MGT411 Book MCQs 29

MGT411 MCQs from Money, Banking and Financial Markets

MGT411 MCQs from Money, Banking and Financial

Q1. The central bank in the United States is:

1. the Bank of America.
2. theU.S. Treasury.
3. the Federal Reserve.
4. the Bank of TheUnited States.

Correct answer: the Federal Reserve.

Feedback:

LOD: 1

Q2. Many governments give their central bank control over issuing currency because:

1. the only way to distribute currency to banks is through the central bank.
2. having large amounts of currency can lead to lower rates of inflation.
3. central banks use the profits from issuing currency to finance their operations.
4. printing currency can be profitable for a government, so government officials may have a strong incentive to print too much.

Correct answer: printing currency can be profitable for a government, so government officials may have a strong incentive to print too much.

Feedback:

LOD: 1

Q3. Monetary policy in the United States is under the control of the:

1. Federal Reserve.
2. President.

Correct answer: Federal Reserve.

C)U. S. Treasury.

D)U.S. Senate.

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LOD: 1

Q4. Central banksperform each of the following EXCEPT:

1. issuing currency.
2. serving as the government's bank.
3. controlling the availability of money and credit.
4. managing fiscal policy.

Correct answer: managing fiscal policy.

Feedback:

LOD: 3

Q5. A central bank typically:

1. facilitates interbank payments.
2. controls the money supply.
3. has a monopoly in printing currency.
4. All of the above are correct.

Correct answer: All of the above are correct.

Feedback:

LOD: 1

Q6. The specific goals of central banks include each of the following EXCEPT:

1. high and stable real growth.
2. low and stable inflation.
3. high levels of imports.
4. low and stable unemployment rates.

Correct answer: high levels of imports.

Feedback:

LOD: 1

Q7. If prices are not stable:

1. money performs better as a unit of account.
2. money becomes less useful as a store of value.
3. it may be an inconvenience, but resources are still allocated efficiently.
4. None above given

Correct answer: money becomes less useful as a store of value.

Feedback:

LOD: 2

Q8. Low and stable inflation implies:

1. that the rate of inflation averaged over many years is zero (0).
2. low rates of economic growth.