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

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

   A. Interest rate
   B. Discount rate
   C. Money rate
   D. Control rate

3. 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

4. Central banks prefer to fix the ____ and accept the resulting _____?

   A. demand for money, interest rate
   B. interest rate equilibrium money supply
   C. demand for money equilibrium money supply
   D. interest rate, demand for money

5. Central banks in LDCs generally have less effect on expenditure and output than in LDCs because of ?

   I- an externally dependent banking system
   II- a poorly developed securities market
   III- a low percentage of demand deposits divided by the total money supply
   IV- the relative insensitivity of investment and employment to monetary policies

   A. I and II only
   B. III and IV only
   C. I, II and III only
   D. I, II , III and IV

6. In the absence of international capital controls, central banks set ________ to provide the correct incentive for speculators?

   A. money supply targets
   B. income policy
   C. interest rates
   D. inflation targets

7. “Seigniorage” is a source of revenue for central banks earned from_____________?

   A. Issuance of Debt securities
   B. Issuance of notes and coins
   C. Dollar Reserves
   D. All of above

   Submitted by: Asad Javed

8. Which of the following is not a function of a commercial bank?

   A. Accepting public deposits
   B. Granting loan and advances
   C. Undertaking agency functions
   D. Banker to the government

9. 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

10. Which of the following is rate of interest the major international banks charge each other for borrowings ?

    A. New York Interbank Offered Rates (NIBOR)
    B. international Interbank Offered Rates (IOBOR)
    C. London Interbank Offered Rate (LIBOR)
    D. USA Interbank Offered Rate (UIBOR)