Central bank’s rate of lending to commercial banks is called ?

Related Mcqs:

1. Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?

   A. assets
   B. deposits
   C. loans
   D. government bonds

2. Which function is performed by both commercial banks and central banks ?

   A. Acting as bankers to the government
   B. Advising the government on monetary policy
   C. Dealing in foreign exchange
   D. Fixing the main interest rate

3. For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?

   A. decrease the money supply
   B. increase the money supply
   C. increase the demand for money
   D. decrease the demand for money

4. Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?

   A. Rs 4,000
   B. Rs 5,000
   C. Rs 1,000
   D. Rs 0

5. Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to ?

   A. increase the money supply because it is now cheaper for banks to borrow from the central bank
   B. decrease the money supply because it will now be more expensive for business firms and consumers to borrow money
   C. Not change the money supply because banks already have excess reserves they cannot lend
   D. Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities

6. Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action ?

   A. Rs 10,00
   B. Rs 1,000
   C. Rs 9,000
   D. Rs 0

7. Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ?

   A. rise by an amount that depends on the bank’s reserve ratio
   B. rise by less than the amount of the deposit
   C. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
   D. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
   E. be unchanged

8. If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, _________ will occur?

   A. a hyperinflation
   B. a depression
   C. stagflation
   D. a recession

9. Which exchange rate mechanism in intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions ?

   A. dual exchange rates
   B. managed floating exchange rates
   C. adjustable pegged exchange rates
   D. crawling pegged exchange rates

10. The system under which a country’s currency is exchangeable for a fixed weight of gold on demand at central bank is called ?

    A. God standard system
    B. Gold based system
    C. Bullion standard system
    D. None of the above