Central Banks and Monetary Policy

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Which tool is NOT available to central banks for monetary policy?

Reserve requirements

Discount rate (correct)

Open market operations

Refinancing rate

What are the three key concepts thought to be important for the success of central banks?

Central bank accountability, flexibility, and efficiency

Central bank autonomy, stability, and secrecy

Central bank independence, credibility, and transparency (correct)

Central bank regulation, supervision, and profitability

Which of the following is NOT a role of central banks in modern economies?

Regulator and supervisor of the payments system

Monopoly supplier of the currency

Banker to the government and the bankers’ bank

Lender of first resort (correct)

What is the primary role of central banks in relation to the domestic currency?

Sole supplier Signup and view all the answers

What were promissory notes issued by in the earliest form of money?

Private banks Signup and view all the answers

What was money initially convertible into in its earliest form?

Gold Signup and view all the answers

What are the two types of institutions mentioned in the text as being designated as the monopoly suppliers of a currency?

State-owned institutions and central banks Signup and view all the answers

What are the two main roles of central banks in relation to the banking system?

Banker and supervisor Signup and view all the answers

What are the three primary tools available to central banks for monetary policy?

Open market operations, refinancing rate, and reserve requirements Signup and view all the answers

How many roles of central banks are mentioned in the text?

Seven Signup and view all the answers

Which principle did most major economies abandon in the first half of the twentieth century?

The convertibility principle Signup and view all the answers

Which term refers to money that is not convertible into any other commodity?

Fiat money Signup and view all the answers

What role do central banks play in modern economies?

All of the above Signup and view all the answers

What is the role of central banks in the payments system?

Oversee, regulate, and set standards for the country's payments system Signup and view all the answers

What is the significance of central banks being the sole suppliers of domestic currency?

They have the capacity to print money Signup and view all the answers

What is the term for money that must be accepted when offered in exchange for goods and services?

Legal tender Signup and view all the answers

What is the role of central banks as lenders of last resort?

To provide liquidity to banks facing crisis Signup and view all the answers

Which role is NOT assumed by central banks?

Regulator and supervisor of the payments system Signup and view all the answers

What is the primary objective of most central banks?

Maintaining price stability Signup and view all the answers

What is the term for money that derives its value through government decree and acceptance for payment of goods and services?

Fiat money Signup and view all the answers

What could potentially happen if central banks decide to sell significant proportions of their gold reserves?

Gold prices could decrease Signup and view all the answers

What is the role of central banks in managing foreign currency reserves?

All of the above Signup and view all the answers

What does monetary policy refer to?

Influencing the quantity of money and credit in an economy Signup and view all the answers

What is the term for money that can be redeemed for a prespecified amount of gold?

Convertible money Signup and view all the answers

What is the highest profile role that central banks assume?

Conductor of monetary policy Signup and view all the answers

What is one of the roles of central banks in relation to the banking system?

Regulator and supervisor of the payments system Signup and view all the answers

What is the ideal position of central banks in implementing and determining monetary policy?

Sole supplier of a country's domestic currency Signup and view all the answers

What are the objectives of monetary policy related to?

Stability of the financial system and the payments systems Signup and view all the answers

What is NOT mentioned as an objective of central banks?

Promoting understanding of the financial sector Signup and view all the answers

What is one of the roles of central banks in relation to the government?

Banker to the government Signup and view all the answers