This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Who is the chairperson of the Monetary Policy committee of India? A) RBI Governor. B) Chief Economic Advisor. C) Prime Minister. D) Finance Minister. Show Answer Correct Answer: A) RBI Governor. 2. Economic recessions sometimes occurred in the past due to: A) Unregulated business control of the economy. B) The lack of social safety nets. C) The domino effect of bank failures. D) None of above. Show Answer Correct Answer: C) The domino effect of bank failures. 3. Open market sales shrink ..... thereby lowering ..... A) The money multiplier; the money supply. B) The money multiplier; reserves and the monetary base. C) Reserves and the monetary base; the money supply. D) The money base; the money multiplier. Show Answer Correct Answer: C) Reserves and the monetary base; the money supply. 4. Which option is not an example of monetary policy? A) Capital investment in research and development. B) Interest rate policy. C) The money supply. D) Bank credit control. Show Answer Correct Answer: A) Capital investment in research and development. 5. Which law was passed in 1913 to stabilize the economy and provide emergency cash to banks? A) The Truth in Lending Act. B) The Works Progress Administration. C) The Federal Employers' Liability Act. D) The Federal Reserve Act. Show Answer Correct Answer: D) The Federal Reserve Act. 6. The economy is experiencing high unemployment and a low rate of economic growth and the fed decides to pursue an easy money policy by A) Raising the reserve ratio. B) Selling government securities. C) Raising the discount rate. D) Buying government securities. Show Answer Correct Answer: D) Buying government securities. 7. As the level of interest rates in the economy falls, the demand for money, ceteris paribus: A) Increase. B) Will roughly fall in line with the change in interest rates. C) Will remain unchanged. D) Could move in either direction depending on other factors. Show Answer Correct Answer: A) Increase. 8. How does the Federal Reserve slow inflation and economic growth? A) Raising interest rates. B) Lowering interest rates. C) Buying securities. D) Stimulating economic growth. Show Answer Correct Answer: A) Raising interest rates. 9. If financial institutions cannot borrow from each other, they may need to borrow from the Federal Reserve. The interest rate charged by the Fed for these loans is called the: A) Discount Rate. B) Inflation. C) Reserve Requirement. D) None of above. Show Answer Correct Answer: A) Discount Rate. 10. The nearest Fedral Reseve District bank to Portland Texas is? A) New York. B) Atlanta. C) Dallas. D) None of above. Show Answer Correct Answer: C) Dallas. 11. It is M1 + small time deposits A) M1. B) M2. C) M3. D) None of above. Show Answer Correct Answer: B) M2. 12. This is a system requiring financial institutions to set aside a fraction of their deposits in the form of reserves or vault cash. A) Legal reserves. B) Fractional reserve system. C) Member bank reserves. D) Reserve requirement. Show Answer Correct Answer: B) Fractional reserve system. 13. *Raising the Discount Rate*Raising the Reserve Requirement*Selling securities on the open market*Raising the Interest Rate on Required and Excess ReservesAll of these are examples of actions that A) Keep it he same. B) Increase. C) Limit it. D) Decrease. Show Answer Correct Answer: D) Decrease. 14. What is the USA currency's money value source based on? A) FED. B) Monetary Policy. C) Fiat Money. D) FOMC. Show Answer Correct Answer: A) FED. 15. Which of the following option is NOT an example of monetary policy? A) Capital investment in research development. B) Interest rate policy. C) Bank credit control. D) The money supply. Show Answer Correct Answer: A) Capital investment in research development. 16. Something that must be accepted as payment for a debt is called A) Counterfeit. B) Bootleg. C) Legal Tender. D) None of above. Show Answer Correct Answer: C) Legal Tender. 17. Best or lowest interest rate commercial banks charge their customers. A) Wage rate. B) Quantity rate. C) Discount rate. D) Prime rate. Show Answer Correct Answer: D) Prime rate. 18. The Monetary Equation of Exchange is A) R = n-Inf. B) C+IG+G+Xn. C) N = r + Infl. D) MV=PQ. Show Answer Correct Answer: D) MV=PQ. 19. When the supply for money increases and the demand for money reduces, there will be ..... A) A fall in the level of prices. B) A decrease in the rate of interest. C) An increase in the rate of interest. D) A fall in the level of demand. Show Answer Correct Answer: B) A decrease in the rate of interest. 20. An Expansionary Monetary Policy is often called an: A) Making it rain. B) Oh no. C) Easy Money Policy. D) Fat paycheck. Show Answer Correct Answer: C) Easy Money Policy. 21. Fractional reserve banking system means? A) Banks are required to keep a portion of all deposits on hand, either on deposit withe the Fed or in the vault. B) Our currency needs to be backed up by an allotment of precious metals. C) Credit cards debt can not be greater than the amount of M1. D) None of above. Show Answer Correct Answer: A) Banks are required to keep a portion of all deposits on hand, either on deposit withe the Fed or in the vault. 22. If you want to speed up the economy, the Fed can ..... the money supply by ..... interest rates. A) Decrease, increasing. B) Increase, increase. C) Maintain, maintain. D) Increase, decreasing. Show Answer Correct Answer: D) Increase, decreasing. 23. How many people end up voting on final monetary policy? A) 19. B) 10. C) 5. D) 12. Show Answer Correct Answer: D) 12. 24. Local banks in the 1800s that printed too much money were called A) Central banks. B) Wildcat banks. C) National banks. D) None of above. Show Answer Correct Answer: B) Wildcat banks. 25. QE is when the BofE England purchases from pension funds and banks ..... A) Existing government and corporate bonds. B) New government and corporate bonds. C) Existing government bonds and new corporate bonds. D) None of above. Show Answer Correct Answer: A) Existing government and corporate bonds. 26. Helicopter money is a solution to the liquidity trap. A) Money given to people rather than buying bank assets like QE. B) Reduces taxes. C) Both 1 and 2. D) Less direct than QE. Show Answer Correct Answer: A) Money given to people rather than buying bank assets like QE. 27. This is attained through banking supervision and regulation. A) Financial Stability. B) Price Stability. C) Efficient payments and settlements system. D) Inflation Targeting. Show Answer Correct Answer: A) Financial Stability. 28. Which of the following allows eligible institutions to borrow money from the central bank to meet reserve requirements? A) Discount window. B) Reserve policy. C) Inflation targeting. D) Discount rate. Show Answer Correct Answer: A) Discount window. 29. What is the Federal Funds Rate? A) Interest banks charge to you and I for loans. B) Interest the Fed charges banks for loans. C) Interest banks charge other banks for loans. D) None of above. Show Answer Correct Answer: C) Interest banks charge other banks for loans. 30. Monetary policies the RBA can adopt include all of the following EXCEPT A) Raising personal income tax rates. B) Lowering the reserve requirement. C) Buying government bonds. D) Raising the discount rate. Show Answer Correct Answer: A) Raising personal income tax rates. ← PreviousNext →Related QuizzesMonetary QuizzesEconomics QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 6Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books