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

If the required reserve ratio is equal to 10%, a single bank can increase its loans up to a maximum amount equal to:

• A) Its total reserves
• B) 10% of its excess reserves
• C) Its excess reserves
• D) 10 times its excess reserves

The money multiplier is negatively related to:

• A) Discount borrowings from the Fed
• B) The excess reserve ratio
• C) Both high-powered money and excess reserve ratio
• D) High-powered money

Excess reserve-to-deposit ratio is a factor that affects the quantity of money. This factor is controlled by which of the following?

• A) Central bank
• B) Bank regulators
• C) Non bank public
• D) Commercial banks

Which factor Decreases reserves and increases currency, leaving size of central bank’s balance sheet and monetary base unchanged

• A) Open market operation
• B) Cash withdrawals
• C) Discount Loans
• D) Foreign Exchange Intervention

Inflation creates which kind of risk specifically?

• A) Non systematic risk
• B) Optional risk
• C) None of above
• D) Systematic risk