Money, Interest Rates And Output

1.If a bank holds surplus reserves available for lending but cannot find borrowers, how will this situation affect the money multiplier?

5.If the central bank buys a government bond from an individual who then deposits the entire payment into their bank account, how will the money supply be affected?

Increase by a value determined by the bank’s reserve requirement ratioIncrease, but by less than the total deposited amountDecrease exactly by the amount deposited, provided the reserve ratio remains constantDecrease exactly by the amount deposited, as long as the reserve ratio is unchangedRemain the same without any change

6.If all banks hold a 100% reserve ratio, what happens to the money supply when a person deposits Rs 1,000 in a bank?

The money supply grows by an amount greater than Rs 1,000The money supply rises by an amount less than Rs 1,000The money supply declines by an amount less than Rs 1,000The money supply decreases by an amount greater than Rs 1,000The money supply remains unchanged

7.What does the refinancing rate refer to?

The rate at which banks lend and borrow funds among themselvesThe interest rate paid by the European Central Bank on bank reservesThe borrowing interest rate charged to the public by banksThe interest rate the European Central Bank imposes on loans provided to banksThe interest rate banks offer on deposits made by the public

8.What is the minimum basis on which central banks require commercial banks to hold reserves?

9.What is the value of the money multiplier when banks maintain a reserve ratio of 20%?

10.Which of the following statements about money is incorrect?

A debit card itself is not money; it simply facilitates the transfer of funds between accounts.All forms of personal wealth, regardless of type, should be classified as money.Funds in your bank's checking account are nearly as accessible for purchases as cash in your wallet, so checking account balances are included in money supply calculations.In a sophisticated economy, distinguishing precisely between assets that qualify as money and those that do not is challenging.

11.Which of the following is an example of fiat currency?

12.What best defines money?

The total worth of all coins and banknotes currently in useAnything widely accepted as a means to facilitate tradeEquivalent to one's earnings or salaryAll the statements mentioned above