2023 Quiz on Monetary Policy

Money Supply and Interest Rate are the only instruments for Monetary Policy

• True

• False

If the Central Bank wants banks to give out more loans, they can

• lower the required reserve ratio

• buy back treasury bills from the Open Market Operation

• Print Money

• All of the above

The bank is charging a 5% interest and the inflation rate is 6%. What is the real interest rate?

• -1%

• 1%

• 11%

When an expansionary monetary policy is used, what components of AD will rise?

• C

• C and I

• C, I and X

When interest rate is reduced, short-term capital inflow will _______ and outflow will __________, leading to _________ of the currency.

• decrease, increase, depreciation

• increase, decrease, appreciation

Monetary policy's effectiveness is limited if

• consumers and firms are insensitive to changes in interest rate.

• commercial banks are unwilling to lend

• interest rate is already close to zero

• all of the above

The Monetary Authority of Singapore targets a

• depreciation of SGD

• very strong SGD

• gradual & modest appreciation of SGD

A strong SGD will help to fight

• cost-push inflation

• cost-push inflation & demand-pull inflation

• cost-push inflation & demand-pull inflation and recession

Which of the statement is false?

• An economy can manage both interest rate and exchange rate with free capital flow

• An economy can manage interest rate and not exchange rate with free capital flow

• An economy can manage exchange rate and not interest rate with free capital flow

• An economy can manage interest rate and exchange rate with capital control

It is common for MAS to devalue SGD.

• True

• False