MGT411 Final Term MCQs 2026 by VUBuddy

Q1. Of the four players in the money supply process, most observers agree that in the simple money supply

1. Depositors
2. The Federal Reserve System
3. Banks
4. Borrowers

Correct answer: The Federal Reserve System

Q2. Zero inflation is bad because

1. Both option A(1) & B (2)
2. It increase risk of deflation
3. It increase the default of loans
4. None of given options

Correct answer: Both option A(1) & B (2)

Q3. If a member of the non-bank public purchases a government bond from the Fed with currency:

1. Reserves will fall
2. Reserves will remain unchanged
3. The monetary base will fall
4. Monetary base will fall and reserves will remain unchanged

Correct answer: The monetary base will fall

Q4. Excess reserve-to-deposit ratio is a factor that affects the quantity of money. This factor is controlled by which of the following?

1. Commercial banks
2. Non bank public
3. Central bank
4. Bank regulators

Correct answer: Commercial banks

Q5. Everything else equal, if the growth rate of a country exceeds its sustainable rate:

1. The central bank is likely to lower the interest rate thinking a slowdown is coming to offset this boom.
2. The central bank will keep interest rates low to keep the momentum
3. The central bank is likely to raise interest rates to slow the rate of growth
4. The central banks will now identify this new rate as the sustainable rate and try to maintain it.

Correct answer: The central bank is likely to raise interest rates to slow the rate of growth

Q6. Which kind of credit by central bank is utilized by the Small agricultural banks to help in managing the cyclical nature of farmers’ loans?

1. Primary credit
2. None of above
3. Seasonal credit
4. Secondary credit

Correct answer: Seasonal credit

Q7. Bank wishes to hold excessive reserves of 7% of deposits, it would keep reserves of 9% of $95,000, what amount will be available for the loans?

1. 86450
2. 79800
3. 89300
4. None of give

Correct answer: 86450

Q8. Cash withdrawal by the general public may effect

1. Composition of balance sheet
2. Size of monetary base
3. None of given
4. Size of balance sheet of SBP

Correct answer: Size of monetary base

Q9. The monetary liabilities of the Federal Reserve include:

1. Government securities and discount loans
2. Currency in circulation and reserves
3. Government securities and reserves
4. Currency in circulation and reserves

Correct answer: Government securities and reserves

Q10. One reason given for more central bankers releasing their decisions publicly is:

1. So that central banks across the world can coordinate their policies
2. To give people time to understand it
3. Most people do not understand monetary policy so it really doesn't do any harm to release the decisions publicly
4. If monetary policy is going to be stabilizing speculation about central bankers decisions should be minimized

Correct answer: If monetary policy is going to be stabilizing speculation about central bankers decisions should be minimized

Q1. When the Fed wants to increase the level of reserves in the banking system, it can:

1. Increase discount loans to banks
2. Buy bonds from the public
3. All of the given options
4. Buy bonds from banks

Correct answer: All of the given options

Q2. Cash become less desirable when ______________.

1. Liquidity falls
2. Riskiness of alternative holdings rises
3. None of the given options
4. Interest rates rise

Correct answer: Interest rates rise

Q3. On the event of purchase of Rs. one billion T-bill by the central bank, the net effect of balance sheet of central bank will be?

1. A & B both possible
2. Its assets and liabilities increase by Rs. 1 billion
3. No effect on monetary base
4. Net effect there is zero

Correct answer: Its assets and liabilities increase by Rs. 1 billion

Q4. The Fed lacks complete control over the money supply because it cannot perfectly predict:

1. Excess reserves held by banks
2. Shifts from deposits to currency
3. Any of the above
4. Discount borrowing by the banks

Correct answer: Any of the above

Q5. Of the four players in the money supply process, most observers agree that in the simple money supply

1. The Federal Reserve System
2. Depositors
3. Borrowers
4. Banks

Correct answer: The Federal Reserve System

Q6. is considered primary job of the central bank?

1. Price stability
2. Stable growth rate
3. Stable exchange rate
4. Financial system stability

Correct answer: Price stability