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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