This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Monetary policy resulting in higher interest rates and restricted access to credit; associated with a contraction of the money supply. A) Easy money policy. B) Tight money policy. C) Open market policy. D) Interest rate policy. Show Answer Correct Answer: B) Tight money policy. 2. Who is the current Governor of the Bank of England A) Rishi Sunak. B) Mark Carney. C) Andrew Bailey. D) Dominic Raab. Show Answer Correct Answer: C) Andrew Bailey. 3. What are the actions taken to manage the availability and cost of money and credit to attain stable prices? A) Expansionary Policy. B) Fiscal Policy. C) Contractionary Policy. D) Monetary Policy. Show Answer Correct Answer: D) Monetary Policy. 4. A tool of monetary policy. The interest rate that the Federal Reserve charges financial institutions for loans. A) Required Reserves. B) Interest on Reserves. C) Open Market Operations. D) Discount Rate. Show Answer Correct Answer: D) Discount Rate. 5. What are two main tools the federal government has? A) Government spending and reserve requirement. B) Taxes and government spending. C) Buy/selling bonds and discount rate. D) Discount rate and taxes. Show Answer Correct Answer: B) Taxes and government spending. 6. Which does not cause a liquidity trap? A) Elastic demand for investment. B) Expectations of deflation. C) Preference for saving. D) Unwillingness to hold bonds. Show Answer Correct Answer: A) Elastic demand for investment. 7. How does fiscal & monetary policy differ? A) Fiscal= TaxesMonetary= Bonds. B) Fiscal=BudgetMonetary= Money. C) Fiscal= deals with revenues & expendituresMonetary= deals with money supply. D) Fiscal= controlled by the government branchesMonetary= control by the FOMC. Show Answer Correct Answer: B) Fiscal=BudgetMonetary= Money. 8. What is the primary goal of supply-side economic policies? A) To stimulate production. B) To slow the multiplier effect. C) To stimulate consumption. D) To punish the wealthy. Show Answer Correct Answer: A) To stimulate production. 9. One characteristic of money is that it is a store of value. Which of the following items is the greatest at storing value? A) Apple. B) Car. C) Computer. D) Gold. Show Answer Correct Answer: D) Gold. 10. If the Fed needs to follow contractionary monetary policy, what will happen to interest rates? A) They will increase. B) They will decrease. C) They will not change. D) None of above. Show Answer Correct Answer: A) They will increase. 11. What is NOT a function of money? A) Medium of exchange. B) Unit of account. C) Stores value. D) Meeting all 6 characteristics. Show Answer Correct Answer: D) Meeting all 6 characteristics. 12. Which of the following is one way the Federal Reserve Bank serves the government? A) Maintaining the US Treasury's checking account. B) Financing state government projects. C) Making loans to the Federal government. D) Minting coins for the government. Show Answer Correct Answer: A) Maintaining the US Treasury's checking account. 13. Ideally, the Fed's target for unemployment is ..... A) 5%. B) 2%. C) 0%. D) 10%. Show Answer Correct Answer: A) 5%. 14. This is a bank belonging to the Federal Reserve System. A) Member bank. B) Federal bank. C) State bank. D) Both a federal and state bank. Show Answer Correct Answer: A) Member bank. 15. What is the total value of goods and services produced each year, for a country? A) GDP. B) Fiscal Policy. C) FOMC. D) Monetary Policy. Show Answer Correct Answer: A) GDP. 16. Expansionary monetary policy in the United States causes U.S. interest rates ..... to and the dollar to ..... A) Decrease; depreciate. B) Decrease; appreciate. C) Increase; appreciate. D) None of above. Show Answer Correct Answer: A) Decrease; depreciate. 17. Which is NOT a committee at the Bank of England? A) Budget Committee (BC). B) Monetary Policy Committee (MPC). C) Financial Policy Committee (FPC). D) None of above. Show Answer Correct Answer: A) Budget Committee (BC). 18. Unlike many politicians, the Fed A) Must respond to pressure from the public. B) Is concerned about short-term interest rates. C) Is concerned about the long-run health of the economy. D) None of above. Show Answer Correct Answer: C) Is concerned about the long-run health of the economy. 19. Which is NOT a main challenge facing the Bank of England? A) Supporting an unsustainable economic. B) Keeping inflation expectations low, i.e. 2% (+/-1%). C) Re-balancing the economy towards (X) and (I). D) Building a more secure banking and credit system. Show Answer Correct Answer: A) Supporting an unsustainable economic. 20. Monetary Policy is controlled by A) The President. B) Congress. C) The Federal Reserve Bank. D) The Legislative Branch. Show Answer Correct Answer: C) The Federal Reserve Bank. 21. The seven leaders of the Federal Reserve System who are appointed by the President are A) The Financial Institution League. B) The Board of Governors. C) The Senate. D) The President's Council. Show Answer Correct Answer: B) The Board of Governors. 22. What is the Federal Reserves primary tool for controlling the money supply? A) Printing presses. B) Margin calls. C) Open market Operations. D) Sell short. Show Answer Correct Answer: C) Open market Operations. 23. The less money that banks keep in reserves means that they can lend more money out ..... which means thatmore money enters the A) Money supply. B) Mr. Pips bank account. C) National debt. D) None of above. Show Answer Correct Answer: A) Money supply. 24. Suppose the Federal Reserve buys $ 400, 000 of US bonds from a bank on the open market. The bank holds no excess reserves and the reserve requirement is 20%, what is the increase in new money supply? A) $ 1.6 million. B) $ 8 million. C) $ 2 million. D) None of above. Show Answer Correct Answer: A) $ 1.6 million. 25. Which best describes the fundamental objective of monetary policy? A) A rapid pace of economic growth. B) A money supply which is based on the gold standard. C) Full employment, noninflationary level of total output. D) A balanced budget consistent with full employment. Show Answer Correct Answer: C) Full employment, noninflationary level of total output. 26. What is the Money Multiplier if the reserve requirement is 25%? A) 25. B) 75. C) 4. D) None of above. Show Answer Correct Answer: C) 4. 27. Which of the following is NOT an example of fiscal policy? A) Progressive income tax. B) Provision of merit goods. C) Lowering interest rates. D) Taxation on polluting business. Show Answer Correct Answer: C) Lowering interest rates. 28. Which of the following is NOT a major tool of the FED? A) Required reserves. B) Discount rate. C) Excess reserves. D) Printing new money. Show Answer Correct Answer: D) Printing new money. 29. Contractionary Monetary policy could be A) Sell Bonds. B) Increase RR. C) Increase DR. D) All of the above. Show Answer Correct Answer: D) All of the above. 30. Which is most likely to increase demand in the economy? A) A rise in income tax. B) A reduction in government spending. C) A rise in a budget surplus. D) A reduction in the rate of interest. Show Answer Correct Answer: D) A reduction in the rate of interest. ← PreviousNext →Related QuizzesMonetary QuizzesEconomics QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 6Monetary Policy Quiz 8Monetary Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books