monetary Economics - 2025

Which of the following is NOT a component of the money supply?

• 1. a) Currency in circulation
     

• Demand Deposit

• 1. c) Government bond

• Saving Deposit

1. Which of the following factors influences the supply of money?
   
   
   
   

• 1. a) Central bank policies

• 1. b) Public demand for cash

• 1. c) Reserve requirements of banks

• 1. d) All of the above

1. The money multiplier effect is mainly determined by which of the following?
   
   

• 1. a) Interest rates

• 1. b) Reserve ratio

• 1. c) Inflation rate

• 1. d) GDP growth

1. What happens to the money supply when the central bank increases the reserve requirement?

• a) It increases

• b) It decreases

• c) It remains unchanged

• d) It fluctuates randomly

1. Which institution primarily regulates the supply of money in an economy?
   
   
   
   

• 1. a) Commercial banks

• 1. b) Ministry of Finance

• 1. c) Central bank

• 1. d) Stock exchange

The money market deals with long-term financial instruments, while the capital market deals with short-term financial instruments. State true or false

The capital market plays a crucial role in economic development by providing funds for investment in infrastructure and industry.

Treasury bills, commercial papers, and certificates of deposit are commonly traded in the money market.

The _________ market provides short-term funds for liquidity management and working capital needs.

The primary function of the capital market is to facilitate the mobilization of _________ for long-term investment.