This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which Federal Reserve district do you live in? A) 5. B) 6. C) 12. D) 1. Show Answer Correct Answer: B) 6. 2. The portion of the Federal Reserve System that is primarily responsible for monetary policy. A) Member banks. B) District Banks. C) Board of Governors. D) Federal Open Market Committee. Show Answer Correct Answer: D) Federal Open Market Committee. 3. When banks take out loans with the Fed, this is called A) Reserve Requirement. B) Discount Rate. C) Interest on Reserves. D) Open Market Operations. Show Answer Correct Answer: B) Discount Rate. 4. Expansionary Monetary policies that increase the money supply are usually intended to: A) Maximize employment. B) Raise taxes. C) Cut debt. D) None of above. Show Answer Correct Answer: A) Maximize employment. 5. In what way is money NOT used? A) Determine value of goods/ services. B) Compares value of goods/ services. C) Keep a stored value. D) Increase/ decrease value. Show Answer Correct Answer: D) Increase/ decrease value. 6. What is Fractional Reserve Banking? A) When banks loan out all of their deposits and keep no reserves. B) When banks are required by the FED to hold a % of their deposits in reserve. C) When banks only have to hold a small % of their loans on hand. D) When banks specialize in fractions. Show Answer Correct Answer: B) When banks are required by the FED to hold a % of their deposits in reserve. 7. If Central Bank lower the discount rate, 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. 8. An open market operation is an instrument of monetary policy which involves buying or selling of ..... from or to the public and banks A) Bonds and Other local securities. B) Debentures and Shares. C) Government Securities. D) None of These. Show Answer Correct Answer: C) Government Securities. 9. Which of the following is NOT a responsibility of the RBA? A) Printing Money. B) Regulating Banks. C) Lending money to civilians. D) Financial Literacy and security. Show Answer Correct Answer: C) Lending money to civilians. 10. Which of these is the correct definition of monetary policy: A) A policy that aims to control the supply of money in the economy. B) A policy that aims to achieve economic growth. C) A policy that controls taxes. D) A policy that aims to contribute to the supply of money. Show Answer Correct Answer: A) A policy that aims to control the supply of money in the economy. 11. Who is the current chair of the FED? A) Janet Yellen. B) Ben Bernanke. C) Allan Greenspan. D) Mr. Pips. Show Answer Correct Answer: A) Janet Yellen. 12. If the vale of the bond increases, ..... A) The yield falls. B) The yield remains unchanged. C) The yield increases. D) None of above. Show Answer Correct Answer: A) The yield falls. 13. The Federal Reserve has a dual mandate to promote A) Price stability & low taxes. B) Price stability & full employment. C) Price instability & high unemployment. D) Spending money & taxing citizens. Show Answer Correct Answer: B) Price stability & full employment. 14. How many Federal Reserve districts are included in the Federal Reserve System? A) 6. B) 8. C) 10. D) 12. Show Answer Correct Answer: D) 12. 15. In Christmasland candycanes of all sizes are used as currency. The reason this type of money serves its function as a medium of exchange is because it is A) Very portable. B) Highly divisible. C) Prized in foreign nations. D) Accepted as payment in exchange for goods and services. Show Answer Correct Answer: D) Accepted as payment in exchange for goods and services. 16. Business will invest more if A) Interest rate on loan is low. B) Expected return on investment is low. C) Interest rate on loan is high. D) None of above. Show Answer Correct Answer: A) Interest rate on loan is low. 17. What action does the FED take when it wants to lower interest rates? A) It buys bonds. B) It sells bonds. C) Increases GDP. D) Decreases GDP. Show Answer Correct Answer: A) It buys bonds. 18. ..... is a general rise in prices that can be caused by a number of things, but one of them is the amount of money that circulates: A) Inflation. B) Deflation. C) Foreclosure. D) None of above. Show Answer Correct Answer: A) Inflation. 19. In the money supply, what represents the cash held by the public and money deposited in checking accounts? A) M1. B) Liquidity. C) M2. D) Store of value. Show Answer Correct Answer: A) M1. 20. What happens to the equilibrium quantity of money (money supply-MS) and interest rates (i%) in the short term when the Fed sell bonds? A) Both increase. B) Money supply increases and interest rates decrease. C) Money supply decreases and interest rates increases. D) None of above. Show Answer Correct Answer: C) Money supply decreases and interest rates increases. ← PreviousNext →Related QuizzesMonetary QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9Monetary Policy Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books