Monetary Policy Quiz
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Questions and Answers

What is the primary objective of monetary policy?

  • Controlling inflation and stabilizing the currency (correct)
  • Regulating the stock market and bond yields
  • Maximizing employment and economic growth
  • Balancing trade deficits and surpluses

    • Which entity is typically responsible for formulating and implementing monetary policy?

  • Ministry of Finance
  • World Bank
  • International Monetary Fund
  • Central bank (correct)

    • How does expansionary monetary policy affect interest rates?

  • It raises interest rates to control inflation
  • It lowers interest rates to stimulate borrowing and spending (correct)
  • It has no impact on interest rates
  • It only affects short-term interest rates, not long-term rates

    • What is the primary tool used in expansionary monetary policy?

    <p>Open market operations</p> Signup and view all the answers

    Which of the following is an example of contractionary monetary policy?

    <p>Increasing the reserve requirement</p> Signup and view all the answers

    How does a central bank use the discount rate as a monetary policy tool?

    <p>To influence short-term borrowing by depository institutions</p> Signup and view all the answers

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