This quiz works best with JavaScript enabled. Home > Economics > Monetary Economics > Monetary Economics – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Economics Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Low interest rates often cause ..... A) An increase in inflation. B) More unemployment. C) A decrease in inflation. D) Less employment. Show Answer Correct Answer: A) An increase in inflation. 2. Selling SBI A) Increases money supply (JUB naik). B) Decreases money supply (JUB turun). Show Answer Correct Answer: B) Decreases money supply (JUB turun). 3. The latest types of money A) Mental money. B) Gold money. C) Plastic money. D) All the above. Show Answer Correct Answer: C) Plastic money. 4. Money that has value because the Government declared that it is money. A) Fiat Money. B) Commodity Money. C) Currency. D) Coins. Show Answer Correct Answer: A) Fiat Money. 5. Money supply means the total amount of money in A) Country. B) State. C) Economy. D) World. Show Answer Correct Answer: C) Economy. 6. The fundamental function of a commercial bank is A) Acceptance of deposits. B) Advancing loans. C) Issuing bank draft. D) Creating credit. Show Answer Correct Answer: B) Advancing loans. 7. Which of the following is a qualitative or selective method of credit control by the central bank? A) Bank rate or Discount Rate Policy. B) Open market operations. C) Cash Reserve Ratio. D) None of the above. Show Answer Correct Answer: D) None of the above. 8. The Fed's decision to raise or lower the ..... impacts interest rates in banks across the nation, mortgage rates, loan rates, etc. A) Required reserve ratio. B) Money multiplier. C) Discount rate. D) Currency exchange rate. Show Answer Correct Answer: C) Discount rate. 9. During an expansion, what you do to prevent inflation? A) Lower the RR, lower the % i, buy SBI. B) Raise the RR, raise the % i, sell SBI. Show Answer Correct Answer: B) Raise the RR, raise the % i, sell SBI. 10. What is an IPO? A) Initial Polling Office. B) Initial Public Offering. C) International Public Office. D) Increasing Public Opportunity. Show Answer Correct Answer: B) Initial Public Offering. 11. Something that must be accepted as payment for a debt is called A) Counterfeit. B) Bootleg. C) Legal Tender. D) None of above. Show Answer Correct Answer: C) Legal Tender. 12. Deflation means..... A) Prices are falling. B) Prices are rising. C) Value of money is increasing. D) Price are remaining the same. Show Answer Correct Answer: A) Prices are falling. 13. The return of a share holder is A) Rate of interest. B) Dividend. C) Discount rate. D) Discount value. Show Answer Correct Answer: B) Dividend. 14. The speculative motive for holding money is closely tied to what function of money? A) Store of wealth. B) Unit of account. C) Medium of exchange. D) Standard of deferred payment. Show Answer Correct Answer: A) Store of wealth. 15. ..... is the most liquid form of capital A) Money. B) Revenue. C) Income. D) Liability. Show Answer Correct Answer: A) Money. 16. When the Central Bank intends to expand the credit, it should A) Raise the margin requirements. B) Raise the variable reserve ratio. C) Lower the bank rate. D) Purchase government securities in the open market. Show Answer Correct Answer: D) Purchase government securities in the open market. 17. The most widely used monetary policy tool among these is? A) Open market operations. B) Issuing of notes. C) Close market operations. D) Discount rate. Show Answer Correct Answer: A) Open market operations. 18. Of the three motives for holding money suggested by Keynes, which did he believe to be themost sensitive to interest rates? A) The transactions motive. B) The precautionary motive. C) The speculative motive. D) The altruistic motive. Show Answer Correct Answer: C) The speculative motive. 19. Because the quantity theory of money tells us how much money is held for a given amount ofaggregate income, it is also a theory of A) Interest-rate determination. B) The demand for money. C) Exchange-rate determination. D) The demand for assets. Show Answer Correct Answer: B) The demand for money. 20. Which of the following is not a function of Central Bank? A) Enjoys monopoly of note issue. B) Acts as the banker's bank. C) Creation of credit. D) Lender of the last resort. Show Answer Correct Answer: C) Creation of credit. ← PreviousNext →Related QuizzesEconomics QuizzesMonetary Economics Quiz 1Monetary Economics Quiz 3Monetary Economics Quiz 4Monetary Economics Quiz 5 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books