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Worksheets

TCTT

Total questions: 209

Worksheet time: 2hrs 48mins

Name
Class
Date
1.

In economics, money is best defined as:

a)

The asset with the highest value in the economy

b)

Anything widely accepted as a medium of payment


c)

Only cash issued by the government

d)

Gold and silver

2.

Which is NOT a basic function of money?


a)

 Medium of exchange

b)

Unit of account

c)

Store of value

d)

Means of production

3.

The function "unit of account" of money means:

a)

Money helps store assets

b)

Money helps evaluate and compare the value of different goods

c)

Money helps exchange goods quickly

d)

Money helps pay debts

4.

 What does it mean when money performs the function of "medium of exchange"?


a)

Used to measure and compare the value of goods

b)

Used to accumulate wealth

c)

Used to buy and sell goods and services

d)

Used to pay debts in the future

5.

For money to perform well the function of "store of value," the important condition is:

a)

The value of money must be stable over time

b)

The amount of money issued must be large

c)

Interest rates must be high

d)

Money must have an attractive color

6.

Which asset is least affected by inflation in the long run?

a)

Consumer goods

b)

Currency held as cash

c)

Government bonds

d)

Precious metals such as gold

7.

Paper money today:

a)

Accounts for only a small proportion of total payment methods

b)

Can be issued by commercial banks

c)

Can be exchanged for gold at a ratio specified by law

d)

Both A and B

8.

Why do people often choose money as a store of value?

a)

Money is the only means to perform the store of value role

b)

Money is a store of value with low risk level

c)

Money is a special commodity

d)

Money is a means with high liquidity

9.

Which form of money appeared first in history?

a)

Paper money

b)

Commodity money

c)

Electronic money

d)

Check

10.

What is Commodity money?

a)

 Money with intrinsic value, usually precious metals

b)

Money with no intrinsic value

c)

Money issued by banks

d)

Money that exists only in digital form

11.

 How does Fiat money differ from Commodity money?

a)

Has no intrinsic value; value is based on government decree

b)

Has high intrinsic value

c)

Is only made from gold

d)

Cannot be used in international transactions

12.

What is a characteristic of Electronic money/Digital money?

a)

Exists in digital form on electronic systems

b)

Exists only in paper form

c)

Cannot be transferred

d)

Used only for international transactions

13.

In what order did the evolution of money occur?

a)

Commodity money → Metal money → Paper money → Electronic money

b)

Paper money → Metal money → Commodity money

c)

Electronic money → Paper money

d)

Metal money → Commodity money

14.

How is Finance defined?

a)

The field studying how to manage, create, and invest money

b)

Only studies banking

c)

Only studies stocks

d)

Studies goods production

15.

Which of the following best describes the structure of a financial system?

a)

A network consisting of financial markets, financial institutions, and financial instruments

b)

Only the banking sector

c)

Only capital markets

d)

Government agencies only

16.

What is the main function of the financial system?

a)

Efficiently allocate financial resources from surplus units to deficit units

b)

Print money

c)

Increase interest rates

d)

Reduce taxes

17.

 Into what types are financial markets primarily classified?


a)

Money market and capital market

b)

Only stock market

c)

Only foreign exchange market

d)

Only commodity market

18.

What types of assets does the Money market trade?

a)

Short-term assets (under 1 year), highly liquid

b)

Long-term assets (over 1 year)

c)

Only stocks

d)

Only real estate

19.

Which characteristic describes a market-based financial system?


a)

Banks are the only source of capital for the economy.

b)

The stock market does not exist or is poorly developed.

c)

The stock market shares a central position with banks in channeling savings to businesses.

d)

Business managers are not subject to market control.

20.

According to asymmetric information theory, which group usually has better knowledge of financial capacity and future risk?

a)

Borrowers

b)

Lenders

c)

Government regulators

d)

Savers

21.

 When performing which function below does money NOT need to be physically present?


a)

Unit of account

b)

Means of payment

c)

Medium of exchange

d)

Means of storage

22.

What types of Financial institutions exist?

a)

Banks, insurance companies, investment funds, securities companies

b)

Only central banks

c)

Only manufacturing enterprises

d)

Only government agencies

23.

What are Financial instruments?


a)

Types of financial assets such as stocks, bonds, futures contracts

b)

Only cash

c)

Only machinery and equipment

d)

Only real estate

24.

What is the relationship between the financial system and the real economy?

a)

The financial system mobilizes and allocates capital to the real economy

b)

There is no relationship

c)

The financial system only serves banks

d)

The real economy does not need the financial system

25.

What is the main role of regulatory authorities in financial markets?


a)

To provide loans to businesses

b)

To supervise and enforce rules to ensure stability and transparency

c)

To set prices of all financial assets

d)

To act as the only buyer in the market

26.

 How does the financial system support the real economy?


a)

Provides capital for investment, production, consumption

b)

Only prints money

c)

Only reduces interest rates

d)

Only increases taxes

27.

 When the financial system operates inefficiently, how does it affect the real economy?


a)

Reduces investment, reduces production, slows economic growth

b)

Strong economic growth

c)

Has no effect

d)

Increases exports

28.

Which of the following best defines asymmetric information?


a)

All parties in a transaction have the same information

b)

One party in a transaction has more or better information than the other

c)

Information is equally distributed by government regulations

d)

Information has no effect on economic decisions

29.

Which situation is an example of adverse selection?


a)

A car insurance company cannot tell a risky driver from a safe driver before issuing a policy

b)

A bank lending money with full knowledge of borrower risk

c)

A market where all participants have perfect information

d)

Employees following all company rules

30.

Moral hazard occurs when:

a)

One party takes more risks because another party bears the cost of those risks

b)

All parties have perfect information

c)

Markets operate without any regulations

d)

Consumers choose products rationally

31.

  1. Public finance is mainly concerned with:


a)

How individuals invest money

b)

How the government collects revenue and spends it to provide public services

c)

How companies maximize profit

d)

How banks issue loans

32.

  1. Which of the following is a feature of public finance?

A. Deals with public resources

B. Aims at social welfare

C. Involves government revenue and expenditure

D. All of the above


a)

Deals with public resources

b)

Aims at social welfare

c)

Involves government revenue and expenditure

d)

All of the above

33.

  1. Which of the following is a function of public finance?

a)

Resource allocation

b)

Income redistribution

c)

Economic stabilization

d)

All of the above

34.

  1. How does public finance help economic stabilization?


a)

By using fiscal policies like taxation and government spending

b)

By reducing household income

c)

By limiting private investments

d)

By privatizing public goods

35.

  1. Providing public goods and services is an example of which function of public finance?

a)

  1. Income redistribution

b)

  1. Resource allocation

c)

Debt management

d)

  1. Inflation control

36.

  1. Which of the following is NOT a feature of public finance?


a)

Focus on public welfare

b)

Deals with government revenue and expenditure

c)

Seeks to maximize individual profit

d)

Involves public accountability

37.

  1.  What is the definition of public revenue?


a)

Income received by private companies

b)

Income of the government from all sources

c)

All expenditures made by the government

d)

Revenue collected only from taxes

38.

  1. Which of the following is NOT a type of public revenue?

a)

Tax revenue

b)

Non-tax revenue

c)

Borrowing

d)

Private investment

39.

  1. Direct taxes are best described as taxes that:


a)

Are imposed on goods and services

b)

Can be shifted to another person

c)

Are paid directly by individuals or organizations to the government

d)

Are collected from international trade

40.

  1. Which of the following is a form of non-tax revenue?

a)

Value-added tax

b)

Corporate income tax

c)

Customs duties

d)

Interest receipts

41.

  1. A tax levied on the consumption of goods and services belongs to which category?


a)

Wealth tax

b)

Income tax

c)

Consumption tax

d)

Property tax

42.

  1. Tax revenue is considered “unrequited” because:


a)

The government must return an equivalent benefit to taxpayers

b)

Taxpayers receive no direct, proportional benefit in return

c)

Taxes are voluntary contributions

d)

Taxes are only imposed on corporations

43.

  1. Which of the following is NOT a reason for increasing public expenditure?


a)

Population growth

b)

Rising income

c)

Declining government responsibilities

d)

Technological development

44.

  1. In Vietnam in 2024, the largest share of recurrent expenditure is usually for:”

A. National defense

B. Salaries and wages of the public sector

C. Infrastructure

D. Foreign aid


a)

National defense

b)

Salaries and wages of the public sector

c)

Infrastructure

d)

Foreign aid

45.

  1. A rise in public debt is often linked to:


a)

Lower fiscal deficits

b)

Persistent high public expenditure

c)

Reduced spending

d)

Zero-interest loans

46.

  1. Which type of spending helps promote long-term economic growth the most?


a)

Public wages

b)

Office stationery

c)

Short-term subsidies

d)

Infrastructure investment

47.

  1. Which of the following is a characteristic of capital expenditure?


a)

Recurring in nature

b)

Used for the daily operation of the government

c)

Helps create government assets

d)

Includes salaries and pensions

48.

  1. Revenue expenditure is generally characterized as:


a)

Recurring and required for routine functioning

b)

Creating new physical infrastructure

c)

Non-recurring and irregular

d)

Used solely to repay government loans

49.

  1. Which statement correctly distinguishes revenue expenditure from capital expenditure?


a)

Capital expenditure does not create assets, while revenue expenditure does.

b)

Revenue expenditure does not create assets, while capital expenditure does.

c)

Revenue expenditure is usually one-time, while capital expenditure is recurring.

d)

Both categories create long-term government assets.

50.

  1. A budget deficit occurs when:


a)

Government revenue equals government spending

b)

Government spending is greater than government revenue

c)

Government spending is lower than government revenue

d)

Government reduces taxes and increases exports

51.

  1. Deficit financing is best defined as:


a)

Using tax revenue to finance all public spending

b)

Financing government spending through borrowing or money creation

c)

Financing only capital projects using budget surplus

d)

Reducing public debt through monetary tightening

52.

  1. A primary deficit equals:


a)

Total public debt minus foreign loans

b)

Fiscal deficit minus interest payments on previous debt

c)

Revenue deficit plus budget surplus

d)

Government spending minus tax revenue

53.

  1. Which of the following is a major risk of deficit financing by printing money?

a)

Increased foreign reserves

b)

Lower unemployment permanently

c)

Rising inflation due to higher money supply

d)

Reduction in aggregate demand

54.

  1. Which of the following best describes the main objective of fiscal policy?

a)

  1. Stabilizing the money supply

b)

  1. Regulating interest rates

c)

  1. Influencing economic activity through government spending and taxation

d)

  1. Controlling the exchange rate

55.

Expansionary fiscal policy is typically used when an economy is experiencing:

a)

  1. High inflation

b)

  1. Budget surplus

c)

  1. Recession or high unemployment

d)

  1. Strong economic growth

56.

Which of the following is an example of an automatic stabilizer?

a)

One-time stimulus checks

b)

Infrastructure spending

c)

Unemployment insurance benefits

d)

Government debt issuance

57.

  1. A persistent government budget deficit most likely leads to:

a)

  1. Lower public debt

b)

  1. Decreased borrowing needs

c)

  1. Higher accumulation of government debt over time

d)

  1. Reduced interest payments

58.

The crowding-out effect occurs when:

a)

Government reduces spending to lower inflation

b)

Taxes increase private disposable income

c)

Government borrowing raises interest rates and reduces private investment

d)

The private sector fully offsets fiscal stimulus

59.

  1. Which fiscal policy tool directly increases aggregate demand?

a)

  1. Raising income taxes

b)

  1. Reducing transfer payments

c)

  1. Increasing government purchases of goods and services

d)

  1. Cutting the money supply

60.

  1. Which of the following is classified as public social expenditure?


a)

Construction of highways

b)

Spending on education and healthcare

c)

Purchase of military equipment

d)

Repayment of government bonds

61.

Corporate finance primarily deals with:


a)

Managing household expenses

b)

Managing and allocating financial resources in corporations

c)

Accounting for taxes only

d)

Preparing marketing strategies

62.

The main objective of corporate finance is to:


a)

Maximize short-term sales

b)

Maximize shareholders' wealth

c)

Increase market share only

d)

Minimize operating staff

63.

Corporate finance is mainly concerned with:

a)

Investment, financing, and dividend decisions

b)

Pricing and advertising decisions

c)

Recruitment and training

d)

Legal procedures

64.

If a bank offers an annual interest rate of 6%, how much interest will be earned after one year on a deposit of $1,000 (without compounding)?

a)

 $30

b)

 $50

c)

$60

d)

$600

65.

In the capital structure, debt is usually cheaper than equity because:


a)

Debt payments are tax deductible

b)

Debt holders receive voting rights

c)

Debt is riskier for investors

d)

Debt cannot be repaid

66.

Which of the following instruments is not part of the capital market?

a)

 Bonds

b)

Equities

c)

Treasury bills

d)

Derivatives

67.

Which of the following is an example of corporate finance?


a)

Deciding how to invest in new equipment

b)

Preparing a household budget

c)

Setting national interest rates

d)

Paying personal income tax

68.

What are the characteristics of bonds?

a)

Interest payment is tax deductable

b)

Equity is a residual claim

c)

Dividends are dependent on profitability

d)

Dividends are not tax deductable

69.

Corporate finance decisions are typically made by:

a)

The central bank

b)

Financial managers and executives

c)

Tax authorities

d)

Citizens

70.

What instruments are included in derivatives?

a)

Credit Linkers, Swaps, Stocks, Options

b)

Futures Contracts, Commodity Derivatives, Currency Derivatives, Forward Contracts

c)

Credit Linkers, Options, Stocks, Interest rate

d)

Forward Contracts, Options, Futures Contracts, Swaps

71.

Which one of the following terms is defined as the management of a firm's long-term investments?


a)

Working capital management

b)

Financial allocation 

c)

Capital budgeting

d)

Capital structure

72.

What happens to borrowing costs in the economy when interest rates decrease?

a)

Borrowing becomes more expensive

b)

Borrowing becomes cheaper, encouraging more loans and spending

c)

Borrowing costs remain unchanged

d)

Only government borrowing is affected

73.

Which one of the following terms is defined as the mixture of a firm’s debt and equity financing?


a)

Working capital management

b)

Cash management

c)

Capital budgeting

d)

Capital structure

74.

Which of the following instruments is typically traded on the Money Market?

a)

Common Stock

b)

Treasury Bills (T-Bills)

c)

Corporate Bonds

d)

Swaps

75.

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?


a)

Working capital

b)

Deb

c)

Investment capital

d)

Capital structure

76.

Which of the following characteristics is true of common stock?

a)

Dividend payments are fixed by contract.

b)

Dividends are a tax-deductible expense for the corporation.

c)

Common stockholders are paid before creditors in the event of liquidation.

d)

Common stockholders have a residual claim on the company's assets and income

77.

Which one of the following is a capital budgeting decision?


a)

Determining how many shares of stock to issue

b)

Deciding whether or not to purchase a new machine for the production line

c)

Deciding how to refinance a debt issue that is maturing

d)

Determining how much money should be kept in the checking account

78.

What is the most important function of the financial markets?

a)

To provide liquidity for financial instruments.

b)

 To determine asset prices through supply and demand.

c)

To transfer funds from savers to investors.

d)

To provide tools for hedging risk.

79.

 Which of the following accounts are included in working capital management?

I. accounts payable

Il. accounts receivable

Ill. fixed assets

IV. inventory

a)

I and Il only

b)

I and III only

c)

Il and IV only

d)

I, II, and IV only

80.

Agency problems in corporate finance occur when:


a)

Managers' interests conflict with shareholders' interests

b)

Shareholders agree on all decisions

c)

Creditors manage the company

d)

Customers influence corporate decisions

81.

Which financial intermediary plays the largest role in raising deposits from the public and providing commercial loans

a)

Mutual Funds

b)

Insurance Companies

c)

Commercial Banks

d)

Pension Funds

82.

Net income is calculated as:


a)

Revenues + Expenses

b)

Revenues - Expenses

c)

Assets - Liabilities

d)

Assets + Liabilities

83.

When market interest rates rise, how does the market value of previously issued bonds typically change

a)

It increases

b)

It decreases

c)

It remains unchanged; only the Yield to Maturity (YTM) changes

d)

It only increases if the bond has a long maturity

84.

 Following the typical allocation process in Corporate Finance, dividends are paid out from which financial outcome?


a)

Revenue 

b)

Expenses 

c)

Net Income 

d)

Current Assets

85.

Which type of derivative gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price before or on the expiration date?

a)

Futures Contract

b)

Forward Contract

c)

Option Contract

d)

Swap Agreement

86.

 Which of the following increases both total assets and total liabilities?

a)

Paying off accounts payable

b)

Borrowing $100,000 from a bank

c)

Issuing $100,000 of common stock

d)

Purchasing inventory with cash

87.

What distinguishes a 'futures contract' from a 'forward contract'?

a)

Forward contracts are traded on organized exchanges, while futures contracts are traded Over-The-Counter (OTC)

b)

Futures contracts are always settled in cash, while forward contracts are always settled by physical delivery

c)

Futures contracts are standardized and require daily marking-to-market, while forward contracts are customized and usually settled at maturity

d)

Forward contracts are legally binding, while futures contracts are merely agreements to agree

88.

 Which of the following is NOT a current asset?


a)

Cash

b)

Inventory

c)

Accounts receivable

d)

Equipment

89.

What is the main purpose of a 'Zero-Coupon Bond'?

a)

To provide investors with regular, fixed interest payments.

b)

To allow the issuer to call the bond back before maturity.

c)

To defer all interest payments until the maturity date, where the investor earns return from the deep discount at issue.

d)

To offer the investor a variable interest rate tied to an index.

90.

 If a firm has excess short-term cash, the best working capital decision might be:

a)

Pay down high-interest debt

b)

Invest in liquid short-term instruments

c)

Increase inventory unnecessarily

d)

Do nothing

91.

Which of the following statements best describes the relationship between risk and return in financial markets?


a)

Higher risk always guarantees higher return

b)

Lower risk always results in higher return

c)

Higher risk generally requires a higher expected return to attract investors

d)

Risk level has no relationship with expected return

92.

Working capital is defined as:


a)

Fixed assets minus long-term debt

b)

Current assets minus current liabilities

c)

Sales minus expenses

d)

Retained earnings minus dividends

93.

If the real interest rate is 3% and the expected inflation rate is 4%, what is the approximate nominal interest rate based on the Fisher Equation?

a)

3%

b)

4%

c)

7%

d)

12%

94.

Retained earnings increase when:


a)

Dividends are paid

b)

Net income > Dividends declared (or paid)

c)

The firm issues new debt

d)

The firm issues new equity

95.

What is the key characteristic that distinguishes Commercial Paper from Corporate Bonds?

a)

Commercial Paper pays fixed dividends, and Corporate Bonds pay variable interest

b)

Commercial Paper is a long-term equity instrument, and Corporate Bonds are short-term debt instruments

c)

Commercial Paper is an instrument of the Money Market (short-term), while Corporate Bonds belong to the Capital Market (long-term).

d)

Commercial Paper is secured by the issuer's assets, while Corporate Bonds are generally unsecured.

96.

 Choosing debt or equity to finance a project is:


a)

Capital budgeting decision

b)

Capital structure decision

c)

Working capital decision

d)

Dividend decision

97.

Residual dividend policy distributes dividends based on:


a)

Fixed percentage of net income

b)

Earnings left after funding positive NPV projects

c)

Industry average payout

d)

Cash at year-end regardless of investments

98.

The relationship between a bond's price and market interest rates is generally:

a)

Neutral (Interest rates have no effect on bond prices).

b)

Proportional to the issuer's profitability.

c)

Direct (As interest rates rise, bond prices rise).

d)

Inverse (As interest rates rise, bond prices fall).

99.

In a perfect capital market, the firm's value is:


a)

Dependent on dividend policy

b)

Independent of capital structure

c)

Dependent on leverage

d)

Determined by tax shields

100.

Which derivative instrument obligates both parties to transact the underlying asset at a predetermined price on a specified future date?

a)

Options Contract

b)

Futures Contract

c)

Swaps Contract

d)

Warrants

101.

A firm purchases equipment worth $120,000 by paying $50,000 cash and borrowing $70,000. Which is correct?


a)

Assets +70,000; Liabilities +70,000; Equity unchanged

b)

Assets +120,000; Liabilities +70,000; Equity +50,000

c)

Assets +50,000; Liabilities +70,000; Equity +120,000

d)

Only assets increase

102.

A firm has liabilities exceeding total assets. This indicates:

a)

Insolvency

b)

Liquidity

c)

Profitability

d)

Overcapitalization

103.

What does it mean for an equity holder (stock owner) to have a Residual Claim?

a)

They receive fixed, guaranteed payments regardless of company performance.

b)

They have the first claim on the company's assets and income, before creditors

c)

They are paid after all creditors, bondholders, and preferred stockholders have been paid during liquidation.

d)

They are allowed to trade their shares only on the over-the-counter market.

104.

Strong corporate governance:

a)

Reduces agency conflicts and improves transparency

b)

Guarantees profit

c)

Eliminates working capital needs

d)

Increases liabilities automatically

105.

Which type of financial market facilitates the trading of already issued securities?

a)

Primary Market

b)

Secondary Market

c)

Money Market

d)

Over-the-counter commodity market

106.

Which increases both assets and equity but not liabilities?


a)

Issuing new shares for cash

b)

Borrowing

c)

Purchasing on credit

d)

Paying off loan

107.

In a normal yield curve, long-term interest rates are typically:

a)

Lower than short-term rates

b)

Equal to short-term rates

c)

Higher than short-term rates

d)

Unrelated to maturity

108.

A key difference between liabilities and equity is that:


a)

Equity must be repaid with interest

b)

Equity represents ownership, liabilities represent obligations

c)

Liabilities never affect cash flow

d)

Equity is considered a short-term obligation

109.

Which factor MOST commonly influences interest rate changes in an economy?

a)

Consumer fashion trends

b)

Monetary policy decisions by the central bank

c)

Number of listed companies on the stock exchange

d)

Weather fluctuations

110.

Which of the following best describes a Floating Interest Rate?

a)

A fixed payment amount for the life of the loan

b)

A rate that changes over time depending on a benchmark index

c)

A rate set only by bondholders

d)

A rate that applies only to government debt

111.

If expenses exceed revenue, the company has:

a)

Net income

b)

Profit margin

c)

Net loss

d)

Increased equit

112.

A financial system with high liquidity generally allows:

a)

Faster buying and selling of financial instruments

b)

Higher transaction costs

c)

Limited participation in financial markets

d)

Lower transparency in pricing

113.

The relationship between revenue, expense, and net income reflects which statement?

a)

Balance sheet

b)

Income statement

c)

Cash flow statement

d)

Statement of retained earnings

114.

A firm has high free cash flow but no profitable projects. Best action for shareholder wealth?


a)

Pay high dividends or share buyback

b)

Invest in risky unrelated ventures

c)

Retain all earnings

d)

Increase leverage

115.

Which market participant primarily provides liquidity by continuously quoting buy and sell prices?

a)

Investor

b)

Dealer

c)

Regulator

d)

Borrower

116.

The interest rate that includes expected inflation is known as:

a)

Nominal interest rate

b)

Real interest rate

c)

Neutral rate

d)

Discounted rate

117.

Which components make up the narrow measure of money (M1) in a general context?

a)

Currency in circulation and savings deposits

b)

Currency held by the public and demand deposits with banks

c)

Demand deposits and time deposits

d)

Currency in circulation and bank reserves

118.

According to the Liquidity Preference Theory, what is the primary reason individuals prefer holding money rather than investing in securities?

a)

Money always offers a higher return than financial assets

b)

Money provides liquidity and can be used immediately for transactions

c)

Securities are risk-free and therefore less attractive

d)

Financial assets cannot be converted into cash under any circumstances

119.

The Monetary Base (MB), or High-powered money, is the amount of money issued by which entity?

a)

Commercial Banks

b)

The Central Bank

c)

The Ministry of Finance

d)

The Securities Market

120.

According to the Loanable Funds Theory, which factor would most likely increase market interest rates?

a)

A decrease in demand for borrowed funds

b)

A decrease in the supply of savings in the economy

c)

An increase in government subsidies

d)

A decrease in inflation expectations

121.

The Monetary Base (MB) is equal to Currency in Circulation (C) plus what?

a)

Checkable Bank Deposits (D)

b)

Time Deposits (T)

c)

Reserves of commercial banks (R)

d)

Bank Certificates of Deposits (B)

122.

Which of the following entities typically issues Treasury Bonds?

a)

Private Corporations

b)

Central Banks

c)

 Government Treasury Department

d)

Consumer Households

123.

According to the formula M1= m1 x MB , what is m1 ?

a)

Monetary Base

b)

Money Demand

c)

Money Multiplier

d)

Money Reserves

124.

In the Vietnam definition, M2 is calculated as M2=C+D+T+B. What does the component 'B' represent?

a)

Currency in Circulation

b)

Time Deposits & Saving Deposits

c)

Checkable Bank Deposits

d)

Bank Certificate of Deposits

125.

The primary function of commercial banks is:

a)

  1. Providing insurance

b)

Accepting deposits and granting loans

c)

Managing investment funds

d)

Issuing stocks

126.

 A decrease in the reserve requirement ratio will likely lead to:


a)

A decrease in the money supply

b)

An increase in the money supply

c)

No effect on the money supply

d)

A reduction in bank loans

127.

Which of the following is NOT a function of commercial banks?

a)

Lending

b)

Accepting deposits

c)

Payment services

d)

Selling mandatory insurance

128.

Which asset measure is generally considered the least liquid in the hierarchy M1 < M2 < M3?

a)

M1

b)

M2

c)

M3

d)

Currency in Circulation

129.

Lending interest rates at commercial banks are typically

a)

  • Lower than deposit rates

b)

Equal to deposit rates

c)

Higher than deposit rates

d)

Fixed by the government

130.

Which of the following is listed as a channel through which the Central Bank issues money and controls MB?

a)

Setting the interest rate target

b)

Buying securities in open market operations

c)

Adjusting the discount rate

d)

Collecting income tax from the public

131.

Which of the following is NOT a function of financial institutions?

a)

Mobilizing savings

b)

Providing risk-management services

c)

Producing consumer goods

d)

Facilitating payments

132.

M2 money supply includes:


a)

M1 money supply, savings deposits, time deposits, and certificates/bonds issued by banks 

b)

M1 money supply, savings deposits, and time deposits

c)

M1 money supply and certificates/bonds issued by banks

d)

Time deposits and bonds issued by banks

133.

Which of the following is a characteristic of non-bank financial institutions (NBFIs)?

a)

They accept demand deposits

b)

They provide specialized financial services such as insurance or consumer finance

c)

They serve as the main payment-clearing intermediaries

d)

They create money through deposit-taking

134.

When the Central Bank lends to Commercial Banks:

a)

The monetary base increases

b)

The monetary base decreases 

c)

Both the monetary base and the money supply decrease

d)

The money supply decreases

135.

The main source of income for commercial banks is:

a)

High-risk investment gains

b)

Insurance fees

c)

Interest rate margin from lending and deposits

d)

Corporate taxes

136.

What is inflation?


a)

A decrease in the general price level of goods and services

b)

A sustained increase in the general price level of goods and services

c)

An increase in unemployment

d)

The total production of an economy

137.

Which of the following is NOT included in a bank’s funding activities?

a)

Issuing certificates of deposit

b)

Accepting deposits

c)

Receiving savings

d)

  1. Granting consumer loans

138.

Which type of inflation occurs when demand exceeds supply?


a)

Cost-push inflation

b)

Imported inflation

c)

Demand-pull inflation

d)

Hyperinflation

139.

Finance companies mainly:

a)

Accept savings deposits

b)

Provide consumer and business loans

c)

Issue currency

d)

Conduct monetary policy

140.

What does CPI stand for in measuring inflation?

a)

Consumer Price Index

b)

Country Price Indicator

c)

Central Price Inflation

d)

Consumer Purchase Input

141.

Finance companies mainly obtain their funds from:

a)

Customer deposits

b)

Selling commercial paper, stocks, and bonds

c)

Issuing credit cards

d)

Government grants

142.

Which of the following groups is most negatively affected by inflation?


a)

Borrowers

b)

Workers with fixed incomes

c)

Exporting firms

d)

Government

143.

  1. Insurance companies belong to:

a)

Banks

b)

Non-bank financial institutions

c)

Investment banks

d)

State-owned credit institutions

144.

Hyperinflation refers to inflation rates that are:

a)

Slightly above 0%

b)

Higher than 10% per year

c)

Extremely high and out of control

d)

Negative

145.

Which of the following describes a life insurance company?

a)

  • Car insurance

b)

Fire insurance

c)

Long-term personal insurance

d)

Cargo insurance

146.

Cost-push inflation happens when:

a)

Aggregate demand increases

b)

Production costs rise for firms

c)

Government cuts spending

d)

Household savings increase

147.

Securities companies do NOT perform which of the following?

a)

Investment advisory

b)

Brokerage services

c)

Proprietary trading

d)

Accepting savings deposits

148.

Which policy can be used to reduce inflation?

a)

Lowering interest rates

b)

Increasing government spending

c)

Tight monetary policy

d)

Increasing money supply

149.

Inflation reduces the purchasing power of money because:

a)

Wages always rise faster than prices

b)

Prices fall over time

c)

The value of money decreases as prices increase

d)

People save more in banks

150.

Mild inflation can benefit the economy by:

a)

Encouraging businesses to cut production

b)

Discouraging borrowing and investment

c)

Stimulating spending and economic growth

d)

Decreasing aggregate demand

151.

Deflation is the opposite of inflation and means:

a)

Prices remain unchanged

b)

Prices increase quickly

c)

A rise in the supply of money

d)

A decrease in the general price level

152.

The main revenue source of investment funds is:

a)

Insurance fees

b)

Portfolio investment returns

c)

Interest margin

d)

Taxes

153.

The CPI in year 1 is 110 and in year 2 is 121. Inflation rate = ?

a)

9%

b)

10%

c)

11%

d)

12%

154.

Which of the following is an advantage of mutual funds?

a)

They guarantee fixed returns to investors

b)

They offer diversified portfolios managed by professionals

c)

They provide check-writing privileges like bank accounts

d)

They only invest in money market instruments

155.

Non-bank financial institutions are NOT allowed to:

a)

Provide loans

b)

Issue bonds

c)

Accept demand deposits

d)

Provide leasing services

156.

Basket cost in base year = $500. Basket cost in current year = $600. CPI = ?

a)

90

b)

100

c)

110

d)

120

157.

Pension funds operate based on:

a)

Long-term contractual contributions and payouts

b)

Short-term lending

c)

Gold deposit services

d)

Cargo insurance

158.

If nominal interest rate = 8% and inflation = 5%, real interest rate = ?

a)

2%

b)

3%

c)

13%

d)

5%

159.

Microfinance institutions mainly serve:

a)

Large corporations

b)

  • Government agencies

c)

Low-income individuals

d)

Investment funds

160.

CPI of 2023 = 140, CPI of 2024 = 154. Inflation = ?

a)

8%

b)

9%

c)

10%

d)

14%

161.

Credit unions are generally:

a)

For-profit

b)

Non-profit

c)

Under the central bank

d)

Securities companies

162.

Which of the following is a key characteristic of an organized exchange?

a)

Trading occurs directly between buyers and sellers without intermediaries

b)

Prices are negotiated privately and not publicly disclosed

c)

Trading is conducted in a centralized marketplace with standardized contracts

d)

There is no regulatory oversight

163.

Price of a good: 2020 = 50$, 2021 = 60$, 2022 = 66$. Average annual inflation (2020→2022) = ?


a)

10%

b)

12%

c)

15%

d)

8%

164.

Money market mutual funds typically:

a)

Provide long-term investment in equities

b)

Invest in money market instruments and allow limited check-writing

c)

Offer unsecured consumer loans

d)

Accept deposits like commercial banks

165.

If inflation rate = 12% and salary increases by 8%, real wage change = ?

a)

+4%

b)

−4%

c)

+20%

d)

−20%

166.

Which of the following is NOT a typical activity of investment banks?

a)

Underwriting securities issues

b)

Providing M&A advisory services

c)

Trading derivatives on behalf of clients

d)

Accepting retail savings deposits

167.

Securities brokers mainly earn income from:

a)

Interest on securities they hold

b)

Brokerage commissions for matching buyers and sellers

c)

Buying assets and reselling them at higher prices

d)

Issuing equity to investors

168.

 Food ↑ from 200 to 240, Housing ↑ from 300 to 360.
Weighted 50% – 50%. CPI = ?

a)

110

b)

120

c)

130

d)

140

169.

Dealers differ from brokers in that they:

a)

Have no inventory of securities

b)

Act only as intermediaries

c)

Buy and sell securities for their own account, taking price risk

d)

Never trade in secondary markets

170.

Organized exchanges help improve market efficiency primarily by;


a)

Allowing unlimited price manipulation

b)

Providing transparent price information and standardized trading rules

c)

Restricting the number of traders

d)

Eliminating the need for brokers

171.

Price index year 1 = 100, year 2 = 125. Inflation = ?

a)

15%

b)

20%

c)

25%

d)

30%

172.

Financial intermediation helps:

a)

Reduce transaction costs

b)

Increase systemic risk

c)

Eliminate all risks

d)

Reduce money supply

173.

Money supply ↑ 15%, output ↑ 5%. With MV=PY, inflation ≈ ?

a)

5%

b)

10%

c)

15%

d)

20%

174.

Which function of financial institutions involves converting short-term deposits into long-term loans?

a)

Size transformation

b)

Liquidity provision

c)

Maturity transformation

d)

Risk transformation

175.

Nominal GDP increases 12% while real GDP increases 5%. Inflation ≈ ?

a)

5%

b)

7%

c)

10%

d)

12%

176.

Which function refers to pooling many small savings into large amounts of capital for lending?

a)

Risk transformation

b)

Size transformation

c)

Maturity transformation

d)

Liquidity provision

177.

When the central bank sells government securities on the open market, the immediate effect is:


a)

Bank reserves increase

b)

Money supply increases

c)

Interest rates decrease

d)

Bank reserves decrease

178.

Which function involves diversifying and managing risks from depositors through a loan portfolio?

a)

Liquidity provision

b)

Size transformation

c)

Risk transformation

d)

Maturity transformation

179.

Which of the following tools is not a conventional instrument of monetary policy?


a)

Open market operations

b)

Required reserve ratio

c)

Discount (refinancing) rate

d)

Government spending

180.

The liquidity function of financial institutions involves:

a)

providing liquidity assets/instruments that can be quickly converted into cash with low loss in value.

b)

Issuing currency

c)

Creating taxes

d)

Eliminating risk

181.

Banks’ payment intermediation helps:

a)

Facilitate transactions efficiently and reduces reliance on physical cash

b)

Increase inflation

c)

Restrict investment

d)

Reduce savings

182.

When a central bank increases the policy interest rate unexpectedly, which of the following channels primarily explains the decline in investment spending?


a)

Exchange rate channel

b)

Credit rationing channel

c)

Interest rate channel

d)

Balance sheet channel

183.

Expansionary monetary policy is most likely to cause:


a)

Higher interest rates

b)

Lower bank reserves

c)

An increase in aggregate demand

d)

A decrease in output

184.

Which of the following is a short-term operating target of monetary policy?


a)

Economic stability

b)

Interbank interest rate

c)

Long-term growth

d)

Price stability

185.

 When a central bank engages in quantitative easing, it primarily aims to:


a)

Reduce the foreign exchange reserves

b)

Increase long-term interest rates

c)

Inject liquidity by purchasing long-term assets

d)

Reduce government budget deficits

186.

The Taylor Rule is used by central banks to:


a)

Determine the optimal level of public debt

b)

Predict exchange rate movements

c)

Guide decisions about setting policy interest rates

d)

Measure the velocity of money

187.

 Which of the following would most likely occur after a contractionary monetary policy?


a)

Higher bank lending and increased consumption

b)

Lower unemployment in the short run

c)

Decrease in inflationary pressures

d)

Increase in the money multiplier

188.

Central bank transparency is important because it:


a)

Allows commercial banks to set their own interest rates freely

b)

Improves public understanding and credibility of monetary policy decisions

c)

Prevents the need for government oversight

d)

Guarantees low unemployment and high growth

189.

 If the central bank wants to stabilize the exchange rate during a period of depreciation, it might:


a)

Lower the policy interest rate

b)

Sell foreign currency reserves and buy domestic currency

c)

Increase government spending

d)

Reduce reserve requirements

190.

What is generally considered the primary goal of a modern Central Bank's monetary policy?



a)

Maximizing government profit.

b)

Maintaining price stability (controlling inflation).

c)

Direct management of commercial banks.

d)

Setting the national minimum wage.

191.

If a Central Bank wants to implement an expansionary monetary policy to increase the money supply, what action will it typically take using Open Market Operations (OMOs)?


a)

Selling government bonds to commercial banks.

b)

Raising the reserve requirement for commercial banks.

c)

Lowering the interest rate paid on reserve balances.

d)

Purchasing government bonds from commercial banks.

192.

How does a Central Bank changing the reserve requirement affect the money supply?


a)

Raising the requirement decreases the money multiplier and contracts the money supply.

b)

Lowering the requirement contracts the money supply by encouraging banks to hold more excess reserves.

c)

The reserve requirement only affects the interest rate, not the money supply

d)

Changing the requirement is the primary tool used today, replacing Open Market Operations

193.

 What term is used to describe the function of a Central Bank providing liquidity to commercial banks that are solvent but facing temporary financial difficulties?

a)

Fiscal Agent for the Government.

b)

Lender of Last Resort.

c)

Financial Regulator.

d)

Currency Exchange Manager.

194.

 If a Central Bank decides to raise its policy interest rate (e.g., the Federal Funds Rate in the US or the Refinancing Rate in the Eurozone), what is the intended effect on the economy?


a)

To encourage consumption and borrowing, leading to increased inflation.

b)

To slow down economic growth and curb inflationary pressures.

c)

To directly increase the value of the national currency against all others.

d)

To stimulate housing market growth by lowering mortgage rates.

195.

 The ultimate goal of monetary policy does not include:


a)

Export value increased and was stable.

b)

Low and stable inflation.

c)

Economic growth and stability.

d)

Low and stable unemployment rate.

196.

When the central bank increases the required reserve ratio, the amount of money supplied to circulation will:

a)

Can increase or decrease

b)

Increase

c)

Not change

d)

Decrease

197.

What factors does monetary policy affect?


a)

Both inflation and output

b)

No effect on inflation and output

c)

Inflationary

d)

Output

198.

The Central Bank’s money issuance channels are:

A. Gold and foreign exchange market

B. Through intermediary banks

C. Through state-owned enterprises

D. Both A and B


a)

Gold and foreign exchange market

b)

Through intermediary banks

c)

Through state-owned enterprises

d)

Both A and B

199.

When a central bank raises the policy interest rate, what is the most likely effect?

a)

Increased borrowing and spending

b)

Lower savings rates

c)

Reduced inflationary pressure

d)

Higher money supply

200.

 Which of the following is not an operating target of monetary policy?

a)

Interbank interest rate

b)

Total reserves of the banking system

c)

M2 money supply

d)

Non-borrowed reserves

201.

 If the central bank conducts an open market purchase, the immediate effect on the banking system is:

a)

The amount of reserves increases

b)

Lending decreases

c)

The monetary base decreases

d)

Interbank rate increases

202.

Which of the following is a long-term objective rather than a short-term operating indicator?


a)

Price stability

b)

Interbank rate

c)

Required reserves

d)

Borrowed reserves

203.

 What happens when the central bank lowers the discount (refinancing) rate?

a)

Banks borrow less from the central bank

b)

The supply of reserves increases

c)

Money multiplier decreases

d)

Monetary policy becomes contractionary

204.

Which statement correctly describes the relationship between monetary policy and aggregate demand?

a)

Tight monetary policy shifts aggregate demand rightward

b)

Expansionary monetary policy raises interest rates

c)

Expansionary monetary policy can increase investment and output

d)

Tight monetary policy increases money supply

205.

Which statement best describes the main benefit of central bank independence?

a)

It ensures higher economic growth in the long run.

b)

It protects monetary policy from political pressure, improving inflation control.

c)

It eliminates the need for fiscal policy coordination

d)

It guarantees low unemployment and stable output.

206.

 If a country defends a fixed exchange rate while experiencing large capital outflows, its central bank will likely need to:


a)

Sell foreign reserves and buy its domestic currency.

b)

Reduce reserve requirements to stimulate lending.

c)

Lower interest rates to discourage speculation.

d)

Purchase domestic currency bonds via QE.

207.

 Which situation is most consistent with fiscal dominance?


a)

Central bank raises policy rates despite rising government debt.

b)

Central bank adjusts monetary policy solely to accommodate government borrowing needs.

c)

Fiscal policy contraction forces the central bank to loosen monetary policy.

d)

The government adopts a balanced budget rule.

208.

Which of the following conditions would make monetary policy less effective in controlling inflation?


a)

A highly credible central bank

b)

Strong transmission through the credit channel

c)

A shallow financial system with weak interest rate pass-through

d)

Low inflation expectations among households

209.

Which scenario best illustrates the liquidity trap?


a)

Banks hold excess reserves even when interest rates are near zero

b)

Inflation rises despite a contractionary monetary policy

c)

The yield curve inverts during a recession

d)

A rapid depreciation of exchange rate due to capital flight