This quiz works best with JavaScript enabled. Home > Monetary > Policy > Monetary Policy – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 9 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Fiat Money A) Something accepted by all parties as payment for goods and services. B) Money in the form of coins made from silver or gold. C) A common denominator that can be used to express worth in terms that most individuals understand. D) Money by government decree. Show Answer Correct Answer: D) Money by government decree. 2. A plan to increase the amount of money in circulation A) Open market operations. B) Expansionary policy. C) Contractionary policy. D) Monetarism. Show Answer Correct Answer: B) Expansionary policy. 3. What would increase the money supply? A) A decrease in consumer expenditure. B) A decrease in investment. C) An increase in bank lending. D) An increase in the rate of interest. Show Answer Correct Answer: C) An increase in bank lending. 4. Which of the following results should be included where the question mark appears in the illustration? A) Unemployment. B) Inflation. C) Consumer spending. D) Production. Show Answer Correct Answer: A) Unemployment. 5. The average interest rate estimated by each of the leading banks in London A) LIBOR. B) Official interest rate. C) LBR. D) None of above. Show Answer Correct Answer: A) LIBOR. 6. Who mints the coins in India? A) Ministry of Finance. B) Reserve Bank of India. C) Prime Minister's Office. D) Commerce and Industry Ministry. Show Answer Correct Answer: A) Ministry of Finance. 7. A tool of monetary policy. The Federal Reserve buys and sells bond/securities on the open market to influence the money supply. A) Discount Rate. B) Open Market Operations. C) Interest on Reserves. D) Reserve Requirements. Show Answer Correct Answer: B) Open Market Operations. 8. During a period of recession the best action would be A) Increase the money supply and lower interest rates. B) Decrease govt. spending and decrease taxes. C) Decrease the money supply and increase govt. spending. D) Increase interest rates and decrease the money supply. Show Answer Correct Answer: A) Increase the money supply and lower interest rates. 9. If Central Bank lower the required reserve ratio, 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. 10. The federal government is attempting to encourage consumers and businesses to spend money, a fiscal policy BEST serving this purpose would be A) Decreasing taxes. B) Decreasing government spending. C) Reducing the investment tax credit. D) Balancing the budget. Show Answer Correct Answer: A) Decreasing taxes. 11. When the Federal Reserve controls the supply, availability, and cost of money to influence the economy, they are creating A) The national debt. B) Monetary policy. C) Fiscal policy. D) A budget surplus. Show Answer Correct Answer: B) Monetary policy. 12. If the Fed wants to increase the cost of loans, then it should adjust ..... A) Open Market Operations. B) The Reserve Ratio. C) The Discount Rate. D) None of above. Show Answer Correct Answer: C) The Discount Rate. 13. What happens to interest rates under a loose money policy? A) Increase. B) Decrease. C) Stay the same. D) Disappear. Show Answer Correct Answer: B) Decrease. 14. The primary decision making body of the Federal Reseve is the ..... A) Board of Governors. B) Congress. C) Federal Open Market Comittee (FOMC). D) None of above. Show Answer Correct Answer: C) Federal Open Market Comittee (FOMC). 15. Interest Rates A) % Charged to a business or consumer for borrowing money. B) How interested a company is in buying a machine. C) % of a profit that must go to a company. D) None of above. Show Answer Correct Answer: A) % Charged to a business or consumer for borrowing money. 16. A tool of monetary policy. The Federal Reserve pays a rate of return to banks who keep deposits at the Federal Reserve. A) Required Reserves. B) Interest on Reserves. C) Discount Rate. D) Open Market Operations. Show Answer Correct Answer: B) Interest on Reserves. 17. Which is not a characteristic of an independent central bank A) Dependent on political considerations. B) Ability to formulate policy. C) Ability to set objectives. D) Communication without constraint. Show Answer Correct Answer: A) Dependent on political considerations. 18. A tool of monetary policy. The Federal Reserve requires that banks keep a certain percentage of deposits on hand, and they cannot loan these funds. A) Discount Rate. B) Interest on Reserves. C) Reserve Requirements. D) Open Market Operations. Show Answer Correct Answer: C) Reserve Requirements. 19. This was created in 1913 to help stabilize the banking system in the United States A) Federal Reserve System. B) Mr. Pips Tortilla company. C) The Atlanta Falcons. D) Money. Show Answer Correct Answer: A) Federal Reserve System. 20. Which of the following is NOT one of the three parts of the FED? A) District Banks. B) Federal Open Market Committee. C) Board of Governors. D) Fiscal Policy. Show Answer Correct Answer: D) Fiscal Policy. ← 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 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books