Wealth-Forum e-zine

Test your understanding of this topic

Q1.

Monetary policy has:

a. Greater inside lag

b. Lesser inside lag

c. Lesser outside lag

Q2.

As bank rate/ discount rate decreases, the banks increase their lending rates.

a. True

b. False

Q3.

To decrease the money supply in the market, the central bank of the country would:

a. Purchase securities from the market

b. Sell securities in the market

c. Decrease the bank rate

Q4.

A high reserve requirement would lead to:

a. An increase in the liquidity

b. A decrease in the liquidity

c. No effect

Q5.

Which of the following is/are objective/s of monetary policy?

a. Maintain money supply in the market

b. Maintain price stability

c. Both a & b