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1 Correct QCM 9

The document contains 10 multiple choice questions on monetary policy and the functioning of the banking system. The questions cover topics such as the consequences of a restrictive monetary policy, the role of the European Central Bank, the money creation power of banks, and the meaning of certain terms.

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8 views3 pages

1 Correct QCM 9

The document contains 10 multiple choice questions on monetary policy and the functioning of the banking system. The questions cover topics such as the consequences of a restrictive monetary policy, the role of the European Central Bank, the money creation power of banks, and the meaning of certain terms.

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SES 1ST YEAR QCM 9

Last name and First names:..................................................

Choose the correct answer for each question.

1. What are the consequences of a monetary policy


restrictive?
a) A restrictive monetary policy results in a decrease in
interest rates and thus an increase in granted loans. This
leads to an increase in the money supply in circulation.
b) A restrictive monetary policy results in a decrease in
interest rates and therefore an increase in the loans granted. This
leads to a decrease in the money supply in circulation.
c) A restrictive monetary policy has the consequence of a
increase in interest rates and therefore an increase in
credits granted. This results in an increase in the mass
money in circulation.
d) A restrictive monetary policy has the consequence of a
increase in interest rates and therefore a decrease in loans
granted. This leads to a decrease in the money supply in
circulation.

2. The European Central Bank must limit inflation.


around:
2 %.
b) 3 %.
c) 1 %.
d) 4 %.

3. What is a monetary policy?


a) This refers to the set of means implemented by the
governments to influence economic activity through
the supply of money.
b) It is a set of resources implemented by banks
second level to influence economic activity through
the money supply.
c) It involves all the means implemented by the banks
centralized to influence economic activity through the supply of
currency.
d) None of these answers.
4. What is the main limit to money creation?
for secondary banks?
a) They must grant credits only to agents
foreign economies.
They must care about price stability.
c) They must pay dividends to their shareholders.
They must keep a certain amount of money available at all times.
moment.

5. Indicate which statement is correct.


The repayment of a loan creates money.
b) The second-tier banks have the power to create money.
c) The central bank has the monopoly on the creation of money
scriptural.
Other agents than banks can create money.

What does the OMT program (Outright Monetary Transaction) represent?


Transactions launched by the European Central Bank?
a) It is about the repurchase, on the secondary market, of company securities.
private.
b) This involves the repurchase, on the secondary market, of public securities.
Eurozone countries without counterpart from the states.
c) This concerns the repurchase, on the secondary market, of public securities from
Euro zone states conditional on economic policy of
these states should be placed under international supervision.
d) It concerns the repurchase, on the primary market, of government securities.
of the euro area provided that the economic policy of these
States should be placed under international supervision.

What does the expression 'monetize assets' mean?


a) This means that the bank transforms a non-monetary asset into
silver.
b) This means that the bank transforms money into a non-asset.
monetary.
c) This means that the bank transforms a monetary asset into money.
This means that the bank turns money into a non-asset.
monetary.

8. How can central banks create


money?
a) By exchanging currencies.
b) By acquiring a claim against the public treasury.
c) The set of these answers.
d) By purchasing securities from second-tier banks that need
liquidity.

9. What is the consequence if the mandatory reserves


do they decrease for second-tier banks?
They must keep more money available at all times, which
increase their capacity to grant credits.
They must keep less money available at all times, this
which reduces their ability to grant loans.
They must keep less cash available at all times, this
which increases their ability to grant loans.
They must keep more money available at all times, which
reduces their ability to grant credit.

10. What do foreign exchange reserves represent?

It concerns the reserves of fiat currency that the bank keeps.


central in its own currency.
It concerns the financial assets held by the central bank.
3. These are the assets held by the central bank in currency
foreign and in gold.
4. The whole of these responses.

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