The primary role of a central bank is to:
A) Regulate the stock market
B) Control government spending
C) Maintain price stability
D) Manage foreign trade policies
Which of the following is NOT a function of a central bank?
A) Issuing currency
B) Regulating commercial banks
C) Setting interest rates
D) Taxation
The central bank controls inflation by:
A) Increasing government spending
B) Lowering interest rates
C) Raising interest rates
D) Regulating taxes
In times of economic downturn, the central bank may:
A) Increase interest rates
B) Print more money
C) Decrease government debt
D) Reduce the supply of credit
Which of the following is a tool used by the central bank to control money supply?
A) Reserve requirements
B) Fiscal policy
C) Taxation
D) Trade policy
Central banks typically aim to:
A) Maximize profits for commercial banks
B) Provide loans to large corporations
C) Ensure stable economic growth
D) Control the stock market volatility
The central bank’s role in managing exchange rates includes:
A) Fixing exchange rates with gold
B) Regulating the flow of foreign exchange reserves
C) Controlling inflation
D) Setting the price of exports
A central bank can control inflation through:
A) Reducing the supply of money
B) Increasing public spending
C) Lowering interest rates
D) Increasing imports
When the central bank lowers interest rates, it:
A) Makes borrowing more expensive
B) Increases the cost of loans
C) Encourages consumer spending
D) Reduces the supply of credit
Which of the following is a goal of central bank monetary policy?
A) Economic expansion at any cost
B) Achieving a balanced budget
C) Maintaining stable inflation and employment
D) Reducing government debt
The central bank conducts open market operations to:
A) Borrow money from commercial banks
B) Buy or sell government securities
C) Print new currency
D) Influence the stock market
Central banks may act as a lender of last resort during:
A) Inflationary periods
B) Economic growth
C) Financial crises
D) Trade surpluses
Which of the following central bank actions would increase the money supply?
A) Selling government securities
B) Raising interest rates
C) Lowering reserve requirements
D) Increasing taxes
The central bank regulates commercial banks by:
A) Setting lending rates
B) Providing loans to banks
C) Determining interest rates
D) Both A and B
Central banks ensure the stability of the banking system by:
A) Implementing monetary policies
B) Setting regulations for bank operations
C) Maintaining emergency funds for banks
D) All of the above
To counteract a recession, the central bank may:
A) Increase interest rates
B) Reduce money supply
C) Purchase government bonds
D) Increase reserve requirements
The central bank can influence the exchange rate by:
A) Decreasing government debt
B) Increasing interest rates
C) Controlling the money supply
D) Increasing taxes
Central banks are responsible for:
A) Issuing government bonds
B) Maintaining a country’s monetary policy
C) Tax collection
D) Setting fiscal policies
The central bank manages the nation’s foreign exchange reserves to:
A) Control inflation
B) Maintain economic growth
C) Influence exchange rates
D) Raise government revenue
Which of the following is an effect of central bank intervention in the foreign exchange market?
A) Currency depreciation
B) Currency stabilization
C) Increased inflation
D) Increased money supply
When the central bank raises interest rates, it:
A) Increases borrowing
B) Decreases savings
C) Makes borrowing more expensive
D) Increases consumer spending
Which of the following is true about central bank independence?
A) It ensures free government spending
B) It helps maintain economic stability
C) It allows politicians to control monetary policy
D) It is irrelevant for economic stability
Central banks control money supply by:
A) Adjusting the fiscal deficit
B) Raising taxes
C) Changing reserve requirements and interest rates
D) Printing more currency directly
Central banks can reduce inflation by:
A) Increasing money supply
B) Lowering interest rates
C) Selling government securities
D) Purchasing foreign assets
Which of the following is a reason for central banks to set high reserve requirements for commercial banks?
A) To stimulate lending
B) To reduce inflation
C) To ensure that banks maintain sufficient liquidity
D) To increase the money supply
The role of a central bank in financial crises includes:
A) Providing loans to banks to prevent failure
B) Encouraging higher government spending
C) Raising interest rates to reduce credit
D) Lowering taxes to stimulate demand
When a central bank lowers interest rates, it typically leads to:
A) Decreased borrowing
B) Increased borrowing and investment
C) A decline in exports
D) A higher exchange rate
A central bank’s ability to control inflation directly impacts:
A) National security
B) Exchange rates
C) Government revenue
D) Consumer prices
The central bank aims to ensure economic stability by controlling:
A) National debt
B) Political policies
C) Money supply and interest rates
D) Wage levels
During inflationary periods, central banks often:
A) Lower interest rates
B) Increase the supply of money
C) Sell government securities
D) Print more currency
The independence of a central bank ensures that:
A) Governments can easily control the economy
B) Monetary policy is free from political interference
C) Economic decisions are made by politicians
D) Central banks cannot adjust interest rates
