Starter quiz for monetary policy

Monetary policy refers to the actions and measures implemented by a central bank or monetary authority to control and manage the money supply, interest rates, and exchange rates in an economy.

• True

• False

The money supply refers to the total amount of money available in an economy at a given time. It includes physical currency (banknotes and coins) in circulation and various types of deposits held by individuals, businesses, and financial institutions.

• True

• False

Appreciation of a currency refers to an increase in the value or exchange rate of a country's currency relative to other currencies.

• True

• False

Depreciation of a currency refers to a decrease in the value or exchange rate of a country's currency relative to other currencies.

• True

• False

Monetary policy is a

• Supply side policy

• Demand side policy

• none

Monetary policy is used to influence the total demand in an economy

• true

• false

During high inflation, on behalf of government the central bank through Monetary Policy will decrease the total demand by

• Increasing the interest rate

• Decreasing the interest rate

During low economic growth, on behalf of government the central bank through Monetary Policy will increase the total demand by

• Decreasing the interest rate

• Increasing the interest rate

What would be most likely to encourage saving?

• a rise in the exchange rate

• a rise in the goods and services tax rate

• a rise in the income tax rate

• a rise in the interest rate