This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 9 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If V and T are constant, then a contracted stock of money (M) must lead to ..... A) The same proportionate fall in price (P). B) A smaller proportionate change in price (P). C) The the same proportionate change in price (P). D) The same proportionate increase in price (P). Show Answer Correct Answer: A) The same proportionate fall in price (P). 2. Which is the difficulty in controlling money supply A) Both 1 and 2. B) The effects of interest rates. C) Neither 1 nor 2. D) Problems with monetary base control. Show Answer Correct Answer: A) Both 1 and 2. 3. The official interest rate has an effect on A) Expectations. B) Money market interest rates. C) Neither 1 nor 2. D) None of above. Show Answer Correct Answer: A) Expectations. 4. What is NOT a characteristic of currency? A) Unlimited supply. B) Portability. C) Uniformity. D) Durability. Show Answer Correct Answer: A) Unlimited supply. 5. Which of the following is NOT one of the three goals of Monetary Policy? A) Maximize employment. B) Moderate long term interest rates. C) Stabilize prices. D) Cut taxes. Show Answer Correct Answer: D) Cut taxes. 6. The Federal Reserve act was signed in A) 1930. B) 1913. C) 1917. D) 1865. Show Answer Correct Answer: B) 1913. 7. A Contractionary Monetary Policy is often called a: A) Cheap. B) Frugal. C) Tight Money Policy. D) Ugh. Show Answer Correct Answer: C) Tight Money Policy. 8. Who is in charge of Monetary Policy A) The Government. B) The Bank of England. C) The International Monetary Fund. D) The Department of the Treasury. Show Answer Correct Answer: B) The Bank of England. 9. What is an example of Commodity money? A) Currency. B) Diamonds. C) Coins. D) None of above. Show Answer Correct Answer: B) Diamonds. 10. The Basil accord in effect ensures the BofE makes banks hold a given level of deposits A) True. B) False. C) True but this contradicts the previous question. D) None of above. Show Answer Correct Answer: A) True. 11. A long-term goal of the Fed is ..... inflation A) High. B) No. C) Low. D) None of above. Show Answer Correct Answer: C) Low. 12. What makes Fiat money have value? A) Gold. B) Silver. C) Faith. D) None of above. Show Answer Correct Answer: C) Faith. 13. In the market for reserves, when the federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is A) Horizontal. B) Positively sloped. C) Negatively sloped. D) Vertical. Show Answer Correct Answer: C) Negatively sloped. 14. Of the categories of federal spending listed below, which is the largest? A) Social security. B) Defense spending. C) Foreign aid. D) Interest on the national debt. Show Answer Correct Answer: A) Social security. 15. By driving interest rates up, high levels of government borrowing may crowd private borrowers out of the lending market A) Monetarism. B) Stagflation. C) Inflation. D) Crowding out effect. Show Answer Correct Answer: D) Crowding out effect. 16. Monetary policy in the Us is the responsibility of which institution A) Office of budget management. B) US treasury. C) Federal Reserve. D) Internal Revenue Service. Show Answer Correct Answer: C) Federal Reserve. 17. What characteristics of money is being met, when the FED raises/ lowers the money supply? A) Acceptability. B) Limited supply. C) Uniformity. D) Durability. Show Answer Correct Answer: B) Limited supply. 18. Are determined by interaction of supply and demand A) Price. B) Price stability. C) Rate. D) Inflation. Show Answer Correct Answer: A) Price. 19. What happened with a price increase? A) Inflation. B) Deflation. C) Loose money. D) Tight money. Show Answer Correct Answer: A) Inflation. 20. Through open market operations, the RBI buys and sells government securities to influence the supply of bank reserves. When the RBI wants to increase reserves, it does what? A) A) Buys Securities. B) B) Sells Securities. C) Unattempted. D) None of above. Show Answer Correct Answer: A) A) Buys Securities. 21. Federal Reserve Board of Governors members are appointed by the ..... and confirmed by the ..... A) FED. B) President; Senate. C) Treasury; Congress. D) House of Rep. Show Answer Correct Answer: B) President; Senate. 22. Fiat money is (hint:it's the name of the $ $ $ used in the U.S.) A) Money is checking accounts. B) Money that has intrinsic value on its own. C) Specially created from the Federal Reserve. D) Money that is only valuable because the government says it is. Show Answer Correct Answer: D) Money that is only valuable because the government says it is. 23. Who puts US paper currency into circulation? A) The US Mint. B) The Fed. C) The House of Representatives. D) The Treasury Department. Show Answer Correct Answer: B) The Fed. 24. The Federal Reserve Act says that no more than one of the members of the Board of Governors may be selected from the same ..... A) Federal Reserve District. B) University. C) Federal Reserve Bank. D) Government agency. Show Answer Correct Answer: A) Federal Reserve District. 25. Financial Policy Committee (FPC):Which is untrue? A) FPC is charged with safeguarding financial stability. B) The FPC can change the cash reserve requirements for Banks. C) FPC hasn't power to alter loan-to-value ratios. D) FPC has the power to alter loan-to-value ratios. Show Answer Correct Answer: C) FPC hasn't power to alter loan-to-value ratios. 26. All of the following are responsibilities of the Federal Reserve EXCEPT A) Print Money. B) Control the Money Supply. C) Regulate banks. D) None of above. Show Answer Correct Answer: A) Print Money. 27. What would a government reduce as part of an expansionary monetary policy to increase employment? A) The rate of interest. B) The money supply. C) Government spending. D) Unemployment benefit. Show Answer Correct Answer: A) The rate of interest. 28. Which is not a component of monetary Policy A) Exchange rates. B) Money supply. C) Interest rates. D) I'm insulted by this question. Show Answer Correct Answer: D) I'm insulted by this question. 29. The interest rate the Federal Reserve charges on loans it makes to member banks A) Federal funds rate. B) Reserve requirement. C) Open market operations. D) Discount rate. Show Answer Correct Answer: D) Discount rate. 30. What consumer behavior is the Federal Reserve board trying to encourage when it implements a loose monetary policy? A) Increased saving and reduced spending. B) Decreased saving and increased spending. C) Increased saving and spending. D) Decreased saving and spending. Show Answer Correct Answer: B) Decreased saving and increased spending. ← 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books