Monitary Policy MCQ 3

Which of the following benefits is a result of a single currency in the eurozone?

What is a potential drawback of a single monetary policy in the eurozone?

Which of the following is a benefit of Ireland's membership in the eurozone?

What did the Irish Central Bank lose when Ireland adopted the euro as its currency?

What is eliminated with the adoption of a single currency in the eurozone?

What is the primary objective of the ECB's monetary policy?

How does the ECB influence the interest rates at which banks lend to their customers?

What is the purpose of the ECB's foreign exchange operations?

Who is responsible for printing bank notes in the eurozone?

What is one of the ECB's roles in maintaining the financial system of the eurozone?

Elimination of exchange rate risk for eurozone countries, removing uncertainty
Elimination of transaction costs for firms and tourists traveling within the eurozone

Membership in the eurozone encourages international trade, benefiting open economies like Ireland

A single monetary policy applies to the entire eurozone, which may not be suitable for individual economies, such as Ireland

Adoption of the euro resulted in the Irish Central Bank losing control over monetary policy

Ensures price stability by targeting an inflation rate of 2% over the medium term
Formulates monetary policy for the eurozone, including setting interest rates, deciding on quantitative easing (QE), and altering reserve requirements
Sets key interest rates, which influence the interest rates at which commercial banks lend to their customers
Manages external foreign currency reserves of the eurozone through foreign exchange operations, buying and selling foreign currencies to influence the euro's price in terms of other currencies
Authorises the printing of bank notes by the 19 national central banks of the eurozone
Ensures the stability, safety, and soundness of the financial system across the eurozone