This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is coins and paper money considered? A) Currency. B) Electronic money. C) Fiat money. D) Representative money. Show Answer Correct Answer: A) Currency. 2. It is the interest rate that the Fed charges member banks to borrow money for short term loans. A) Discount rate. B) Federal Funds rate. C) Prime rate. D) None of above. Show Answer Correct Answer: A) Discount rate. 3. In which city is the Board of Governor's Office located? A) Philadelphia. B) Washington D.C. C) Boston. D) New York City. Show Answer Correct Answer: B) Washington D.C. 4. If the federal reserve lowers the reserve requirement, Bobby, a consumer, will more likely A) Save his money. B) Buy bonds. C) Pay a high interest rate. D) Buy a house. Show Answer Correct Answer: B) Buy bonds. 5. What is the sustained increase in the average prices of goods and services? A) Rate. B) Inflation Percentage. C) Inflation. D) Inflation Rate. Show Answer Correct Answer: C) Inflation. 6. When the Fed is conducting open market operations, they are buying or selling A) Stocks on the New York Stock Exchange. B) Goods in the product market. C) Factors in the factor market. D) Government bonds. Show Answer Correct Answer: D) Government bonds. 7. The central bank can reduce the money supply ..... reserve requirements, increasing the discount rate, or ..... bonds in the open market. A) Raising/ selling. B) Decreasing/ buying. C) Decreasing/selling. D) Raising/ buying. Show Answer Correct Answer: A) Raising/ selling. 8. The central bank of the United States that makes monetary policy for the country is A) The US Treasury. B) The Federal Reserve System. C) The US Congress. D) The Board of Governors. Show Answer Correct Answer: B) The Federal Reserve System. 9. The actions of the FED that control and regulate the amount of money in the economy are referred to as A) Monetary policy. B) International trade. C) Opportunity costs. D) Fiscal policy. Show Answer Correct Answer: A) Monetary policy. 10. This is attained through the conduct of monetary policy A) Financial Stability. B) Price Stability. C) Efficient payments and settlements system. D) Inflation Targeting. Show Answer Correct Answer: B) Price Stability. 11. How can the central bank shift aggregate demand? A) No plan. B) Making more or less money avaible. C) Borrowing. D) Controlling the FED. Show Answer Correct Answer: B) Making more or less money avaible. 12. Which among the following is not a part of Liquidity Adjustment Facility (LAF)? A) Repo Rate. B) Reverse Repo Rate. C) Marginal Standing Facility (MSF). D) Open Market Operations (OMO). Show Answer Correct Answer: D) Open Market Operations (OMO). 13. Higher interest rates, increase in the reserve requirement and higher returns on government securities are all examples of A) Fiscal Policy. B) Monetary Policy. C) Contractionary Policy (tight money). D) Expansionary Policy (easy money). Show Answer Correct Answer: C) Contractionary Policy (tight money). 14. What is not a function of the FED? A) Set reserve requirements. B) Set interest rates. C) Complete open market operations. D) Handle money transfers. Show Answer Correct Answer: D) Handle money transfers. 15. Which of the following scenarios would cause the UK's money supply to increase? A) Decreasing government spending. B) Raising interest rates. C) Lowering interest rates. D) Selling bonds to investors. Show Answer Correct Answer: C) Lowering interest rates. 16. Monetary Policy has these tools A) OMO, DR AND RR. B) OMO, DR and G. C) G and T. D) RR AND DD. Show Answer Correct Answer: A) OMO, DR AND RR. 17. What policy can cause a low demand and production levels? A) Tight Money. B) Loose Money. C) Monetary. D) Fiscal. Show Answer Correct Answer: A) Tight Money. 18. If Central Bank lower the OCR, it would A) Limit money supply. B) Increase money supply. C) Money supply remain unchanged. D) None of above. Show Answer Correct Answer: B) Increase money supply. 19. Who owns the Federal Reserve? A) U.S. Government. B) U.S. Taxpayers. C) Member or National Banks. D) The President and his cabinet. Show Answer Correct Answer: C) Member or National Banks. 20. What type of policy causes an increase in Xn? A) Binary. B) Contractionary. C) Contrary. D) Expansionary. Show Answer Correct Answer: D) Expansionary. 21. Which of the following is NOT a method governments may use to decrease unemployment? A) Introduce working training schemes. B) Increase unemployment benefit. C) Reduce the rate of interest. D) Reduce corporation tax. Show Answer Correct Answer: B) Increase unemployment benefit. 22. CPI suddenly rises above 2%, the Bank of England Monetary Policy committee is most likely to A) Lower inflation rates. B) Lower interest rates. C) Raise inflation rates. D) Raise interest rates. Show Answer Correct Answer: D) Raise interest rates. 23. The base rate is currently A) 0.1%. B) 0.25%. C) 0.5%. D) 1%. Show Answer Correct Answer: A) 0.1%. 24. Interest rate that the Federal Reserve System charges on loans to the nation's financial institutions. A) Monetary rate. B) Prime rate. C) Discount rate. D) Explicit rate. Show Answer Correct Answer: C) Discount rate. 25. If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy? A) Equanimitous. B) Contractionary. C) Expansionary. D) Whole Dollar. Show Answer Correct Answer: B) Contractionary. 26. It is the formula for the money multiplier. A) 1/MPS. B) 1/Discount Rate. C) 1/Required Reserve Ratio. D) 1/OMO. Show Answer Correct Answer: C) 1/Required Reserve Ratio. 27. If Central Bank conducts open market sales, it will A) Limit money supply. B) Increase money supply. C) Money supply remain unchanged. D) None of above. Show Answer Correct Answer: A) Limit money supply. 28. What is the percentage of the cost of a loan or investment account? A) Deflation. B) Inflation. C) Interest rate. D) GDP. Show Answer Correct Answer: C) Interest rate. 29. Prior to the adaption of monetary instruments, most trade was conducted through? A) Layaways. B) IOUs. C) Barter. D) None of above. Show Answer Correct Answer: C) Barter. 30. Which president tried unsuccessfully to implement wage-price controls? A) Ronald Reagan. B) Jimmy Carter. C) Richard Nixon. D) Bill Clinton. Show Answer Correct Answer: C) Richard Nixon. ← PreviousNext →Related QuizzesMonetary QuizzesEconomics QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 6Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books