QUIZ IN MONETARY POLICY

NAME: _____________________________ DATE: _____________

YR. & SECTION: ___________________

I. MULTIPLE CHOICE. Encircle the Right Answer.

1. _________ What is monetary policy?

a. Central bank controls currency c. Generated by The central bank
b. supply of money and interest rate d. all of the above

2. _________ What is the Purpose of Monetary policy?

a. Functions as fiscal policy c. Economic growth & stability
b. Employment d. none of the above

3. _________ The two basic types of Monetary Policy

a. Expansionary & Contractionary c. Money supply & Tax
b. Interest & Demand d. none of the Above

4. _________ Which of these is NOT true about Expansionary Policy

a. increase level of liquidity c. Tend to tame/limit economic activity
b. increase aggregate demand d. none of the above

5. _______ It is often used synonymously with money.

a. Equipment’s c. Income
b. Wealth d. Health

6. _______ It is generally accepted as a payment for goods and services or in the

repayment of debts.
a. debits c. Supply
b. Money Supply d. Demand

7. _________ Which of these is NOT true about Contractionary Policy?

a. Tend to stimulate economic activity c. higher reserve
increasing interest rates d. Decrease of liquidity

8. _________ During a recession, which of the following is likely to occur?

a. Increase in real wages c. increase in production
b. Increase in GDP rate d. increase in the unemployment rate

9. _________ Is the total collection as pieces of property that serves to store value.
a. Stocks c. Wealth
b. lands d. Bonds
10. _________ Which of the following is not a Monetary Policy tool?
a. Bond Purchases
b. Reserve Requirements
c. Balance Accounts
d. Discount Rate

II. TRUE OR FALSE

1. _______ monetary policy t is how a central bank or agency governs the supply
of money and interests rates in an economy.
2. _______ monetary policy is the macroeconomic policy laid down by the central
bank. It involves management of money supply and interest rate.
3. ___ _____ The primary objective of central banks is to manage inflation.
4. ________ Centrals banks use Expansionary monetary policy to reduce inflation.
5. ________ Contractionary monetary policy is use to lower unemployment and
avoid recession.
6. ________ Higher interest rates, increase in the reserve equipment and higher
taxes are all examples of Contractionary Policy.
7. _______ Monetary policy is the use of interest rates by the central bank to keep
the economy stable.
8. ________ If the money supply increases, and the price level is unchanged,
interest rates will fall.
9. ________ Balance Accounts is one of the monetary policy tool.
10. ________ M1 or Narrow Money is consists of currency in circulation or
currency outside depository corporations and peso demand deposits.
 ANSWERS:
I. MULTIPLE CHOICE

1. D
2. C
3. A
4. C
5. B or C
6. B
7. A
8. D
9. C
10. B

II. TRUE OF FALSE.

1. T
2. T
3. T
4. F
5. F
6. T
7. T
8. T
9. F
10. T