Monetary Policy and its Impact Quiz

Test your knowledge on central bank tools, objectives, and effects of monetary policy in this comprehensive quiz on monetary economics.

#1

Which of the following tools is used by central banks to control the money supply?

Fiscal policy
Monetary policy
Trade policy
Industrial policy
#2

What is the main objective of expansionary monetary policy?

To decrease inflation
To decrease unemployment
To decrease money supply
To increase economic growth
#3

What is the primary tool used by central banks to influence the money supply?

Open market operations
Quantitative easing
Reserve requirements
Discount rate
#4

Which of the following is NOT a tool of monetary policy used by central banks?

Open market operations
Government spending
Reserve requirements
Discount rate
#5

Which of the following is a primary goal of central banks when implementing monetary policy?

Achieving full employment
Maximizing government revenue
Stabilizing prices
Encouraging imports
#6

Which of the following is a tool of monetary policy used to control short-term interest rates?

Open market operations
Quantitative easing
Fiscal stimulus
Tariffs
#7

What is the term used to describe the interest rate at which the central bank lends money to commercial banks?

Discount rate
Prime rate
Federal funds rate
LIBOR
#8

What is the term used to describe the purchase and sale of government securities by the central bank?

Fiscal policy
Monetary policy
Open market operations
Trade policy
#9

In which of the following situations would a central bank likely pursue an expansionary monetary policy?

During a recession
During high inflation
During an economic boom
During stagflation
#10

Which of the following is a goal of contractionary monetary policy?

Increasing inflation
Reducing unemployment
Stabilizing prices
Encouraging borrowing
#11

Under what circumstances might a central bank use contractionary monetary policy?

To combat inflation
To stimulate economic growth
To decrease government spending
To increase money supply
#12

Which of the following is NOT a transmission mechanism through which monetary policy affects the economy?

Interest rates
Exchange rates
Money supply
Government spending
#13

When a central bank decreases the reserve requirement, what effect does it have on the money supply?

Increases the money supply
Decreases the money supply
No effect on the money supply
It's uncertain

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