Monetary Policy Quiz (1) Test your knowledge on monetary policy with this informative quiz! See if you can answer all 12 questions correctly alina90 published on January 110 responses 0 « Previous Next » Questions in vertical order 1/12 What is the primary goal of monetary policy? Maintaining price stability Maximizing economic growth Reducing unemployment Controlling inflation 2/12 Which central bank is responsible for monetary policy in the United States? Federal Reserve European Central Bank Bank of Japan Bank of England 3/12 What tool does the central bank use to control money supply? Open market operations Fiscal policy Foreign exchange interventions Capital controls 4/12 Which of the following is an expansionary monetary policy tool? Lowering interest rates Increasing taxes Reducing government spending Raising reserve requirements 5/12 What happens to the money supply when the central bank sells government securities? Money supply increases Money supply decreases Money supply remains unchanged Money supply fluctuates 6/12 Which of the following is NOT a monetary policy transmission mechanism? Interest rates Exchange rates Unemployment rates Credit availability 7/12 What is the interest rate at which commercial banks can borrow from the central bank called? Discount rate Inflation rate Prime rate Federal funds rate 8/12 Under contractionary monetary policy, what happens to interest rates? They increase They decrease They remain unchanged They fluctuate 9/12 Which of the following is an example of a conventional monetary policy tool? Changing reserve requirements Quantitative easing Negative interest rates Helicopter money 10/12 What term is used to describe the rate at which the central bank lends to commercial banks? Policy rate Repo rate Libor rate Discount rate 11/12 Which of the following is an example of an expansionary fiscal policy? Lowering government spending Increasing taxes Reducing money supply Implementing tax cuts 12/12 What is the term for the difference between a country's total exports and total imports? Gross domestic product Foreign direct investment Trade balance Current account
