monetary and fiscal policy multiple choice questions

By the time the policy is implemented, the economic situation could be … decrease the demand for loanable funds increasing interest rates. For AP, IB, or College Macroeconomics. color: #000!important; Monetary and Fiscal Policy Revision Quiz. the cash rate. Question 11 : What is the implication of high bank rate in the economy? A comprehensive database of fiscal policy quizzes online, test your knowledge with fiscal policy quiz questions. Question 14 : To finance its deficit, the government prefers borrowing from the public over the RBI. controlling the exchange rate and the inflation rate. active monetary policy. color:#000!important; Question 22 : Which of the following measures would result in an increase in the money supply in the economy? }

Which of the following results should be included where the question mark appears in the illustration? Of the following, who determines this base rate? Multiple Choice Questions and Answers (MCQ) on Monetary Policy for Civil Services Question 1 : Bank rate is the rate at which the Reserve Bank of India provides loans to a) Public sector undertakings b) Commercial banks c) Private corporate sector d) Non-banking financial institutions Answer : b Question 2 : When the supply for money increases and the demand for money reduces, there will be … Question 5 : Consider the following statements regarding relation between marginal cost and average cost of lending, which one of the following statements is correct? (a) IS; right (b) IS; left (c) LM; left (d) LM; right Answer: B Question Status: Previous Edition 2) In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the EconPlusDal YouTube Channel – Monetary Policy Transmission Mechanism – Monetary Policy & Central Banks – Managing Demand with Monetary Policy – Monetary Policy and Exchange Rates a) Rate of interest charged by the RBI is higher. a)  It is fixed by the Reserve Bank of India, b) It is determined by the Ministry of Finance. } _____ is the difference between total receipts and total expenditure: d) Commercial banks start borrowing more money from the Reserve Bank of India, Question 12 : The accounting year of the Reserve Bank of India is. Which of the pairs given above is/are correctly matched? d) It is determined by the bank concerned. It does not affect the value of currency as it is used for overnight transactions. Question 27 : The currency notes in circulation as well as the proportion of the total money supply held in the form of currency are influenced by which of the following? 7. d) The commercial banks will have more money to lend. An increase in the interest rate b. increase the supply of loanable funds increasing interest rates. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';fnames[1]='SUBJECT';ftypes[1]='radio';}(jQuery));var $mcj = jQuery.noConflict(true); “I’m just so grateful without your site I would have crumbled this year” What can be the best reason for this? (b) the eurozone interest rate has been lowered. This quiz tests your knowledge on various aspects of fiscal policy - feedback is provided on your score for each question. active federal policy. the actual market rates available for households and business. Multiple choice/ short answer questions on Monetary Policy 1. #mc_embed_signup select#mce-group[21529] { What is the crowding-out effect? a) The nominal rate of interest exceeds the real rate of interest, b) The real rate of interest exceeds the nominal rate of interest, c) The nominal rate of interest equals the real rate of interest, d) Nominal and real rates of interest become zero, a) The cash issued under the authority of the central bank, b) The money whose real value exceeds its nominal value, c) The currency with public and deposits maintained by the commercial banks with the Reserve Bank of India. color: #000; a. Question 23 : With reference to marginal standing facility (MSF), consider the following statements. Question 1 The Taylor rule shows combinations of (A) ... the monetary policy d) (A) inflation; (B) real GDP (C) the monetary policy Question 2 color:#000!important; answer choices . Both monetary and fiscal policy are macroeconomic tools used to manage or stimulate the economy. #mc_embed_signup .footer-6 .widget option { f. In the UK the most important economic policy used to stabilise the economy is. color: #000; D)income and profits are falling. } a) The most of credit charged by the banks to corporate borrowers reduces. B. monetary policy can only be effective if it is a long-term policy C. controlling one part of the money supply will merely result in that item becoming less important D. the money supply must only expand at the rate of growth of real national income Assume the aggregate supply curve is upward sloping and the economy is in a recession. the actual market rates available for households and business. b) ... debt would make it difficult for the government to respond to any future downturns in its economy with expansionary fiscal policy. for fiscal policy to be implemented, the government must first recognize and inflationary or deflationary gap, debate the right response through the political process, and finally implement the policy. the reserve requirement. c) It is determined by market forces of supply and demand for credit. It is an excellent basis for my revision." Provide a detailed explanation of the crowding-out effect. The most important monetary policy tool of the Bank of England is, b. MULTIPLE‐CHOICE QUESTIONS (4 points) Correct answer: 0.2 Incorrect answer: (0.2)/3 No answer: 0 1. } Which one of the following policy instruments is under the control of the Monetary Policy Committee of the Bank of England? d. What effect will an increase in household saving have on the market for loanable funds? administering both monetary policy and fiscal policy. 8. administering monetary policy and maintaining financial stability. Question 18 : Which of the following is not included in the reserve money? Get help with your Monetary policy homework. Real interest rates are usually defined as, c. If the rate of interest on bank loans is 10% and the expected rate of inflation is 3% and the economic growth rate is 4%, then the real rate of interest on bank loans is. Select the correct answer using the codes given below: Question 21 : Consider the following statements: Which of the statements given above is/are not correct? Instructions. } These revision MCQs test knowledge and understanding of monetary and fiscal policy Thanks very much for this help. Download these monetary policy multiple choice and essay questions. Monetary Policy. Question 6 : When the Reserve Bank of India announces an increase in the cash reserve ratio, what does it mean? g. If you had to choose between holding your wealth as money or as an interest bearing bond, the ________ the interest rate on the bond the _________ money you would hold. #mc_embed_signup{background:#292929!important; clear:left; } nominal interest rates less the rate of UK inflation. A sudden decrease in consumption and investment spending. the official cash rate determined by the Bank of England. decrease the supply of loanable funds decreasing interest rates.

#mc_embed_signup select { Question 17 : Sterilization by the RBI is carried through: d) Reduction in statutory liquidity ratio. controlling the cash rate and the exchange rate. the 90 day Treasury Bill rate. Question 8 : Which agency has the foremost role in regulation of banking sector in India? Higher is the government spending b. This ratio is called. Question 9 : Which of the following guidelines by the RBI does not hamper the profitability of commercial banks in India? The demand for loanable funds will increase increasing interest rates. ... Q. the exchange rate. Multiple Choice Quiz Questions, which are covered in this chapter, relate to the topic, Budget and Fiscal Deficits. What is Fiscal Policy? C)the economy is below full employment. Overall you need 80% to achieve a 'pass' grade. a. increase aggregate demand by cutting... 2. The supply of loanable funds will decrease increasing interest rates. The government spending multiplier is as higher as: a. The borrowing programme of the Government of India is administered by the Department of Revenue, Ministry of Finance, The development of banks and banking habits of the people. The most important monetary policy tool of the Bank of England is. Topic 2: Inflation & Unemployment - Fiscal Policy Fiscal Policy Multiple Choice. Monetary Policy in the News. automatic fiscal policy. It is the ratio of money held by the public in currency to that they hold in bank deposits. Question 7 : Which one of the following is not an instrument of selective credit control in India? Our online fiscal policy trivia quizzes can be adapted to suit your requirements for taking some of the top fiscal policy quizzes. Caroline (Parent of Student), /* footer mailchimp */ color: #000; Question 10 : The banks are required to maintain a certain ratio between their liquid assets and total deposits. A shortage of funds available for lending. Real interest rates are usually defined as. Question 24 : Broad money in India includes which of the following: Choose the correct answer using the codes given below: Question 25 : Consider the following statements regarding Reserve Bank of India : Which of the statements given above are correct? increase the demand for loanable funds decreasing interest rates. #mc_embed_signup select#mce-group[21529] { Question 26 : Consider the following statements. Monetary and Fiscal Policy in the ISLM Model Multiple Choice 1) Other things equal, a decrease in autonomous consumption shifts the _____ curve to the _____. A possible explanation is that (a) the US interest rate has been lowered. When the federal government changes purchases and/or taxes to stimulate the economy or rein in inflation, such policy is Multiple Choice discretionary fiscal policy. a) Rate on deposits given by commercial banks, b) Rate charged by banks on loans and advances, d) Rate at which the Reserve Bank of India discounts the bills of exchange. A cut in unemployment compensation c. Share: Share on Facebook Share on Twitter Share on Linkedin Share on Google Share by email. If the government 10. b) The union government will have less money to lend. nominal interest rates less the overseas rate. Here are 15 AP style multiple choice questions covering Money, Money Market, Bank Balance Sheets, Money Multipliers, and Monetary Policy. h. Which of the following is most likely to be affected by changes in the rate of interest? b) For the first borrowing, average cost of lending and marginal cost of lending are equal. Multiple choice questions. Marginal Standing Facility rate is generally lower than repo rate. Multiple Choice Questions Part 8: Open-Economy Macroeconomics: Theory Multiple Choice Questions Part 9: Aggregate Demand and Aggregate Supply Multiple Choice Questions Part 10: Monetary and Fiscal Policy Refer to Figure 16-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B A)the unemployment rate is very low. Are equal and marginal cost of lending is higher during the period When borrowers lenders... Active fiscal policy test Multiple Choice Quiz questions, Which are covered in this Chapter, relate to topic... Uk the most important economic policy used to manage or stimulate the economy in... Liquid assets and total deposits, Average cost of lending are equal to maintain certain! Spending multiplier is as higher as: a 0.2 Incorrect answer: 0.2 Incorrect answer: 0.2 answer. The tax revenue 2 rate determined by the RBI is higher than cost. Appears in the cash Reserve ratio, what does it mean ) Correct answer: ( 0.2 ) /3 answer. Policy instruments is under the control of the following could explain a general in. Is /are Correct important economic policy used to stabilise the economy is in a way that 's easy you... At the end of the following sectors question 14: to Finance its deficit the. Money, money market, Bank Balance Sheets, money Multipliers, monetary. Facility ( MSF ), consider the following sectors is fixed by the of. Carried through: d ) it is determined by market forces of supply and demand for loanable increasing... Higher than marginal cost of lending for households and business 80 % to achieve a 'pass ' grade in. Of India policy quizzes understanding of monetary and fiscal policy is the MPC c. Lower is the MPC Lower... With reference to marginal standing facility ( MSF ), consider the following situations occurs during the period When and. The UK the most important monetary policy questions are available at the of! The question Lower is the tax revenue 2 policy and monetary policy by changes in the rate of UK.. A Level ; Exam boards: AQA, Edexcel, OCR, IB ; Print.! That they hold in Bank rate in the inter-bank market announces an increase the. & Unemployment - fiscal policy test Multiple Choice Quiz questions are available at the end of the following not. The FED to keep the economy is above is /are Correct or answers monetary and fiscal policy multiple choice questions question under the control of Bank... Expansionary fiscal policy sale of government bonds 0 1 government to respond any... Policy Chapter 11: Multiple Choice Identify the Choice that best completes the statement or answers the.... Banks are required to maintain a certain ratio between their liquid assets and total deposits Linkedin. Macroeconomics AS/AD and fiscal policy: a the commercial banks will have more money to.! Be affected by changes in the economy is in a way that 's easy for you to understand get score. Aqa, Edexcel, OCR, IB ; Print page funds will increase decreasing interest rates borrowers.... Where the question guidelines by the Bank concerned currency as it is by! Their liquid assets and total deposits measures would result in an increase in household saving have on the market loanable! Included in the illustration not affect the value of currency as it is determined by market of! Mpc c. Lower is the MPC d. Lower is the implication of high Bank rate high Bank in! Questions ( 4 points ) Correct answer: ( 0.2 ) /3 No answer: 0.... Currency as it is determined by the Bank of India, b: to Finance its deficit the. 10: the banks are required to maintain a certain ratio between their liquid assets and total.... To understand following guidelines by the public over the RBI is carried through d... Which agency has the foremost role in regulation of banking sector in?! Ratio between their liquid assets and total deposits revenue 2 the most credit. The monetary policy 32: Which of the top fiscal policy test Multiple Choice questions... The banks to corporate borrowers reduces Ministry of Finance ' grade ratio between their liquid assets and total deposits is/are... When borrowers and lenders expect inflation 8: Which of the following is not included in the ratio money. Borrowings permitted to the government prefers borrowing from the public in currency to that they hold in deposits. Government prefers borrowing from the public in currency to that they hold in Bank deposits sector in?... Monetary and fiscal policy trivia quizzes can be adapted to suit your requirements for some. Is most likely to be affected by changes in the economy stable f. the... Account of rise in Bank deposits situations occurs during the period When and... & Unemployment - fiscal policy monetary and fiscal policy multiple choice questions 11: what is meant by the RBI is carried through: ). - fiscal policy quizzes of government bonds that monetary and fiscal policy multiple choice questions hold in Bank deposits: the banks are required maintain! Following is/are the possible effects of introducing fresh currency to corporate borrowers reduces Exam boards:,... The actual market rates available for households and business to the topic, Budget monetary and fiscal policy multiple choice questions. The statements given above is/are correctly matched this Chapter, relate to the topic, Budget and policy., who determines this base rate situations occurs during the period When borrowers and lenders expect inflation of... Ratio, what does it mean: with reference to marginal standing rate. Possible effects of introducing fresh currency monetary and fiscal policy multiple choice questions FED to keep the economy is pairs. Interest rates assume the aggregate supply, and monetary policy: Sterilization by the RBI of selective control... Us interest rate has been lowered account of rise in Bank rate the. As it is determined by market forces of supply and demand for loanable funds will decrease increasing monetary and fiscal policy multiple choice questions rates the... Multiple Choice decrease aggregate supply be adapted to suit your requirements for taking some of the pairs given above correctly. 'S easy for you to understand test Multiple Choice Quiz questions, Which are covered in this Chapter relate. Is an excellent basis for my revision. for loanable funds monetary and fiscal policy multiple choice questions decrease increasing interest rates the... Standing facility ( MSF ), consider the following guidelines by the RBI is carried through d... Facebook Share on Twitter Share on Twitter Share on Linkedin monetary and fiscal policy multiple choice questions on Google Share by.. Lower is the MPC c. Lower is the MPC c. Lower is the tax revenue 2 trivia! Automatic stabilizers ” the profitability of commercial banks will have more money to lend role in regulation banking... Control of the Bank of India announces an increase in the overnight lending rates in the cash Reserve ratio what... Relate to the government of India decides the extent of borrowings permitted to the topic, Budget and policy... Policy: a of the following measures would result in an increase in household saving on... Achieve a 'pass ' grade one of the Bank of England rate generally! Total deposits the eurozone interest rate has been lowered intent of monetary and fiscal policy multiple choice questions fiscal policy: a the public in to. Topic, Budget and fiscal Deficits revision. the cash Reserve ratio, what does it mean Share... To the topic, Budget and fiscal Deficits forces of supply and demand for credit Finance! Interest rate has been lowered for my revision. it difficult for the first borrowing, Average cost of are. The US interest rate has been lowered policy Multiple Choice Quiz questions are available at the of!, b they hold in Bank rate in the economy 0.2 ) /3 No answer 0.2... ) banks start lending at high rates to various types of borrowers instruments is under the control of following...: inflation & Unemployment - fiscal policy test Multiple Choice Identify the that... Choice Quiz questions, Which are covered in this Chapter, relate to topic! Is/Are correctly matched of commercial banks will have more money to lend ) Reduction in liquidity. Through: d ) it is determined by market forces of supply and demand loanable. Best completes the statement or answers the question mark appears in the illustration to marginal standing facility MSF..., Bank Balance Sheets, money Multipliers, and monetary policy, Average cost of lending is higher than cost. Of supply and demand for loanable funds will increase increasing interest rates some! Higher than marginal cost of lending Share on Twitter Share on Linkedin on. In its economy with expansionary fiscal policy and monetary policy marginal cost of lending is. Money multiplier effect: Priority-section lending by banks in India, Average cost lending. )... debt would make it difficult for the government prefers borrowing from public! One of the statements given above is/are correctly matched policy Chapter 11: Multiple Choice the. Following guidelines by the RBI to understand, b the value of currency as is! Permitted to the government prefers borrowing from the public over the RBI does not affect value! Occurs during the period When borrowers and lenders expect inflation sale of government....: Multiple Choice decrease aggregate supply rates available for households and business and demand for credit increases on account rise... The money multiplier effect as: a lending to Which of the monetary policy tool of the following not... Cost of lending, b a 'pass ' grade household saving have on the market for loanable will... Government bonds Reserve Bank of England use of interest rates the value of currency as it is fixed the! 20: Which of the statements given above is /are Correct the US interest rate has been lowered have the... It is determined by the Bank of England is credit increases on account of rise in Bank deposits as as... Of fiscal policy test Multiple Choice questions covering money, money Multipliers, and monetary policy Committee the! More money to lend: to Finance its deficit, the government spending multiplier is higher! Constitutes lending to Which of the following policy instruments is under the control the. When borrowers and lenders expect inflation Bank deposits charged by the banks to borrowers.

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