Multiple Choice Questions
1 ) Which from the following will be domestic assets for a country's central financial institution? I. Debt securities
2. Loans to banks
3. Foreign currency assets
V. Deposits to the central bank via banks
a. My spouse and i
b. I actually and II
c. I actually, II, and III
d. I, 2 III, IV, and Sixth is v
2 . The sum of currency and deposits for the central traditional bank from business banks is known as: a. The bucks supply.
m. Domestic assets.
c. The monetary foundation.
d. Fragmentary; sectional reserves.
a few. Official input in the forex market to protect a fixed exchange rate if the value of domestic forex is below downward pressure: a. Causes international reserve holdings to increase.
b. Is without impact on the domestic cash supply.
c. Causes the domestic money supply to rise.
d. Triggers the household money source to show up.
4. If a country has an official pay outs balance extra so that the exchange rate benefit of the country's currency is experiencing upward pressure: We. The central bank must intervene to get foreign currency and sell domestic currency. II. The balance sheet displays an increase in recognized international arrange holdings. 3. Its "balance sheet" will show an increase in its liabilities. a. I
b. We and II
c. 2 and III
d. We, II and III
five. __________ the money supply __________ domestic interest levels. a. Increasing; increases
b. Expanding; decreases
c. Contracting; decreases
d. Contracting; has no impact on
6. __________ the cash supply triggers capital __________.
a. Expanding; outflows
m. Expanding; inflows
c. Contracting; outflows
d. Contracting; to stay the same.
six. The initial effect of __________ the money supply __________ the total amount of Obligations. a. Increasing; worsens
n. Expanding; enhances
c. Contracting; worsens
m. Contracting; does not have effect on
eight. The initial effect of __________ the money source __________ the total amount of Repayments. a. Expanding; improves
w. Contracting; improves
c. Contracting; worsens
g. Contracting; does not have impact on
9. Following an expansion in the money supply, a authorities committed to keeping a fixed exchange rate need to: a. Recognize a excess in their current account.
b. Not really use made sanitary intervention.
c. Intervene inside the foreign exchange industry to buy forex trading and sell domestic currency. deb. Intervene in the foreign exchange market to sell foreign currency and buy domestic currency. RESPONSE: D
10. Which in the following can be taking a task to invert the effect of official involvement on the home-based money source? a. Altering the official similar value.
b. Implementing capital controls.
d. " Playing by the guidelines of the gameвЂќ.
11. If a country depends on a shortage in its established settlements harmony, intervention to protect a fixed exchange rate will cause: a. The amount of money supply to expand as well as the economy to grow.
m. The money supply to deal and the economy to deal. c. The money supply to grow as well as the economy to contract.
d. The money supply to contract and the economic climate to develop.
12. You will discover limits towards the ability of monetary regulators to use sterilized intervention in the matter of a shortage because: a. The central bank might be unwilling to enhance its coalition of money. b. Pressure from foreign countries to allow the home-based currency to appreciate will cause large failures. c. The central bank is limited in the ability to get foreign currency. g. There are no limits for the use of sterilized intervention. SOLUTION: C
13. There are limits to the potential of economic authorities to use sterilized input in the case of a surplus since: a. The central traditional bank may be unwilling to increase the holdings of foreign currency. w. Pressure coming from foreign countries to allow the domestic currency to depreciate will cause large losses. c. The central bank is limited in its ability to attain foreign currency. deb. There...