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mgt411 money and banking mcq's solved

Question No: 23 ( Marks: 1 ) - Please choose one

Which one of the following is a primary policy tool of the Central Bank?

Inflation rate

Open market operations

Interest rate

Money supply

Question No: 24 ( Marks: 1 ) - Please choose one

___________ is the strategy of buying and selling government securities:

Open market operations

Reserve requirement

Discount loans

Cash withdrawal

Question No: 25 ( Marks: 1 ) - Please choose one

The _____________ shows how the quantity of money is related to the monetary base:

Money multiplier

Deposit expansion multiplier

Fiscal multiplier

Tax multiplier

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is correct?

Monetary base = Currency + Reserves

Monetary base = Currency + Deposits

Monetary base = Loans + Reserves

Monetary base = Required reserves + Deposits

Question No: 27 ( Marks: 1 ) - Please choose one

The central bank makes which type of loans?

Primary credit

Secondary credit

Seasonal credit

All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following expresses the equation of exchange?

MV = PY

MV = Y

MY = PV

MP = VY

Question No: 29 ( Marks: 1 ) - Please choose one

If the liquidity of alternative assets falls, the demand for money________.

Increases

Decreases

Remains unchanged

None of the given option

Question No: 30 ( Marks: 1 ) - Please choose one

Interest rate risk arises as a result of which one of the following consequences?

It arises when banks make additional profit by using derivatives

It arises when loan is not repaid

It arises because of sudden demands of funds

It arises when two sides of the balance sheet do not match up

Question No: 31 ( Marks: 1 ) - Please choose one

A U.S. institution, United Bank, buys some financial assets denominated in British pounds. Fluctuations in the dollar value of the pound will give rise to:

Credit risk

Operational risk

Foreign exchange risk

Country risk

Question No: 32 ( Marks: 1 ) - Please choose one

High State Bank purchases some U.S. Treasury bonds. We would view such bonds as being free of:

Credit risk

Interest rate risk

Reinvestment risk

All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

In general, if the financial institution's balance sheet displays assets and liabilities that are "mis-matched" to a significant degree, the institution faces:

Operational risk

Sovereign risk

Interest rate risk

Liquidity risk

Question No: 34 ( Marks: 1 ) - Please choose one

The idea that central banks should be independent of political pressure is an idea that:

Is included in Federal Reserve Act in 1913

Is relatively new

Every central bank was founded upon

Became quite popular in the early 1900's

Question No: 35 ( Marks: 1 ) - Please choose one

Currency-to-deposit ratio is a factor that affects the quantity of money. This factor is controlled by which of the following?

Central bank

Bank regulators

Commercial banks

Non bank public

Question No: 36 ( Marks: 1 ) - Please choose one

The real purchasing power of money in circulation is expressed as which of the following?

MV·PY

M/P

PY

M/Y

Question No: 37 ( Marks: 1 ) - Please choose one

The FOMC targets the federal funds rate, but if they are going to alter the course of the economy they must influence which one of the following?

The money growth rate as well

The long-term nominal interest rate as well

The real interest rate as well

The nominal exchange rate as well

Question No: 38 ( Marks: 1 ) - Please choose one

Inflation in the long run would be determined by which one of the following?

The exchange rate

Aggregate demand

The rate of money growth

Aggregate supply

Question No: 39 ( Marks: 1 ) - Please choose one

According to real business cycle theory, aggregate economic fluctuations are caused by changes in:

The money supply

Fiscal policy

High unemployment

The natural rate level of output

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following represents the history of money uptill the modern age?

Gold/silver coins____ Paper Currency____Electronic Fund Transfer

Paper Currency_____Gold/Silver coins_____Electronic Fund Transfer

Electronic Fund Transfer_____Paper Currency _____Gold/silver coins

Gold/silver coins_____Electronic Fund Transfer_____Paper currency

Question No: 41 ( Marks: 1 ) - Please choose one

Zero-Coupon Bonds are pure discount bonds since they sell at a price __________.

Equal their face value

Below their face value

Above their face value

None of the given options

Question No: 42 ( Marks: 1 ) - Please choose one

__________ pool money from individuals and invest in different portfolio and return is distributed in different share holders.

Mutual funds

Investment banks

Brokers

Finance companies

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