emaa banking

What is the primary role of a central bank?

• • A) Printing money

• • B) Regulating financial institutions

• • C) Selling financial products

• • D) Managing stock markets

Which of the following is NOT a function of a central bank?

• • A) Issuing national currency

• • B) Implementing monetary policy

• • C) Providing direct loans to businesses

• • D) Acting as a lender of last resort

What is the primary objective of central banks concerning inflation?

• • A) Encourage inflation

• • B) Eliminate inflation completely

• • C) Maintain price stability

• • D) Ignore inflation

What happens when a central bank lowers the discount rate?

• • A) Decreases money supply

• • B) Encourages borrowing

• • C) Reduces economic activity

• • D) Increases inflation

Which monetary policy instrument involves buying and selling government bonds?

• • A) Open market operations (OMO)

• • B) Discount rate

• • C) Reserve requirements

• • D) Exchange rate adjustments

What is the effect of increasing reserve requirements?

• • A) Banks lend more money

• • B) Money supply decreases

• • C) Inflation increases

• • D) Economic activity increases

What does a central bank do to control inflation?

• • A) Increase money supply

• • B) Lower interest rates

• • C) Raise reserve requirements

• • D) Decrease bond sales

Which monetary policy tool directly influences interest rates?

• • A) Reserve requirements

• • B) Open market operations

• • C) Discount rate

• • D) Currency devaluation

6. What does selling government bonds do to the economy?

• • A) Increases money supply

• • B) Decreases money supply

• • C) Lowers interest rates

• • D) Boosts borrowing

11. Why is banking regulation important?

• • A) Ensures financial stability

• • B) Increases banking profits

• • C) Reduces government intervention

• • D) Eliminates banking competition