Macroeconomic Monetary Policy and Banking Principles Quiz

Monetary policy is the primary tool used by central banks to control the money supply.

Commercial banks do not have the authority to issue currency.

The rate at which the central bank lends money to commercial banks is known as the discount rate.

Raising interest rates is a contractionary monetary policy tool.

Lowering interest rates is a tool of expansionary monetary policy.

The interest rate at which banks lend reserves to each other overnight is known as the federal funds rate.

Quantitative easing refers to the central bank's purchase of financial assets to inject money into the economy.

In the context of banking, LTV ratio stands for Loan-to-Value ratio.

The ratio of a bank's reserves to its total deposits is known as the reserve ratio.

The central bank's buying and selling of government securities is termed as open market operations.

Moral suasion is a tool of qualitative monetary policy.

The percentage of deposits that banks are required to hold in reserve is known as the reserve ratio.

The maximum amount of money a bank is allowed to lend is known as the credit ceiling.

In the context of monetary policy, the Taylor rule refers to a mathematical formula for determining the optimal interest rate based on inflation and output gaps.