This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 8 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the end result of Contractionary Monetary Policy A) Higher Inflation. B) Lower Inflation. C) Inflation Targeting. D) None of the above. Show Answer Correct Answer: B) Lower Inflation. 2. Which is NOT a job of the Fed? A) Process checks for the federal government. B) Loan money to individuals and small businesses. C) Regulate the money supply. D) Clear checks. Show Answer Correct Answer: B) Loan money to individuals and small businesses. 3. If the Fed pursues Expansionary Monetary Policy, then interest rates would ..... as a result A) Decrease. B) Increase. C) Remain unchanged. D) None of above. Show Answer Correct Answer: A) Decrease. 4. How could the RBA encourage banks to lend out more of their reserves? A) Raise the required amount of reserve. B) Increase the prime rate. C) Reduce the discount rate. D) Reduce the money supply. Show Answer Correct Answer: C) Reduce the discount rate. 5. If the Fed wants to prevent or end a recession, which of the following policies would be appropriate? A) Raise the reserve requirement. B) Raise the discount rate. C) Buy bonds. D) Sell bonds. Show Answer Correct Answer: C) Buy bonds. 6. Monetary policy refers to what the Federal Reserve does to influence the amount of ..... and ..... in the U.S. economy. A) Interest;debt. B) Money;credit. C) Taxes;revenue. D) Currency;gold reserves. Show Answer Correct Answer: B) Money;credit. 7. What is the goal of Expansionary Monetary Policy? A) To reduce money supply. B) To increase money supply. C) To decrease taxes. D) To increase taxes. Show Answer Correct Answer: B) To increase money supply. 8. The three main monetary policy tools are: A) Interest rates, taxes, government purchases, and transfers. B) Currency, near-moneys, and reserve ratio. C) Reserve requirements, the discount rate, and open-market purchases. D) None of above. Show Answer Correct Answer: C) Reserve requirements, the discount rate, and open-market purchases. 9. Which of the following is NOT one of the tools of monetary policy? A) Government Spending. B) Reserve Requirement. C) Open Market Operations. D) Discount Rate. Show Answer Correct Answer: A) Government Spending. 10. Money that has an alternative use as an economic good is A) Fiat money. B) Commodity money. C) Wampum. D) Specie. Show Answer Correct Answer: B) Commodity money. 11. This year, when Bonnie arrives at the country store mentioned in the previous question, she discovers that the pies cost $ 1 more than they did the previous year. Bonnie is noticing what? A) Price floor. B) Inflation. C) Price ceiling. D) Stagflation. Show Answer Correct Answer: B) Inflation. 12. The purpose of the Fed's discount window is to: A) Provide short-term loans to banks that need money. B) Set monetary policy. C) Provide low-interest loans to banks. D) Handle transactions related to the buying and selling of securities. Show Answer Correct Answer: A) Provide short-term loans to banks that need money. 13. This tool of monetary policy refers to the buying and selling of government bonds. A) Discount rate. B) Reserve requirement. C) Open market operations. D) None of above. Show Answer Correct Answer: C) Open market operations. 14. The Fed uses interest rates to try and influence: A) Unemployment rate & inflation. B) Inflation & fiscal policy. C) Housing market & food prices. D) Student loan debt & national deficit. Show Answer Correct Answer: A) Unemployment rate & inflation. 15. It involves publicly announcing an inflation forecast which the BSP promises to achieve. A) Financial Stability. B) Inflation Target. C) Price Stability. D) Monetary policy. Show Answer Correct Answer: B) Inflation Target. 16. If Central Bank raised the required reserve ratio, it would 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. 17. Which of the following is not a Monetary Policy tool? A) OMO. B) Reserve Requirements. C) Discount Rate. D) Balance Accounts. Show Answer Correct Answer: D) Balance Accounts. 18. During a recession central bank will use A) Supply side policy. B) Contractionary monetary policy. C) Expansionary monetary policy. D) None of above. Show Answer Correct Answer: C) Expansionary monetary policy. 19. Who is the Chairperson of the Board of Govenors for the Federal Reserve? A) Jerome Powell. B) Steve Mnuchin. C) Milton Friedman. D) Janet Yellin. Show Answer Correct Answer: A) Jerome Powell. 20. Expansionary Monetary Policy could be A) Increase RR. B) Increase DR. C) Increase RR. D) Decrease DR. Show Answer Correct Answer: D) Decrease DR. 21. Which of the following words is not used in Monetary Policy? A) Blue chip. B) Cash reserve ratio. C) Bank rate. D) Repo Rate. Show Answer Correct Answer: A) Blue chip. 22. The quantity of reserves supplied equals A) Nonborrowed reserves minus borrowed reserves. B) Nonborrowed reserves plus borrowed reserves. C) Required reserves plus borrowed reserves. D) Total reserves minus required reserves. Show Answer Correct Answer: B) Nonborrowed reserves plus borrowed reserves. 23. What controls the supply of money & interest rates according to the needs of the economy? A) FED. B) Open Market Operations. C) Monetary Policy. D) FOMC. Show Answer Correct Answer: C) Monetary Policy. 24. Which of the following policies might be used to control inflation? A) Decrease direct taxation. B) Increase interest rates. C) Increase the money supply. D) Increase government spending. Show Answer Correct Answer: B) Increase interest rates. 25. RBI has launched a portal to curb illegal money pooling by firms called ..... A) Sanchet.rbi.org.in. B) Sachet.rbi.org.in. C) Sanket.rbi.org.in. D) None of the above. Show Answer Correct Answer: B) Sachet.rbi.org.in. 26. What happens to the money circulation, when the FED orders a tight money policy? A) More money is put out into circulation. B) Interest rates rise. C) Circulation stays the same. D) Less money is put into circulation. Show Answer Correct Answer: D) Less money is put into circulation. 27. Milton Friedman, idea that states changes in the money supply are the main cause of inflation and of economic expansions or contractions A) Monetarism. B) Communism. C) Keynesian economics. D) Classical Economics. Show Answer Correct Answer: A) Monetarism. 28. What is the required action of BSP to slow down inflation? A) Contractionary Monetary Policy. B) Inflation Policy. C) Interest Rate Policy. D) Expansionary Policy. Show Answer Correct Answer: A) Contractionary Monetary Policy. 29. The dual mandate of the Federal Reserve includes A) Price stability and economic growth. B) Price stability and economic freedom. C) Price stability and economic equity. D) Price stability and economic efficiency. Show Answer Correct Answer: A) Price stability and economic growth. 30. What is the annual percentage change in consumer price index? A) Inflation. B) Inflation Rate. C) Rate. D) Inflation Percentage. Show Answer Correct Answer: B) Inflation Rate. ← 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 7Monetary Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books