On the event of purchase of Rs. one billion T-bill by the central bank, the net effect of balance sheet of central bank will be?

• A) No effect on monetary base
• B) A & B both possible
• C) Its assets and liabilities increase by Rs. 1 billion
• D) Net effect there is zero

The quantity of money people hold for transactions purposes does not depends on?

• A) Expected future interest rate
• B) Their nominal income
• C) The availability of substitutes
• D) The cost of holding money

When a bank has $1,000,000 in deposits and is subject to a required reserve ratio of 0.1, and it has $100,000 in vault cash and reserve deposits at the Fed is said to be:

• A) Holding total reserves of $900,000
• B) Fully loaned up
• C) Holding vault cash of $100,000
• D) Holding excess reserves of $100,000

The State Bank of Pakistan chooses to organize the federal funds rate by manipulating the quantity of reserves by?

• A) Open market operation
• B) Discount lending
• C) None of above
• D) Target Federal fund rate

In the United States, the central bank is responsible for:

• A) Oversee the stock exchanges
• B) The conduct of monetary policy
• C) Both the conduct of monetary policy and help finance government deficits
• D) Help finance government deficits

Which is not principal of central bank design?

• A) Fiscal policy by competent persons
• B) Decision making by committee
• C) Independence
• D) Accountability and transparency

----------Interest rate charged by the central bank on loans to commercial banks?

• A) Reserve requirement
• B) None of above
• C) Discount rate
• D) Target Federal Funds Rate

Which is the factor that affects transaction demand for money?

• A) Availability of alternative means of payment
• B) National Income
• C) Interest rates
• D) All of above

The Fed lacks complete control over the money supply because it cannot perfectly predict:

• A) Discount borrowing by the banks
• B) Excess reserves held by banks
• C) Any of the above
• D) Shifts from deposits to currency

The idea that central banks should be independent of political pressure is an idea that:

• A) Is relatively new
• B) Became quite popular in the early 1900's
• C) The Federal Reserve Act included in 1913.
• D) Every central bank was founded upon.

When the Fed wants to increase the level of reserves in the banking system, it can:

• A) All of the given options
• B) Buy bonds from banks
• C) Buy bonds from the public
• D) Increase discount loans to banks

When we draw a line of 45 degree in the inflation and money growth exes, left side of 45 degree line will be called?

• A) Inflation>Money Growth
• B) Money Growth <Inflation
• C) Money Growth =Inflation
• D) None of above

High-powered money less reserves equals:

• A) Required reserves
• B) Currency in circulation
• C) The non-borrowed monetary base
• D) The monetary base

Successful monetary policy relies on:

• A) Competent people in responsible positions and knowledgeable citizens who know how to react to the policy
• B) Competent people in responsible positions
• C) Knowledgeable citizens who know how to react to the policy
• D) The institutional environment

Which of the following type/s of transaction/s affect the balance sheets of both the central bank and the banking system?

• A) All of the given options
• B) A foreign exchange intervention
• C) Central bank’s extension of a discount loan
• D) An open market operation

Which is not the liability of Central bank?

• A) Currency
• B) None of given option
• C) Loans
• D) Deposit of Government account

Cash become less desirable when ______________.

• A) Riskiness of alternative holdings rises
• B) Liquidity falls
• C) Interest rates rise
• D) None of the given options

Zero inflation is bad because

• A) It increase the default of loans
• B) None of given options
• C) It increase risk of deflation
• D) Both option A(1) & B (2)

A sale of government bonds by the Fed, all else the same:

• A) None of the given option
• B) Increases the high-powered money
• C) Increases the non-borrowed monetary base
• D) Increases the monetary base

Cash withdrawal by the general public may effect

• A) None of given
• B) Size of monetary base
• C) Size of balance sheet of SBP
• D) Composition of balance sheet