#1
Which entity typically sets short-term interest rates in a country?
Commercial banks
Central bank
Government
International Monetary Fund
#2
What is the main tool used by central banks to control monetary policy?
Fiscal policy
Exchange rates
Open market operations
Inflation targeting
#3
Which of the following is a primary objective of monetary policy?
Maximizing employment
Minimizing government spending
Maximizing trade balance
Minimizing income inequality
#4
What happens to bond prices when interest rates rise?
Bond prices rise
Bond prices fall
Bond prices remain unchanged
Bond prices fluctuate randomly
#5
In the context of monetary policy, what does the term 'tightening' refer to?
Increasing interest rates
Decreasing interest rates
Maintaining interest rates
Adjusting exchange rates
#6
What is the Taylor Rule in economics often used for?
Forecasting stock prices
Predicting exchange rates
Setting monetary policy interest rates
Analyzing fiscal policy effects
#7
Which of the following is NOT a tool of expansionary monetary policy?
Quantitative easing
Lowering reserve requirements
Raising interest rates
Forward guidance
#8
What is the name for the interest rate that banks charge each other for overnight loans?
Federal funds rate
Discount rate
Prime rate
LIBOR
#9
What is the term for the purchase or sale of government securities by the central bank to control the money supply?
Fiscal policy
Quantitative easing
Open market operations
Exchange rate intervention
#10
What is the primary aim of expansionary monetary policy?
To control inflation
To decrease aggregate demand
To stimulate economic growth
To reduce government spending
#11
What is the name of the rate at which commercial banks can borrow from the central bank during a liquidity shortage?
Federal funds rate
Discount rate
Prime rate
LIBOR
#12
What does the term 'liquidity trap' refer to in the context of monetary policy?
A situation where interest rates are extremely high
A situation where the money supply exceeds the demand
A situation where interest rates are so low that monetary policy becomes ineffective
A situation where inflation is uncontrollable
#13
Which of the following is NOT a potential effect of higher interest rates?
Reduced consumer spending
Lower borrowing costs
Decreased business investment
Appreciation of the currency
#14
Which of the following is an example of contractionary monetary policy?
Increasing government spending
Decreasing taxes
Lowering interest rates
Selling government bonds
#15
What is the main aim of a central bank when conducting open market operations?
Stabilizing exchange rates
Controlling inflation
Managing unemployment
Influencing interest rates