#1
Which of the following is a function of central banks?
Maximizing profits
Controlling inflation
Encouraging consumption
Providing subsidies
#2
What does M1 represent in monetary economics?
Currency in circulation and demand deposits
Currency in circulation only
Currency in circulation and time deposits
Currency in circulation and savings deposits
#3
What is the role of the Federal Reserve System in the United States?
Setting fiscal policy
Regulating stock markets
Conducting monetary policy
Issuing currency
#4
Which of the following is a characteristic of fiat money?
Backed by gold or silver
Value determined by market demand
Legal tender by government decree
Exchangeable for foreign currency
#5
Which of the following is NOT a function of money?
Medium of exchange
Store of value
Unit of labor
Unit of account
#6
Which of the following is a tool of expansionary fiscal policy?
Increasing taxes
Reducing government spending
Increasing government spending
Reducing interest rates
#7
Which of the following is a tool of monetary policy?
Fiscal deficit
Open market operations
Trade surplus
Public debt
#8
What is the primary role of a lender of last resort in the banking system?
To increase interest rates
To decrease money supply
To provide liquidity to banks facing a crisis
To encourage risky lending practices
#9
What is the Taylor Rule in monetary policy?
A rule for setting interest rates based on inflation and output gaps
A rule for determining government spending
A rule for regulating exchange rates
A rule for controlling fiscal deficits
#10
What is the effect of an increase in the reserve requirement on the money supply?
It increases the money supply
It decreases the money supply
It has no effect on the money supply
It increases inflation
#11
What is the significance of the Phillips curve in monetary economics?
It describes the relationship between unemployment and inflation
It explains the relationship between money supply and interest rates
It outlines the impact of government spending on economic growth
It analyzes the effects of fiscal policy on exchange rates
#12
What is seigniorage in monetary economics?
The interest earned on government bonds
The profit made by banks from lending
The revenue generated by minting currency
The tax levied on imports and exports
#13
In the quantity theory of money, if the money supply increases while the velocity of money and real output remain constant, what will happen to the price level?
Decrease
Remain constant
Fluctuate
Increase
#14
What is the primary tool used by central banks to control short-term interest rates?
Open market operations
Fiscal policy
Exchange rate intervention
Quantitative easing
#15
What is the significance of the LM curve in macroeconomic theory?
It represents the relationship between interest rates and investment
It illustrates the relationship between money supply and output
It describes the relationship between consumption and income
It explains the relationship between inflation and unemployment
#16
What is the role of the European Central Bank (ECB) in the Eurozone?
Regulating fiscal policy
Issuing national currencies
Conducting monetary policy
Managing trade agreements
#17
What is the significance of the Taylor Principle in monetary policy?
It states that the central bank should respond more than one-to-one with changes in inflation
It advocates for a fixed exchange rate regime
It emphasizes the use of fiscal policy over monetary policy
It suggests that the central bank should respond less than one-to-one with changes in inflation
#18
Which of the following is an example of an automatic stabilizer in fiscal policy?
Discretionary government spending
Unemployment benefits
Tax cuts during a recession
Infrastructure investments