Open market operations refer to:

B. Buying and selling government securities.

C. Setting reserve requirements.

D. Regulating foreign exchange rates.

Which of the following is TRUE about the reserve requirement?

C. It influences the amount banks can lend.

A. It determines how much gold banks must hold.

B. It is set by commercial banks.

D. It regulates the currency exchange rate.

Legal money derives its value from:

C. International gold reserves.

Personal trusts are primarily used for:

B. Investing family funds for future income.

C. Trading stocks and securities.

The central bank is a key institution in every modern economy. It acts as the government's banker, manages the monetary system, and serves as the lender of last resort. One of its main responsibilities is to regulate the money supply and ensure economic stability. It uses tools like open market operations, reserve requirements, and interest rate adjustments to achieve these goals. Open market operations involve the buying and selling of government securities in the market. For example, during periods of high inflation, the central bank may sell securities to reduce the amount of money in circulation. Conversely, during a recession, the central bank may buy securities to inject liquidity into the economy and encourage spending. Another critical role of the central bank is issuing legal money, which is the currency that people use for daily transactions. Legal money does not have intrinsic value but is accepted because it is declared as legal tender by the government. The central bank also supervises commercial banks to ensure they operate safely and soundly. It holds their reserves, acts as a clearinghouse for interbank payments, and provides technical and advisory support. What is the primary role of the central bank?

B. To regulate the monetary system and issue currency.

A. To collect taxes for the government.

C. To provide loans directly to citizens.

D. To oversee international trade agreements.

The central bank is a key institution in every modern economy. It acts as the government's banker, manages the monetary system, and serves as the lender of last resort. One of its main responsibilities is to regulate the money supply and ensure economic stability. It uses tools like open market operations, reserve requirements, and interest rate adjustments to achieve these goals. Open market operations involve the buying and selling of government securities in the market. For example, during periods of high inflation, the central bank may sell securities to reduce the amount of money in circulation. Conversely, during a recession, the central bank may buy securities to inject liquidity into the economy and encourage spending. Another critical role of the central bank is issuing legal money, which is the currency that people use for daily transactions. Legal money does not have intrinsic value but is accepted because it is declared as legal tender by the government. The central bank also supervises commercial banks to ensure they operate safely and soundly. It holds their reserves, acts as a clearinghouse for interbank payments, and provides technical and advisory support. How does the central bank reduce inflation?

B. By increasing reserve requirements.

C. By buying government securities

D. By increasing the money supply

The central bank is a key institution in every modern economy. It acts as the government's banker, manages the monetary system, and serves as the lender of last resort. One of its main responsibilities is to regulate the money supply and ensure economic stability. It uses tools like open market operations, reserve requirements, and interest rate adjustments to achieve these goals. Open market operations involve the buying and selling of government securities in the market. For example, during periods of high inflation, the central bank may sell securities to reduce the amount of money in circulation. Conversely, during a recession, the central bank may buy securities to inject liquidity into the economy and encourage spending. Another critical role of the central bank is issuing legal money, which is the currency that people use for daily transactions. Legal money does not have intrinsic value but is accepted because it is declared as legal tender by the government. The central bank also supervises commercial banks to ensure they operate safely and soundly. It holds their reserves, acts as a clearinghouse for interbank payments, and provides technical and advisory support. What happens during open market operations?

C. The central bank buys or sells government securities

A. The government increases its spending

B. Commercial banks issue more loans to customers

D. Citizens deposit money into savings accounts

The central bank is a key institution in every modern economy. It acts as the government's banker, manages the monetary system, and serves as the lender of last resort. One of its main responsibilities is to regulate the money supply and ensure economic stability. It uses tools like open market operations, reserve requirements, and interest rate adjustments to achieve these goals. Open market operations involve the buying and selling of government securities in the market. For example, during periods of high inflation, the central bank may sell securities to reduce the amount of money in circulation. Conversely, during a recession, the central bank may buy securities to inject liquidity into the economy and encourage spending. Another critical role of the central bank is issuing legal money, which is the currency that people use for daily transactions. Legal money does not have intrinsic value but is accepted because it is declared as legal tender by the government. The central bank also supervises commercial banks to ensure they operate safely and soundly. It holds their reserves, acts as a clearinghouse for interbank payments, and provides technical and advisory support. What gives legal money its value?

B. Government declaration and public trust

C. Its ability to be exchanged for commodities.

D. Its intrinsic physical characteristics

The central bank is a key institution in every modern economy. It acts as the government's banker, manages the monetary system, and serves as the lender of last resort. One of its main responsibilities is to regulate the money supply and ensure economic stability. It uses tools like open market operations, reserve requirements, and interest rate adjustments to achieve these goals. Open market operations involve the buying and selling of government securities in the market. For example, during periods of high inflation, the central bank may sell securities to reduce the amount of money in circulation. Conversely, during a recession, the central bank may buy securities to inject liquidity into the economy and encourage spending. Another critical role of the central bank is issuing legal money, which is the currency that people use for daily transactions. Legal money does not have intrinsic value but is accepted because it is declared as legal tender by the government. The central bank also supervises commercial banks to ensure they operate safely and soundly. It holds their reserves, acts as a clearinghouse for interbank payments, and provides technical and advisory support. Which function does the central bank perform for commercial banks?

C. Supervising their operations and holding reserves

A. Collecting taxes from customers.

D. Managing their employee payroll

UNIT 6

Quiz

•

English

•

University

•

Practice Problem

•

Medium

Hà Đặng

Used 2+ times

FREE Resource

26 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

What is the primary function of the central bank?

Collect taxes.

Issue the nation’s currency

Provide insurance services

Operate savings institutions

2.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

Which tool is used to regulate the money supply?

Reserve requirement.

Income tax.

International trade agreements

Loan approvals

3.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

What is a share-draft account?

A. An account for government funds.

B. A type of savings account in banks.

C. A version of a checking account provided by credit unions.

D. A corporate investment account.

4.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

Fiat money is also known as:

A. Commodity money.

B. Legal money.

C. Token money

D. Representative money

5.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

What is NOT a function of money?

A. Store of value.

B. Medium of exchange.

C. Inflation regulator.

D. Standard of deferred payment.

6.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

Which of the following is part of the money supply?

A. Treasury bonds.

B. Demand deposits.

C. Gold reserves.

D. Mortgage securities.

7.

MULTIPLE CHOICE QUESTION

10 sec • 10 pts

Who acts as the lender of last resort?

A. Commercial banks.

B. Central bank.

C. Credit unions.

D. Savings institutions.

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UNIT 6

26 questions

What is the primary function of the central bank?

Which tool is used to regulate the money supply?

What is a share-draft account?

Fiat money is also known as:

What is NOT a function of money?

Which of the following is part of the money supply?

Who acts as the lender of last resort?

Which deposit can be withdrawn at any time without notice?

Open market operations refer to:

Which of the following is TRUE about the reserve requirement?

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