(A) The central bank buying foreign currency in the foreign exchange market
(B) redemption of central bank liquidity paper
(C) build-up of commercial banks’ deposits held with the central bank
(D) decrease in the central bank discount rate
Category: Economics Mcqs
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When economists speak of the ‘demand for money,’ which of the following questions are they asking?
(A) How much cash do you wish you could have?
(B) How much wealth would you like?
(C) How much income would you like to earn?
(D) What proportion of your financial assets do you want to hold in non-interest bearing
forms?
The quantity of money demanded increases with income. Thus if income increases, the opportunity cost of holding money must go up in order to reduce money demand and re-establish equilibrium in the money market. This relation is captured by:
(A) an upward sloping LM curve.
(B) a downward sloping L curve.
(C) a downward sloping IS curve.
(D) the circular flow of money in the economy.
A bank has excess liquidity reserves to lend but is unable to find a willing borrower. This will __ the size of the money multiplier.
(A) reduce
(B) increase
(C) have no effect on
(D) double
Which of the following activities is one of the responsibilities of the State Bank of Pakistan?
(A) Monitoring the financial health of banks and non-bank financial insitutions.
(B) Auditing the various agencies and departments of the government.
(C) Issuing bonds on international capital markets to finance the fiscal deficit.
(D) Loaning money to other countries that are friendly to Pakistan.
A checking deposit (or current account) held at a commercial bank is considered __ of that bank.
(A) an asset.
(B) net worth.
(C) a liability.
(D) capital.
An item designated as money that is intrinsically worthless could be?
(A) a currency note.
(B) a silver coin.
(C) a barter item.
(D) any tradeable commodity.
If the State Bank of Pakistan wished to pursue a ‘tight’ monetary policy, it would?
(A) lower the required reserve ratio and the statutory liquidity ratio.
(B) lower interest rates.
(C) buy government securities on the open market.
(D) sell government securities on the open market.