This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How can the central bank shift aggregate demand? A) Borrowing. B) Making more or less money avaible. C) No plan. D) Controlling the FED. Show Answer Correct Answer: B) Making more or less money avaible. 2. Which among the following is not a part of Liquidity Adjustment Facility (LAF)? A) Repo Rate. B) Reverse Repo Rate. C) Marginal Standing Facility (MSF). D) Open Market Operations (OMO). Show Answer Correct Answer: D) Open Market Operations (OMO). 3. Higher interest rates, increase in the reserve requirement and higher returns on government securities are all examples of A) Monetary Policy. B) Fiscal Policy. C) Contractionary Policy (tight money). D) Expansionary Policy (easy money). Show Answer Correct Answer: C) Contractionary Policy (tight money). 4. What is not a function of the FED? A) Set reserve requirements. B) Set interest rates. C) Complete open market operations. D) Handle money transfers. Show Answer Correct Answer: D) Handle money transfers. 5. Which of the following scenarios would cause the UK's money supply to increase? A) Decreasing government spending. B) Lowering interest rates. C) Raising interest rates. D) Selling bonds to investors. Show Answer Correct Answer: B) Lowering interest rates. 6. Monetary Policy has these tools A) OMO, DR AND RR. B) OMO, DR and G. C) G and T. D) RR AND DD. Show Answer Correct Answer: A) OMO, DR AND RR. 7. What policy can cause a low demand and production levels? A) Loose Money. B) Tight Money. C) Fiscal. D) Monetary. Show Answer Correct Answer: B) Tight Money. 8. If Central Bank lower the OCR, it would A) Limit money supply. B) Increase money supply. C) Money supply remain unchanged. D) None of above. Show Answer Correct Answer: B) Increase money supply. 9. Who owns the Federal Reserve? A) U.S. Government. B) U.S. Taxpayers. C) Member or National Banks. D) The President and his cabinet. Show Answer Correct Answer: C) Member or National Banks. 10. What type of policy causes an increase in Xn? A) Expansionary. B) Contractionary. C) Binary. D) Contrary. Show Answer Correct Answer: A) Expansionary. 11. Which of the following is NOT a method governments may use to decrease unemployment? A) Increase unemployment benefit. B) Reduce the rate of interest. C) Introduce working training schemes. D) Reduce corporation tax. Show Answer Correct Answer: A) Increase unemployment benefit. 12. CPI suddenly rises above 2%, the Bank of England Monetary Policy committee is most likely to A) Raise inflation rates. B) Raise interest rates. C) Lower inflation rates. D) Lower interest rates. Show Answer Correct Answer: B) Raise interest rates. 13. The base rate is currently A) 0.1%. B) 0.25%. C) 0.5%. D) 1%. Show Answer Correct Answer: A) 0.1%. 14. Interest rate that the Federal Reserve System charges on loans to the nation's financial institutions. A) Discount rate. B) Prime rate. C) Monetary rate. D) Explicit rate. Show Answer Correct Answer: A) Discount rate. 15. If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy? A) Expansionary. B) Contractionary. C) Equanimitous. D) Whole Dollar. Show Answer Correct Answer: B) Contractionary. 16. It is the formula for the money multiplier. A) 1/Discount Rate. B) 1/OMO. C) 1/Required Reserve Ratio. D) 1/MPS. Show Answer Correct Answer: C) 1/Required Reserve Ratio. 17. If Central Bank conducts open market sales, it will 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. 18. What is the percentage of the cost of a loan or investment account? A) Interest rate. B) Inflation. C) Deflation. D) GDP. Show Answer Correct Answer: A) Interest rate. 19. Prior to the adaption of monetary instruments, most trade was conducted through? A) Layaways. B) IOUs. C) Barter. D) None of above. Show Answer Correct Answer: C) Barter. 20. Which president tried unsuccessfully to implement wage-price controls? A) Richard Nixon. B) Jimmy Carter. C) Ronald Reagan. D) Bill Clinton. Show Answer Correct Answer: A) Richard Nixon. ← PreviousNext →Related QuizzesMonetary QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 6Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9Monetary Policy Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books