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WorksheetsTài Chính Tiền Tệ K27CLC-NHC
Total questions: 220
Worksheet time: 4hrs 40mins
Direct finance occurs when funds flow:
Through financial intermediaries
Directly from savers to borrowers
Through government only
Through insurance companies
In direct finance, financial instruments are issued in:
Financial intermediaries
Financial firms only
Financial markets
Government agencies
Indirect finance occurs when:
Savers lend directly to borrowers
Firms issue bonds directly to households
Intermediaries stand between savers and borrowers
No financial instruments are created
Which is a financial intermediary?
Stock exchange
Commercial bank
Bond market
Currency market
Which is an example of direct finance?
Taking a bank loan
Selling a bond to investors
Depositing money in a bank
Borrowing through a credit union
Financial intermediaries reduce:
Market transparency
Transaction costs
Market access
Liquidity
What is the main goal of central banks?
Maximize bank profits
Maintain financial stability
Issue corporate bonds
Set stock prices
Asymmetric information occurs when:
All parties have equal information
One party has more information than the other
Markets are perfectly competitive
Government regulates interest rates
Adverse selection occurs:
After a transaction
Before a transaction when risky borrowers seek loans
Only in stock markets
Only due to high interest rates
Which tool reduces adverse selection?
Deposit insurance
Open market operations
Credit screening / credit scoring
Lowering reserve requirements
Moral hazard occurs when:
Borrowers are screened before borrowing
Borrowers take more risk after receiving funds
Markets issue too many securities
Central banks tighten regulations
Deposit insurance may cause moral hazard because:
It reduces liquidity
It increases transaction costs
Banks may take more risk knowing deposits are protected
It forces banks to raise capital
A bank-based financial system relies mainly on:
Bond markets
Stock markets
Banks for financing firms
Foreign investors
A market-based financial system relies mainly on:
Commercial banks
Credit unions
Stock and bond markets
Government spending
Market-based systems are generally better at:
Financing only large corporations
Reducing stock price volatility
Financing innovative and high-risk firms
Eliminating adverse selection
Which of the following is not a function of money?
Medium of exchange
Unit of account
Store of value
Production of goods
What is commodity money?
Government-issued money
Money with intrinsic value
Digital currency
Borrowed money
Why does fiat money have value?
Backed by gold
Declared legal by the government
Has intrinsic worth
Scarce in nature
Which characteristic is essential for good money?
Easily spoiled
Hard to divide
Portable
Easy to counterfeit
What is the main problem with the barter system?
Lack of goods
Double coincidence of wants
High inflation
Easy to use
What does M1 include?
Savings deposits
Cash + demand deposits
Bonds
Gold
What increases the money supply?
Higher taxes
More bank lending
Higher reserve requirement
Reduced lending
If the central bank sells government securities, the money supply will:
Increase
Decrease
Stay the same
Become unstable
The exchange rate is defined as:
The interest rate of foreign banks
The price of one currency in terms of another
The difference between imports and exports
The government’s tax rate on foreign goods
What is digital money?
Exists only electronically
Paper currency
Gold coins
Counterfeit money
How do commercial banks create money?
Printing money
Making loans → creating deposits
Selling gold
Raising interest rates
Which of the following is a function of money?
Providing loans
Unit of account
Regulating markets
Issuing bonds
A money market instrument typically has:
Long-term maturity
Low liquidity
High risk
Short-term maturity
What is the velocity of money?
Speed of printing money
How fast money circulates in the economy
The interest rate
GDP growth rate
Hyperinflation occurs when:
Population grows
Money is printed excessively
Cash is limited
Gold price rises
Which of the following definitions best describes Public Finance?
The activity of managing money for state-owned enterprises.
The study of the management of assets, revenues, and expenditures of the government and quasi-government entities.
The management of private investment funds for the public interest.
The study of the monetary policy of the central bank.
What is one of the functions of Public Finance?
Ensuring the mobilization of capital for listed companies.
Ensuring the existence and operation of the state apparatus (government).
Adjusting the prices of goods and services in the market.
Providing credit to small and medium enterprises.
Which characteristic is NOT a feature of Public Finance?
Associated with public ownership.
Social benefits, non-profit.
Performance efficiency can be directly evaluated by profit.
Wide operation scope.
Public Finance is classified by operation and management into which main areas?
Taxes, Public Expenditure, Public Debt.
Public Revenues, Public Expenditure, Public Debts.
State Budget, Financial Markets, Monetary Policy.
Fiscal Policy, Monetary Policy, Trade Policy.
What does Fiscal Policy primarily deal with?
Controlling the money supply and interest rates.
Managing the government's public revenues and public expenditures.
Adjusting the exchange rate.
Supervising the operations of commercial banks.
The process of public financial management includes which steps?
Allocation, Control, Evaluation.
Mobilization, Allocation, Control.
Planning, Execution, Negotiation.
Definition, Classification, Functions.
Which of the following best describes the purpose of expansionary fiscal policy?
To reduce aggregate demand by raising taxes and cutting government spending
To increase aggregate demand by lowering taxes and increasing government spending
To stabilize the exchange rate through foreign currency interventions
To increase interest rates through bond sales
What is the Macro regulation function of Public Finance?
Adjusting the purchasing behavior of individuals.
Managing the government's public revenues and expenditures.
Regulating the money supply and interest rates.
Adjusting the overall level of economic activity.
Where is the public benefit (Social benefits) of Public Finance demonstrated?
Ensuring citizens do not have to pay taxes.
Providing public goods and services such as education, healthcare, and national defense.
Enhancing the competitiveness of private enterprises.
Financially supporting private cultural events.
Public Finance has a wide operation scope because
It only relates to central government levels.
It only focuses on infrastructure projects.
It involves the revenue, expenditure, and resource allocation at all levels (central, local) and in all sectors (economic, social, defense).
It is limited to managing foreign debt.
The income of the government from all sources is called what?
Investment capital.
Public debt.
Public revenue.
National income.
Public revenue is classified into which main types?
Taxes and Fees.
Tax revenue and Non-tax revenue.
Direct investment and Indirect investment.
Direct tax and Indirect tax.
The "Unrequited and uncompensated" nature of a Tax is demonstrated by:
The government must return tax money when citizens request it.
The amount of tax paid does not directly correspond to the specific benefit/service received by the taxpayer.
Taxes only apply to the poor.
Taxes are fully refunded at the end of the year.
Which example below belongs to Non-tax revenue?
Personal income tax.
Interest receipts, Dividends, Revenue from the sale of public goods and services.
Value Added Tax (VAT).
Export and import duties.
Non-tax revenue is recurring income from sources except:
Interest receipts.
Foreign loans/debt.
Dividends or profit.
Fines and Fees.
Public expenditure refers to the government's spending on which area?
Investing in the stock market.
Purchasing goods, services, and providing public services such as education, social security, and national defense.
Lending to non-governmental organizations.
Repaying private company debts.
Public expenditures are classified into which main types?
Current expenditures and Investment expenditures.
Tax expenditures and Non-tax expenditures.
Domestic and Foreign expenditures.
Mandatory and Discretionary expenditures.
Which of the following are the two main types of government expenditures?
Domestic expenditures and Foreign expenditures.
Central expenditures and Local expenditures.
Revenue expenditures and Capital expenditures.
Mandatory expenditures and Discretionary expenditures.
What are Revenue expenditures?
Spending on major construction projects.
Spending on the regular operation of the state apparatus, e.g., salaries, maintenance, purchasing supplies.
Spending to repay the principal amount of debt.
Spending to purchase stocks.
What are Capital expenditures?
Spending to repay short-term loans.
Spending on purchasing assets, increasing the government's future production/service capacity, e.g., building schools, roads.
Spending on monthly social welfare subsidies.
Spending to pay fines.
What is the definition of Budget balance?
The difference between the government's total income and the income of state-owned companies.
The difference between the government's total revenues and spending over a fiscal period.
The total public debt.
The total assets of the nation.
A Government Budget Deficit occurs when:
The government's revenue exceeds its expenditure.
The government's spending exceeds its revenue.
The total foreign debt increases.
Revenue expenditure equals capital expenditure.
What is Deficit Financing?
The management of government revenue.
The process of funding government expenditure by borrowing or printing money when expenditure exceeds revenue.
The reduction of government debt.
The allocation of funds to capital projects only.
How is the budget deficit financed? The circled ways of financing are what?
Taxing, Borrowing, Monetizing, Reduce government expenditure.
Increasing interest rates, Printing money, Selling assets, Increasing taxes.
Income tax, VAT, Special consumption tax.
Borrowing from IMF, Borrowing from World Bank, Borrowing from foreign governments.
Among the deficit financing methods, which method involves selling government bonds to the public or banks?
Taxing.
Monetizing (Printing money).
Borrowing.
Reducing expenditure.
What negative consequence can result from the "Monetizing" (Printing money) method to finance a budget deficit?
Deflation.
Sustainable economic growth.
Inflation.
Reduced public debt.
If the government decides to "Reduce government expenditure" to solve the deficit, this may affect:
Aggregate demand and economic growth.
The exchange rate.
Short-term interest rates.
The money supply.
Which of the following is an example of a fiscal policy tool?
Adjusting the policy interest rate
Changing reserve requirements for commercial banks
Conducting open market operations
Altering government spending and taxation levels
A government budget deficit occurs when:
Government revenue equals government expenditure
Government expenditure is higher than government revenue
Government revenue is higher than government expenditure
Government borrows from the central bank
If a government decides to use "Taxing" to finance a deficit, what does this mean?
The government borrows more from the central bank.
The government issues more bonds.
The government increases existing taxes or creates new taxes.
The government sells public assets.
What is the primary goal of corporate finance?
To minimize corporate taxes
To maximize total revenue
To maximize the value of the existing owners' equity
To maximize the current year's profit
Which of the following best describes Capital Budgeting?
Managing the firm's day-to-day cash flows
The process of planning and managing a firm's long-term investments
Deciding on the mixture of debt and equity
Determining the dividend payout ratio
Net Working Capital is defined as:
Fixed Assets minus Long-term Debt
Current Assets minus Current Liabilities
Total Assets minus Total Liabilities
Equity plus Long-term Debt
Which area of corporate finance answers the question: 'Where will the firm get the long-term financing to pay for its investments?'
Working Capital Management
Capital Structure
Dividend Policy
Capital Budgeting
In an Income Statement, what is the 'bottom line'?
Total Revenue
EBIT (Earnings Before Interest and Taxes)
Operating Income
Net Income
Which of the following is considered a 'Current Asset'?
Factory building
Inventory
Machinery
Patents
What distinguishes a stock dividend from a cash dividend?
A stock dividend is paid to bondholders.
A stock dividend increases the value of each share.
A stock dividend involves cash leaving the firm.
A stock dividend is not a true dividend because no cash leaves the firm.
Which financial statement is described as a 'video recording' of what people did between two snapshots?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
Holders of which instrument are considered the owners of the corporation?
A. Debentures
B. Bank Loans
C. Equity (Stock)
D. Bonds
The difference between current assets and fixed assets generally relates to:
A. The currency they are valued in
B. The time length of their life or liquidity
C. The tax rate applied
D. The source of funding
Which of the following is a technique used in Capital Budgeting?
A. Net Working Capital (NWC)
B. Earnings Per Share (EPS)
C. Net Present Value (NPV)
D. Debt-to-Equity Ratio
Interest expense is typically classified under which section of the Income Statement?
A. Retained Earnings
B. Operating section
C. Nonoperating section
D. Cost of Goods Sold
Short-term financial decisions typically involve cash flows that occur within:
Five years
A year
A decade
Ten years
Which of the following represents the correct order in an Income Statement?
Taxes -> Revenues -> EBIT -> Net Income
Net Income -> Revenues -> Expenses
Revenues -> Net Income -> Expenses -> Taxes
Revenues -> Expenses -> EBIT -> Taxes -> Net Income
When a firm uses cash to buy back shares of its own stock, this is called:
Stock repurchase
Stock split
Stock dividend
Initial Public Offering (IPO)
Which of the following is NOT a main area of corporate finance?
Marketing Management
Working Capital Management
Capital Structure
Capital Budgeting
Bonds represent which type of financing?
Debt financing
Equity financing
Venture capital
Preferred stock
Tangible fixed assets include:
Copyrights
Machinery and Equipment
Trademarks
Goodwill
If Revenue is less than Expenses, the company has a:
Positive Cash Flow
High Dividend
Net Income
Net Loss
What is the payment made to bondholders called?
Retained Earning
Dividend
Capital Gain
Coupon (Interest)
Which formula correctly represents the balance sheet identity?
Assets = Liabilities + Equity
Assets = Liabilities - Equity
Equity = Assets + Liabilities
Liabilities = Assets + Equity
Working Capital Management involves managing:
Building a new factory
Everyday financial activities
Long-term bond issuance
Mergers and Acquisitions only
Financial managers prefer capital budgeting techniques that:
Consider cash flow and the time value of money
Focus solely on accounting profit
Ignore risk
Ignore the time value of money
Depreciation is included in which expense category on the income statement?
Operating expenses
Interest expenses
Dividends
Tax expenses
If a firm has Current Assets of $100 and Current Liabilities of $70, what is its Net Working Capital?
$170
-$30
$100
$30
The decision to issue new stock to raise funds falls under:
Capital Structure
Working Capital Management
Asset Classification
Capital Budgeting
Which of the following statements about liability is true?
Bondholders are the owners of the firm.
Dividends are a liability that must be paid.
Shareholders are liable for all company debts.
Liabilities represent the firm's debts and obligations.
Why is 'Profit Maximization' not the ideal goal for a firm?
It is illegal.
Shareholders do not care about profit.
It ignores the timing of returns and risk.
It is impossible to calculate.
Which of the following best describes the primary market?
A market where securities are traded among investors.
A market where new securities are issued and sold to initial buyers.
A market for short-term debt instruments only.
A market that provides liquidity to previously issued securities.
Which financial market deals with instruments that have an initial maturity of one year or less?
Capital market.
Equity market.
Money market.
Primary market.
According to the Fisher Effect, if the nominal interest rate is 8% and expected inflation is 3%, what is the real interest rate?
2%
3%
5%
11%
Simple interest is calculated based on:
Principal and accumulated interest.
Principal only.
Market yield.
Coupon payments.
Which of the following is TRUE about compound interest?
Interest is calculated only on the principal.
Interest is added to the principal, earning interest on interest.
The future value is always lower than under simple interest.
It applies only to discount bonds.
Which statement best describes Yield to Maturity (YTM)?
It is the coupon rate of the bond.
It is the interest rate that makes the present value of cash flows equal to the bond’s price.
It is the current yield.
It is always higher than the coupon rate.
Under the Loanable Funds Theory, an increase in expected inflation will:
Shift the supply of loanable funds right.
Shift the demand for loanable funds left.
Shift the demand for loanable funds right.
Have no effect on loan markets.
A bank offers a nominal interest rate of 12% per year, compounded quarterly. What is the effective annual interest rate (EIR)?
12.00%
12.55%
13.00%
13.43%
A bond has a face value of 10 million VND and a compound interest rate of 10% per year. How much will it be worth after 5 years?
15.76 million.
14.50 million.
16.11 million.
12.00 million.
Which of the following financial instruments is traded in the Capital Market?
Treasury Bills (T-Bills)
Commercial Paper
Corporate Bonds
Certificates of Deposit (CDs)
What is the primary function of the Secondary Market?
To help corporations acquire new funds.
To issue new securities to initial buyers.
To provide liquidity to financial instruments (making them easier to sell).
To set the initial par value of a bond.
Which type of loan requires the borrower to make the same payment every period (consisting of part of the principal and interest) until maturity?
Simple Loan
Discount Bond
Fixed Payment Loan
Coupon Bond
The "Effective Interest Rate" (ief) differs from the nominal interest rate because it accounts for:
A. The expected rate of inflation.
B. The risk premium of the borrower.
C. The compounding of interest within the time period.
D. The liquidity of the asset.
If a coupon bond is currently trading at a price higher than its face value, how does the Yield to Maturity (YTM) compare to the Coupon Rate?
A. YTM is equal to the Coupon Rate.
B. YTM is lower than the Coupon Rate.
C. YTM is higher than the Coupon Rate.
D. There is no relationship between them.
According to the Loanable Funds Theory, which factor would cause the Supply of Loanable Funds curve to shift to the right?
A. An increase in the wealth of individuals.
B. An increase in the government budget deficit.
C. An increase in expected inflation.
D. A decrease in the expected return of bonds.
The Rate of Return (RET) on a bond is calculated as the sum of the current yield (coupon/price) and:
A. The yield to maturity.
B. The inflation rate.
C. The rate of capital gain (or loss).
D. The face value.
According to the Liquidity Preference Theory, an increase in the income level of the economy will cause:
A. The money demand curve to shift to the right.
B. The money demand curve to shift to the left.
C. The money supply curve to shift to the right.
D. The interest rate to decrease.
You bought a bond with a 10% coupon rate and a face value of $1,000 for a price of $1,000. One year later, you sold it for $1,100. What is your Rate of Return (RET)?
A. 10%
B. 15%
C. 20%
D. 110%
A discount bond with a face value of $1,000 matures in one year. If the bond is currently bought for $900, what is the yield to maturity (YTM)?
A. 10.00%
B. 11.11%
C. 12.50%
D. 90.00%
If the Yield Curve is inverted, what is this typically considered a sign of according to the Expectations Theory?
A. The market expects short-term interest rates to rise in the future.
B. The market expects an economic recession.
C. Long-term bonds have higher liquidity risk than short-term bonds.
D. Long-term interest rates are always lower than short-term interest rates.
Which of the following financial instruments, traded in the Money Market, is considered to have the lowest credit risk?
A. Commercial Paper.
B. Certificates of Deposit (CDs).
C. Treasury Bills (T-Bills).
D. Repurchase Agreement (Repo).
What type of interest is received by a depositor when interest is calculated only on the original principal amount over the years?
A. Effective Interest Rate.
B. Yield to Maturity.
C. Real Interest Rate.
D. Simple Interest.
Which market trades financial instruments with a maturity period of more than one year?
A. Money Market.
B. Primary Market.
C. Capital Market.
D. Foreign Exchange Market
Which of the following factors constitutes the Nominal Interest Rate according to the Fisher Effect?
A. Rate of Return and Tax.
B. Coupon rate and Current Yield.
C. Real Interest Rate and Expected Inflation.
D. Money Supply and Money Demand.
Certificates of Deposit (CDs) are primarily issued by which type of institution?
A. Government.
B. Large corporations.
C. Commercial banks.
D. Insurance companies.
"Which of the following markets is not considered a component of the Financial Markets based on its fundamental role?"
A. Money Market
B. Labor Market
C. Stock Market
D. Bond Market
When you buy common stock in a company, what type of asset are you holding?
A. Equity Instrument.
B. Short-term Debt Instrument.
C. Simple Loan Contract.
D. Derivative.
Which of the following financial instruments is a typical example of a Debt Instrument?
A. Common Stock.
B. Bond.
C. Call Option.
D. Futures Contract.
"If a bond has a Face Value of $1,000, a coupon rate of 5% paid annually, what is the Present Value (PV) of the Face Value payment only if the discount rate (Yield to Maturity) is 6% and the time to maturity is 1 year?"
A. $945.00
B. $1,000.00
C. $50.00
D. $943.40
Which financial institution is classified as a deposit institution?
A. Insurance company
B. Commercial bank
C. Mutual fund
D. Stock exchange
Contractual savings institutions include which of the following?
A. Investment bank
B. Life insurance company
C. Money market mutual fund
D. Credit union
Investment intermediaries include which of the following?
A. Pension fund
B. Mutual fund
C. Mutual savings bank
D. Stock exchange
What is the definition of banks?
A. Financial institutions that only invest in securities
B. Financial intermediaries that accept deposits and make loans
C. Institutions that only provide insurance services
D. Stock exchanges
Types of banks include which of the following?
A. Commercial bank
B. Hedge fund
C. Stock exchange
D. Fire and casualty insurance company
For commercial banks, what is the core activity?
A. Only investing in securities
B. Deposits and loans
C. Only providing insurance
D. Managing pension funds
Why are bank deposits considered as money and banks subject to strict regulation?
A. Because they do not affect monetary policy
B. Because a bank failure can have serious effects
C. Because they are only bank assets
D. Because they are not related to liabilities
In the balance sheet of a commercial bank, what is the primary source of funds?
A. Non-transaction deposits
B. Fixed assets
C. Loans
D. Reserves at the central bank
Assets of a commercial bank include which of the following?
A. Checkable deposits
B. Loans
C. Bank capital
D. Borrowings from other banks
Most bank profits come from which activity?
A. Cash reserves
B. Loans
C. Issuing stocks
D. Purchasing real estate
In the income statement of a commercial bank, what is net interest income?
A. Interest income minus interest expense
B. Fees and commissions income
C. Net trading income
D. Staff and administrative costs
Savings and Loan Associations (S&Ls) specialize in which type of lending?
A. Consumer loans
B. Mortgage loans
C. Business loans
D. Short-term loans
How do mutual savings banks differ from S&Ls?
A. They do not accept deposits
B. They are structured as "mutuals"
C. They only make consumer loans
D. They have no deposit sources
Credit unions serve which group?
A. Large companies
B. Small groups such as union members
C. International organizations
D. Central banks
How do contractual savings institutions raise funds?
A. By selling stocks
B. At periodic or regular intervals on a contractual basis
C. By making loans
D. By trading securities
How do insurance companies perform the intermediation function?
A. By accepting deposits
B. By collecting premiums and investing in the capital markets
C. By making mortgage loans
D. By managing pension funds
Pension funds receive contributions from whom?
A. Only from the government
B. From employees of companies and governments
C. From banks
D. From individual investors
Finance companies specialize in lending to which entities?
A. Only to the government
B. Individuals and high-risk businesses
C. Only to banks
D. International organizations
What do mutual funds allow investors to do?
A. Pool funds to invest in a diversified portfolio
B. Only invest in short-term securities
C. Only make consumer loans
D. Manage pension funds
What is an advantage of mutual funds?
A. Higher risk than direct investment
B. Reduced transaction costs and risk through diversification
C. Only for large investors
D. No professional management
How does a funded pension system differ from an unfunded one?
A. No risk
B. Contributions are invested in financial assets
C. Only applies to the private sector
D. No returns
Money market mutual funds combine features of what?
A. Banks and insurance companies
B. Investment funds and deposit institutions
C. Exchanges and hedge funds
D. Pension funds and investment banks
How do hedge funds differ from regular mutual funds?
A. Only for small investors
B. Allowed to short-sell and trade derivatives
C. No risk
D. Highly transparent
Investment banks mainly work with which clients?
A. Retail individual customers
B. Companies and large institutions
C. Pension funds
D. Credit unions
Main activities of investment banks include what?
A. Accepting deposits
B. Financial advisory and underwriting securities
C. Mortgage lending
D. Managing pension funds
How do securities brokers (brokers) differ from dealers?
A. Brokers hold securities
B. Dealers only connect buyers and sellers
C. Brokers earn from price spreads
D. Dealers bear no risk
Organized exchanges combine which types of markets?
A. Only auction markets
B. Auction markets and dealer markets
C. Only dealer markets
D. Money markets
What is the maturity transformation function of financial institutions?
A. Raising long-term deposits and making short-term loans
B. Raising short-term deposits and making long-term loans
C. Only risk transformation
D. Only liquidity provision
What problem does the size transformation function solve?
A. Pooling small deposits to make large loans
B. Converting high risk to low risk
C. Providing short-term liquidity
D. Investing in securities
What is the liquidity provision function of financial institutions?
A. Maintaining a large number of depositors to cover withdrawals
B. Only making long-term loans
C. Risk transformation
D. Issuing stocks
Which of the following best describes money demand (MD)?
A. The total amount of money created by the central bank.
B. The desire of people to hold wealth in the form of money instead of other assets.
C. The amount of currency held only by commercial banks.
D. The total deposits in the banking system.
According to the money multiplier framework, the money supply is negatively related to which of the following?
A. Monetary base
B. Required reserve ratio
C. Loans to financial institutions
D. Government securities held by banks
If people suddenly choose to hold a larger share of their wealth as currency rather than deposits, what happens to the money multiplier?
A. It increases because banks have more reserves.
B. It decreases because deposit creation falls.
C. It remains unchanged because MB is constant.
D. It increases because the central bank must supply more reserves.
Which of the following is included in the monetary base (MB)?
A. Time deposits
B. Bank reserves and currency in circulation
C. Government bonds
D. Checkable deposits
A Treasury bond has a current price of VND 100,000 and pays a fixed yield of VND 10,000 after one year. You expect the bond to be sold on the market for VND 90,000 after one year. What is the expected rate of return on the bond?
A. –10%
B. 0%
C. 10%
D. 20%
Which of the following best defines inflation?
A. A persistent fall in the general price level
B. A one-time increase in the price of a single good
C. A rise in the general level of prices over time
D. An increase in real GDP
Which of the following is NOT a common measure of inflation?
A. Consumer Price Index (CPI)
B. Producer Price Index (PPI)
C. GDP Deflator
D. Required Reserve Ratio
Which situation would most likely cause demand-pull inflation?
A. A sudden increase in production costs
B. A decrease in aggregate demand
C. A shift of the AD curve to the right due to rising consumer spending
D. A technological shock lowering production capacity
Which of the following can lead to cost-push inflation
A. Decrease in money supply
B. Increase in consumer demand
C. Rise in production costs such as wages or raw materials
D. Higher imports
Suppose the monetary base (MB) of an economy is 900,000 billion VND. The required reserve ratio is 8%.
The currency–deposit ratio (C/D) is 0.25. What is the approximate value of the money multiplier?
A. 2.5
B. 3.7
C. 4.8
D. 6.2
What happens when the central bank increases the money supply in an economy?
A. Interest rates rise
B.Inflation decreases
C.Aggregate demand increases
D.Investment falls
In the Quantity Theory of Money (MV = PY), if velocity decreases while the money supply remains constant, what must occur for the price level to remain stable?
A. Real output must decrease
B. Real output must increase
C. Prices must rise
D. The money supply must decrease
On a commercial bank’s balance sheet, required reserves held at the Central Bank are recorded as:
A. Assets
B. Liabilities
C. Equity
D. Not recorded
Which of the following best describes the Fisher effect?
A. Nominal interest rates rise one-for-one with expected inflation
B. Real interest rates rise when nominal rates fall
C. Money demand decreases when inflation rises
D. Supply of money has no effect on interest rates
When the Central Bank conducts open market sales of government securities, what is the most likely effect on the economy?
A. Money supply increases
B. Money supply decreases
C. Commercial banks’ reserves increase
D. Market interest rates fall
According to money demand theory, when interest rates increase, the amount of money people want to hold for speculative purposes will:
A. Increase
B. Stay the same
C. Decrease
D. Become unpredictable
An economy currently has an inflation rate of 10% per year. The central bank plans to reduce the growth rate of the money supply from 12% to 5% per year. According to the Quantity Theory of Money, what is the expected trend of inflation in the short run and long run?
A. Inflation will immediately fall to 5% in the short run and remain at 5% in the long run.
B. Inflation may decrease gradually in the short run and approach 5% in the long run.
C. Inflation will stay at 10% in the short run and increase in the long run.
D. Inflation will immediately drop below 5% in the short run and stabilize at 10% in the long run.
Which factor primarily affects the demand for money in an economy?
A. Fiscal deficit
B. Interest rates and income
C. Exchange rates
D. Government debt
If the central bank permanently increases the money supply growth rate, what is the long-run effect on real GDP according to classical theory?
A. Real GDP increases permanently
B. Real GDP decreases permanently
C. Real GDP returns to its natural level; only price level rises
D. Real GDP becomes unpredictable
If the velocity of money falls while M is constant, the price level P:
A. Increases
B. Decreases
C. Stays the same
D. Becomes unpredictable
On the simplified Balance Sheet of the Central Bank, Currency in Circulation is recorded as:
A. An asset
B. A liability
C. Equity
D. Not recorded
Assume the Central Bank sets the required reserve ratio (rr) at 10%. Commercial banks decide to hold an excess reserve ratio (e) of 5%. The public holds currency equal to 25% of their deposits (currency ratio c = 0.25).
If the Monetary Base (MB) is 100 trillion VND, what is the total Money Supply (MS)?
A. 250 trillion VND
B. 312.5 trillion VND
C. 400 trillion VND
D. 500 trillion VND
In the context of Vietnam's banking system, the M1 measure of money supply consists of:
A. Currency in Circulation and Time Deposits
B. Currency in Circulation and Checkable Bank Deposits
C. Currency in Circulation and Bank Certificates of Deposits
D. All types of bank deposits
Which component is included in the broad measure M2 but is NOT included in the narrow measure M1?
A. Currency in circulation
B. Checkable bank deposits
C. Time Deposits and Saving Deposits
D. Vault cash
According to the definition of Money Demand, why do people choose to hold money despite it earning little or no interest compared to other assets?
A. Because holding money is the best way to increase wealth during high inflation
B. Because money provides liquidity, making it easier to conduct transactions
C. Because money is riskier than bonds or stocks
D. Because the Central Bank requires individuals to hold a minimum amount of cash
Which of the following actions by the Central Bank would directly INCREASE the Monetary Base?
A. Selling government securities in the open market
B. Increasing the required reserve ratio for commercial banks
C. Lending money to financial institutions or the government
D. Selling foreign currency reserves to buy domestic currency
According to the factors affecting money supply, the relationship between the Monetary Base and Money Supply is:
A. Negatively related
B. Positively related
C. Unrelated
D. Inverse relationship
If the Central Bank increases the required reserve ratio rr, the Money Supply will generally:
A. Increase
B. Decrease
C. Stay the same
D. Fluctuate More
If the Monetary Base (MB) is 200 billion and the Money Multiplier (m) is 3
What is the total Money Supply (MS)?
A. 66 billion
B. 203 billion
C. 500 billion
D. 600 billion
Inflation is best defined as:
A. A rise in the price of a specific good like oil
B. A rise in the general level of prices of goods and services over a period of time
C. A decrease in the purchasing power of money due to deflation
D. An increase in the money supply
Which of the following tools is NOT mentioned in the slides as a method to measure inflation?
A. Consumer Price Index CPI
B. Producer Price Index PPI
C. GDP Deflator
D. Stock Market Index
Demand-pull inflation is graphically illustrated by:
A. A shift of the Aggregate Supply curve to the left
B. A shift of the Aggregate Demand curve to the right
C. An increase in production costs
D. A decrease in consumer spending
Cost-push inflation is caused by a decrease in supply, often due to:
A. Rising costs of inputs like energy and raw materials
B. Higher government spending
C. Lower interest rates
D. Increased consumer confidence
The term shoe-leather costs refers to:
A. The cost of printing new price tags
B. The extra time and effort spent transacting to avoid holding depreciating cash
C. The distortion of tax liabilities
D. The rise in the price of shoes
The physical resources needed to adjust prices, such as printing new catalogs or menus, are known as:
A. Menu costs
B. Purchasing power loss
C. Transaction costs
D. Redistribution costs
Unanticipated inflation generally transfers wealth from:
A. Borrowers to lenders
B. Lenders to borrowers
C. The government to taxpayers
Which equation correctly represents the link between Money Supply, the Multiplier, and the Monetary Base?
A. MS equals m plus MB
B. MS equals m times MB
C. MB equals m times MS
D. m equals MS times MB
If the Central Bank buys securities in the open market to increase the Monetary Base, but banks simultaneously decide to hold significantly more excess reserves due to economic uncertainty, the net effect on the Money Supply is:
A. A definite sharp increase
B. A definite sharp decrease
C. Uncertain, or the increase will be dampened/smaller than expected
D. No change at all
To combat high inflation effectively, the Central Bank should perform which Open Market Operation?
A. Buy government securities
B. Sell government securities
C. Print more currency
D. Lower the discount rate
(Advanced) Why do economists calculate Core Inflation by excluding food and energy prices?
A. Because these items are not essential
B. Because their prices are highly volatile and can obscure the long-term inflation trend
C. Because the government sets these prices
D. Because they account for a very small part of the CPI basket
What is Central Bank Independence (CBI)?
A. The ability of the central bank (CB) to issue currency without the consent of the government.
B. The degree of the CB freedom from fiscal or political or governmental pressure in implementing policy.
C. The extent to which the CB can manage its branches across the country on its own.
D. The extent to which the CB can operate without reporting to the legislature.
D. The extent to which the CB can operate without reporting to the legislature.
A. Legal Independence
B. Goal Independence
C. Management Independence
D. Instrument (Operational) Independence
What is a major disadvantage of an independent Central Bank?
A. Difficulty in mobilizing capital for infrastructure development projects.
B. Monetary policy becomes less effective.
C. The CB becomes too focused on short-term goals.
D. Conflict between monetary objectives and the government's fiscal objectives.
Which type of independence allows the Central Bank to set its own monetary policy goals?
A. Management Independence
B. Instrument (Operational) Independence
C. Legal Independence
D. Goal Independence
According to the slides, what is a potential consequence of Low Central Bank independence?
A. Monetary policy may become less effective.
B. Conflict with the objectives of the legislature.
C. Difficulty for the government to raise funds for public spending.
D. The CB is forced to report directly to the President or Prime Minister.
In the context of Central Bank Independence (CBI), how is the Central Bank (CB) typically positioned within the national power structure to ensure its autonomy from political pressure while still maintaining accountability?
A. As a Department or Agency under the Executive Branch (Government) but with the authority to set interest rates.
B. As an independent body, reporting solely to the head of the Executive Branch (President or Prime Minister).
C. As an entity granted operational autonomy, but required to be accountable to the legislative body (Parliament/Congress).
D. As a fourth branch of power, completely exempt from reporting to any other authority.
Which operation reduces the monetary base (MB)?
A. Central bank purchases government securities
B. Central bank sells government securities
C. Central bank lowers the reserve requirement
D. Central bank buys foreign reserves
If the central bank sells government securities in the open market, what happens to its balance sheet?
A. Assets decrease; liabilities decrease
B. Assets increase; liabilities increase
C. Assets decrease; liabilities increase
D. Assets increase; liabilities decrease
Which of the following is a basic function of a central bank?
A. Providing personal loans
B. Issuing currency
C. Selling insurance products
D. Offering credit cards
D. Offering credit cards
A. Currency in circulation
B. Foreign exchange reserves
C. Required reserves
D. Demand deposits of banks
Which of the following is a central bank liability?
A. Lending to commercial banks
B. Gold reserves
C. Currency issued
D. Government securities held
Which scenario increases both the central bank’s assets and liabilities by the same amount?
A. Central bank sells government securities
B. Central bank prints currency and gives it to the public
C. Central bank lends to commercial banks
D. Government withdraws its deposits
What is the primary focus of monetary policy as defined in the context of the central bank's actions?
A. Controlling government spending and taxation to influence the national budget.
B. Controlling the supply of money and interest rates in an economy.
C. Regulating international trade agreements and foreign direct investment.
D. Directly setting market prices for goods and services to prevent inflation.
According to the provided materials, which goal is explicitly stated as the most important objective of monetary policy?
A. High Employment
B. Stability in Foreign Exchange Markets
C. Economic Growth
D. Price Stability
Which of the following is listed as an indicator used to measure the achievement of the Price Stability goal?
A. GDP growth rate
B. Unemployment rate
C. Core inflation
D. Interest rate stability
Why is High Employment considered a worthy goal for monetary policy?
A. It guarantees a balanced budget for the government.
B. High unemployment leads to closed factories, unused equipment, and low GDP.
C. It ensures the central bank can easily lower interest rates.
D. It stabilizes foreign assets and liabilities.
Besides the main goals of Price Stability, High Employment, and Economic Growth, which of the following is listed as another important goal of monetary policy?
A. Reducing government debt.
B. Stability of Financial Markets.
C. Increasing the minimum wage.
D. Direct control over consumer spending.
Monetary policy is generally characterized by two types of stance to influence the economy. What are these two types?
A. Fiscal and Trade
B. Expansionary and Contractionary
C. Active and Passive
D. Dynamic and Defensive
What is the primary objective of Open Market Operations (OMO) in monetary policy?
A. Supporting export activities
C. Reducing personal income tax
B. Regulating the money supply in the economy
D. Lowering public debt
When the central bank purchases securities in the open market, the immediate effect is:
A. Withdrawing money from circulation
B. Increasing the money supply
C. Reducing the monetary base
D. Raising reserve requirements
Lending facilities (refinancing) refer to the central bank’s action of:
A. Providing short-term loans to commercial banks to support liquidity
B. Purchasing foreign currencies
C. Increasing taxes and banking fees
D. Selling government bonds
In OMO, the central bank mainly trades which type of asset?
A. Corporate stocks
B. Government securities and other eligible financial instruments
C. Digital currencies
D. Real estate
When a commercial bank faces short-term liquidity shortages, the most appropriate tool for the central bank to use is:
A. Exchange-rate adjustment
B. Lending facilities (refinancing)
C. Purchasing foreign reserves
D. Issuing new currency
An increase in the refinancing (lending facility) rate generally leads to:
A. Encouraging banks to borrow more
B. Lowering borrowing costs for banks
C. A tightening of monetary policy
D. An expansion of the money supply
When the central bank buys government securities on the open market, the immediate effect on the banking system is:
A. Market interest rates rise
B. Bank reserves increase
C. Money supply decreases
D. The money multiplier decreases
When the central bank raises the discount/policy rate, which outcome is most likely?
A. Banks borrow more from the central bank
B. Money supply expands
C. Banks reduce borrowing from the central bank
D. Market lending rates fall
Standing Facilities are mainly used to:
A. Strengthen long-term inflation targeting
B. Manage short-term liquidity through overnight lending and deposit facilities
C. Restructure the economy
D. Expand long-term credit
Increasing the reserve requirement ratio will:
A. Increase the money multiplier
B. Reduce the amount of funds available for banks to lend
C. Increase the money supply
D. Lower market interest rates
Which of the following best describes an Intermediate Target in the Monetary Policy Framework?
A. A variable that the Central Bank can control directly with its policy tools, such as the interbank rate.
B. A long-term goal like Price Stability or Economic Growth.
C. A macroeconomic variable, such as a monetary aggregate (M1 or M2) or a long-term interest rate, that influences the ultimate goal.
D. The reserve ratio that commercial banks must maintain against their deposits.
Which combination correctly represents an expansionary monetary policy?
A. Increase RR, raise interest rates, sell securities
B. Decrease RR, lower interest rates, buy securities
C. Increase RR, lower interest rates, buy securities
D. Decrease RR, raise interest rates, sell securities
What is the primary goal of corporate finance?
A. To minimize corporate taxes
B. To maximize total revenue
C. To maximize the value of the existing owners' equity
D. To maximize the current year's profit
If a firm has Current Assets of $100 and Current Liabilities of $70, what is its Net Working Capital?
A. $170
B. $-30
C. $100
D. $30
Equity instruments are characterized by which of the following?
A. They must be repaid at maturity.
B. They have no maturity date and may pay dividends.
C. They require fixed interest payments.
D. They are always short-term instruments.
