This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The primary concern with using a tight money policy would be: A) Slowing economic growth or increasing unemployment. B) Inflation. C) High prices. D) None of above. Show Answer Correct Answer: A) Slowing economic growth or increasing unemployment. 2. Cash Reserve Ratio increases the cash for ..... : A) Lending. B) Borrowing. C) Mortgaging. D) None of These. Show Answer Correct Answer: A) Lending. 3. Fee charged by the Federal Reserve Bank for member banks to borrow money from the FED (hint:@ a reduced rate)? A) Inflation. B) Interest. C) Discount rate. D) Reserve requirement. Show Answer Correct Answer: C) Discount rate. 4. Which of these is a quantitative instrument of Monetary Policy? A) REPO. B) CRR. C) SLR. D) All the Above. Show Answer Correct Answer: D) All the Above. 5. A liquidity trap occurs when ..... fail to stimulate consumption. MP becomes ineffective. A) Low or zero interest rates. B) Low interest rates. C) Zero interest rates. D) None of above. Show Answer Correct Answer: A) Low or zero interest rates. 6. To fix the demand-pull inflation, the FED would ..... A) Use easy money. B) Use tight money. C) Raise taxes. D) Lower taxes. Show Answer Correct Answer: B) Use tight money. 7. Who votes at FOMC meetings? A) The members of the Board of Governors. B) Presidents of 5 Federal Reserve Banks. C) Presidents of all 12 Federal Reserve Banks. D) Both members of the Board and Presidents of the 5 Banks. Show Answer Correct Answer: D) Both members of the Board and Presidents of the 5 Banks. 8. When a nation imports more than it exports, economists say it has which of the following? A) A trade surplus. B) Trade deficit. C) A positive balance of trade. D) A national trade difference. Show Answer Correct Answer: B) Trade deficit. 9. The FED would want to increase the money supply during a recession (contraction) because of the increasingly higher unemployment rate. This would help to achieve what monetary policy goal? A) (Maximum Employment) Full Employment. B) Price Stability. C) Moderate interest rates. D) None of above. Show Answer Correct Answer: A) (Maximum Employment) Full Employment. 10. ..... controls the supply of money and bank credit: A) RBI. B) Indian Banking Association. C) SEBI. D) None of These. Show Answer Correct Answer: A) RBI. 11. The money multiplier is the inverse of the ..... A) Discount rate. B) Required reserve rate (ratio). C) Federal funds rate. D) None of above. Show Answer Correct Answer: B) Required reserve rate (ratio). 12. Which of the following is not a purpose of the Federal Reserve? A) Provide financial services for the Federal Government. B) Regulate financial institutions. C) Conduct Monetary Policy. D) Prepare the Government Budget each year. Show Answer Correct Answer: D) Prepare the Government Budget each year. 13. Which of the following is not the work of RBI? A) Bank of the banks. B) Credit controller. C) Custodian of foreign currency. D) Allocating funds directly to the farmers for agricultural development. Show Answer Correct Answer: D) Allocating funds directly to the farmers for agricultural development. 14. Voting members of the FOMC include 7 members of the ..... and Presidents of the FRB. A) Board of Governors. B) Senate. C) Financial Institution League. D) President's Council. Show Answer Correct Answer: A) Board of Governors. 15. Which is not a potential problem of quantitative easing A) Appreciating exchange rate. B) Bond bubble. C) Inflation. D) Inequitable distribution of income. Show Answer Correct Answer: A) Appreciating exchange rate. 16. What are objects that have value and are also used as money? A) Fiat Money. B) Commodity Money. C) Representative Money. D) Electronic Money. Show Answer Correct Answer: B) Commodity Money. 17. What is the Federal Reserve System? A) Central bank. B) FOMC. C) FED. D) A bank like all others. Show Answer Correct Answer: A) Central bank. 18. Why did the U.S. government initiate a policy of more frequent intervention during the Great Depression? A) To dominate global trade. B) To stabilize the economy. C) To prepare for a possible war. D) O strengthen local governments. Show Answer Correct Answer: B) To stabilize the economy. 19. What does the MPC NOT consider when setting interest rates? A) Discretionary fiscal policy. B) Share prices and house prices. C) Growth of wages. D) GDP growth. Show Answer Correct Answer: A) Discretionary fiscal policy. 20. Which type of institution is responsible for conducting monetary policy? A) A central bank. B) A commercial bank. C) A multinational company. D) A trade union. Show Answer Correct Answer: A) A central bank. ← PreviousNext →Related QuizzesMonetary QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 6Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9Monetary Policy Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books