#1
Which of the following is NOT a function of money in an economy?
Medium of exchange
Unit of account
Store of labor
Standard of deferred payment
#2
What is the term used to describe the situation when the general price level is consistently falling over time?
Inflation
Hyperinflation
Deflation
Stagflation
#3
What is the term used to describe the central bank's ability to influence the money supply and interest rates?
Monetary sovereignty
Monetary policy
Monetary union
Monetary equilibrium
#4
What is the term for the percentage of deposits that banks are required to hold as reserves?
Reserve ratio
Liquidity ratio
Capital adequacy ratio
Interest rate
#5
What is the term for the interest rate at which the central bank lends money to commercial banks for a short term?
Prime rate
Discount rate
LIBOR rate
Federal funds rate
#6
In the context of monetary policy, what does the term 'open market operations' refer to?
Buying and selling of government securities by the central bank
Direct setting of interest rates by the central bank
Regulation of banks' reserve requirements
Printing and minting of currency
#7
Which of the following is true about the 'quantity theory of money'?
It states that the price level is determined by the quantity of money in circulation
It argues that changes in the money supply have no effect on the economy
It suggests that interest rates are the primary determinant of economic growth
It emphasizes fiscal policy over monetary policy
#8
Which of the following is a characteristic of fiat money?
Backed by a physical commodity like gold
Value determined by supply and demand in the market
Can be exchanged for its value in gold at any time
Value determined by government decree
#9
What is the name of the rate at which banks lend to each other overnight?
Discount rate
Federal funds rate
Prime rate
LIBOR rate
#10
Which of the following is NOT a function of the central bank?
Issuing currency
Regulating commercial banks
Fiscal policy implementation
Setting monetary policy
#11
What is the role of the central bank in controlling inflation through monetary policy?
By increasing government spending
By raising taxes
By reducing the money supply
By encouraging borrowing and spending
#12
What is the significance of the Taylor Rule in monetary policy?
It determines the optimal level of inflation for an economy
It provides guidelines for central banks to set interest rates based on economic conditions
It calculates the money multiplier effect
It measures the velocity of money circulation
#13
What is the primary tool used by central banks to control the money supply?
Fiscal policy
Interest rates
Government spending
Taxation
#14
What effect does an expansionary monetary policy typically have on interest rates?
Decreases interest rates
Increases interest rates
No effect on interest rates
Interest rates become negative
#15
What does the term 'moral suasion' refer to in monetary policy?
The use of persuasion and influence by the central bank to achieve policy objectives
The imposition of legal penalties on banks that violate regulations
The practice of setting interest rates based on moral principles
The manipulation of reserve requirements to control lending