This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 11 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. Monetary Policy is controlled by A) Congress. B) The President. C) The Legislative Branch. D) The Federal Reserve Bank. Show Answer Correct Answer: D) The Federal Reserve Bank. 3. The seven leaders of the Federal Reserve System who are appointed by the President are A) The Board of Governors. B) The Senate. C) The Financial Institution League. D) The President's Council. Show Answer Correct Answer: A) The Board of Governors. 4. 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. 5. 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. 6. 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. 7. 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. 8. 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. 9. Which of the following is NOT an example of fiscal policy? A) Provision of merit goods. B) Taxation on polluting business. C) Lowering interest rates. D) Progressive income tax. Show Answer Correct Answer: C) Lowering interest rates. 10. Which of the following is NOT a major tool of the FED? A) Required reserves. B) Discount rate. C) Printing new money. D) Excess reserves. Show Answer Correct Answer: C) Printing new money. 11. 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. 12. Which is most likely to increase demand in the economy? A) A reduction in government spending. B) A reduction in the rate of interest. C) A rise in a budget surplus. D) A rise in income tax. Show Answer Correct Answer: B) A reduction in the rate of interest. 13. 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. 14. 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. 15. 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. 16. How could the RBA encourage banks to lend out more of their reserves? A) Reduce the discount rate. B) Raise the required amount of reserve. C) Increase the prime rate. D) Reduce the money supply. Show Answer Correct Answer: A) Reduce the discount rate. 17. If the Fed wants to prevent or end a recession, which of the following policies would be appropriate? A) Raise the discount rate. B) Raise the reserve requirement. C) Buy bonds. D) Sell bonds. Show Answer Correct Answer: C) Buy bonds. 18. Monetary policy refers to what the Federal Reserve does to influence the amount of ..... and ..... in the U.S. economy. A) Interest;debt. B) Currency;gold reserves. C) Money;credit. D) Taxes;revenue. Show Answer Correct Answer: C) Money;credit. 19. What is the goal of Expansionary Monetary Policy? A) To reduce money supply. B) To increase money supply. C) To increase taxes. D) To decrease taxes. Show Answer Correct Answer: B) To increase money supply. 20. 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. ← PreviousNext →Related QuizzesMonetary QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary 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