Monetary Policy and Central Banking Quiz
Test your knowledge on monetary economics. Explore tools, objectives, and effects of central bank policies. Take the quiz now!
#1
Which of the following is a tool used by central banks to control the money supply?
Fiscal policy
Monetary policy
Trade policy
Industrial policy
#2
What is the main objective of monetary policy?
Maximizing employment
Minimizing inflation
Stabilizing exchange rates
All of the above
#3
Which of the following is an example of expansionary monetary policy?
Decreasing the money supply
Raising interest rates
Buying government securities
Increasing reserve requirements
#4
What does 'open market operations' refer to in the context of monetary policy?
Government intervention in foreign exchange markets
Buying and selling government securities
Setting reserve requirements for banks
Providing loans to commercial banks
#5
What is the discount rate in the context of monetary policy?
The interest rate at which commercial banks can borrow from each other
The interest rate at which commercial banks can borrow from the central bank
The interest rate set by the government for savings accounts
The interest rate set by the government for long-term loans
#6
Which of the following tools is used by central banks to influence short-term interest rates?
Reserve requirements
Quantitative easing
Open market operations
Currency pegging
#7
What is the term for the rate at which the central bank lends money to commercial banks?
Prime rate
Federal funds rate
Discount rate
LIBOR rate
#8
Which of the following is NOT a function of a central bank?
Issuing currency
Conducting fiscal policy
Supervising banks
Acting as a lender of last resort
#9
What is the term for a situation where inflation and economic growth are high while unemployment remains low?
Stagflation
Hyperinflation
Deflation
Recession
#10
In the context of central banking, what does the term 'lender of last resort' mean?
A bank that lends only to borrowers with excellent credit
A bank that provides loans to governments during financial crises
A central bank that provides emergency loans to financial institutions
A bank that provides loans to individuals facing financial difficulties
#11
Which of the following is NOT a transmission mechanism through which monetary policy affects the economy?
Interest rates
Exchange rates
Consumer confidence
Bank lending
#12
Which of the following is an unconventional tool of monetary policy?
Reserve requirements
Forward guidance
Open market operations
Discount rate
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