Money and Central Banks ES20013 Intermediate Macro 1: Week 2 Quiz

Central Bank's Role in Currency Issuance

• The Central Bank has the sole right to issue currency, giving it a monopoly on currency issuance.

Deposits at the Central Bank

• Only commercial banks can legally hold deposits at the Central Bank.

Central Bank's Impact on the Economy

• The Central Bank affects the economy by controlling the money supply, interest rates, and credit conditions.

Central Bank's Assets

• The Central Bank holds financial assets, including government securities and foreign exchange reserves.

Commercial Banks' Role

• The main function of Commercial Banks is to provide loans to the private sector.

Importance of Commercial Banks in Monetary Policy

• Commercial Banks play a crucial role in monetary policy as they intermediate between the Central Bank and the private sector.

Weakened Link between Central Bank and Private Sector

• The development of financial markets has weakened the direct link between the Central Bank and the private sector.

Assets Less Associated with Quantitative Easing (QE)

• Government securities are currently less closely associated with Quantitative Easing (QE).

Calculating Commercial Banks' Rate of Profit

• The rate of profit of Commercial Banks can be calculated as the difference between the interest earned on loans and the interest paid on deposits.

Test your knowledge about the banking system, central banks, and financial institutions with this quiz from the University of Bath. The quiz covers topics related to money, commercial banks, the central bank, and the private sector in the context of macroeconomics.