monetary policy

____________________ is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.

Which of these is NOT a monetary policy tool?

• a) Marginal Standing Facility

• b) Open Market Operations

• c) Bank Accounts

• d) Reserve Requirements

A decrease in the rate of inflation

• Inflation

• Deflation

• Disinflation

• Hyperinflation

What do we call the funds that the banks keep with RBI as a portion of their Net Demand and Time Liabilities?

• Statutory Liquidity Ratio

• Cash Reserve Ratio

• Bank Rate Reverse

• Repo Rate

The difference between the time a serious problem is recognized and the time the Fed implements a policy to resolve that problem is known as....

• implementation lag

• Stimulative Monetary Policy

• Recognition lag

• Restrictive Monetary Policy

_______controls the supply of money and bank credit:

• a) RBI

• b) Indian Banking Association

• c) SEBI

• d) None of These

Monetary Board has the unique right to offer advice, and to press such advice even to the point of nagging; but always of course subject to the supreme authority of the government.

• True

• False

According to monetary policy experts:

• money supply directly determines changes in prices, real GDP and employment.

• monetary policy acts too slowly to cause any changes in aggregate demand.

• monetary policy acts indirectly causing changes in interest rates but not in investment and aggregate demand.

• monetary policy acts indirectly causing changes in interest rates first before affecting investment and aggregate demand.

The RBA believes that by keeping inflation low and steady it can assist with:

• the achievement of low prices over the medium to long term.
• the achievement of slow and steady economic growth over the medium to long term.
• the achievement of full unemployment and slow and steady economic growth over the medium to long term.
• the achievement of full employment and high economic growth over the medium to long term.

The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to:

• fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
• fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP.
• rise, cutting investment and shifting the AD curve rightward, leading to an increase in real GDP.
• rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP.