15 Questions
Which tool is described as having an immediate effect on the entire system?
Discount rate
What is the main weakness of the reserve requirement tool?
It may cause immediate liquidity problems for banks with low excess reserves
Which tool is described as being suitable to fine-tune market operations and having complete control by BNM?
Open market operation
What is the primary goal of achieving high employment in the economy?
To ensure all labor resources are utilized efficiently
What is the main merit of the discount rate tool?
Effective solution for cash flow problems
Why is it important to achieve price stability in the economy?
Rising price levels create economic uncertainty and hamper growth
Which tool is described as being powerful to fine-tune credit & market conditions but may be too powerful?
Reserve requirement
What does price stability refer to in the context of the economy?
A situation of no inflation or deflation
Why do all countries aim to achieve high employment?
To minimize the losses associated with unemployment
What does high employment in the economy indicate?
All labor resources have jobs and are utilized
What is the main problem associated with inflation according to the text?
Uncertainty about future prices complicating decision making
How does inflation affect creditors, according to the text?
They lose because the real value of the money will be less
Why is interest-rate stability desirable according to the text?
It creates uncertainty in the economy
What is the objective of converting short-term loans to long-term loans according to the text?
To enable commercial banks to create multiple credits
What is the main goal of monetary policy mentioned in the text?
Achieving higher economic growth and interest-rate stability
This quiz covers the objectives and types of monetary policy, focusing on overcoming inflation and unemployment. It also includes class activities related to discussing the goals of monetary policy and their impact on employment stability.
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