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TIOB Professional Banking Monetary Policy — practice questions

Explore 30 free Monetary Policy questions in TIOB Professional Banking Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Monetary Policy questions and exercises with answers

Showing questions 1–30 of 30.

The institution that conducts monetary policy and keeps the financial system running smoothly is the:Read the answer and worked solution →In setting the money supply, a central bank aims at low inflation and low:Read the answer and worked solution →Regional Federal Reserve banks supporting commercial banks in their districts number:Read the answer and worked solution →Commercial banks hold an account at the central bank in which they deposit:Read the answer and worked solution →Bank regulation exists to maintain solvency by avoiding excessive:Read the answer and worked solution →Even a rumour of negative net worth could destroy a bank that is otherwise:Read the answer and worked solution →Two strategies protect against bank runs: the lender of last resort and deposit:Read the answer and worked solution →Deposit insurance ensures that depositors do not lose their money even if the bank:Read the answer and worked solution →The body whose examiners assess bank balance sheets for risk is the:Read the answer and worked solution →The real danger of a bank run is that it can make banks fail even when they are:Read the answer and worked solution →The Federal Reserve was founded after the financial panic of:Read the answer and worked solution →The most common monetary policy tool in the United States is open market:Read the answer and worked solution →Those operations work by having the central bank buy or sell:Read the answer and worked solution →Decisions about open market operations are made by the Federal Open Market:Read the answer and worked solution →Policy that lowers interest rates and stimulates borrowing is described as:Read the answer and worked solution →Policy that raises interest rates and reduces borrowing is described as:Read the answer and worked solution →An economy in recession with output below potential GDP calls for policy that is:Read the answer and worked solution →Besides open market operations, the Fed can change the discount rate and the reserve:Read the answer and worked solution →Beyond policy, the central bank makes sure enough coins and notes circulate, meeting public:Read the answer and worked solution →Unlike most central banks, the Federal Reserve is described in structure as:Read the answer and worked solution →In the 1987 stock market crash, share values fell in a single day by about:Read the answer and worked solution →In March 2020 the Fed responded to the pandemic recession by reducing the federal funds:Read the answer and worked solution →Catch the policy toolsRead the answer and worked solution →Pop the safety netsRead the answer and worked solution →Run the policy gatesRead the answer and worked solution →Slice the banking wordsRead the answer and worked solution →Loose or tightRead the answer and worked solution →Sort the banking wordsRead the answer and worked solution →Type the numberRead the answer and worked solution →Banking bingoRead the answer and worked solution →

Worked practice questions

The institution that conducts monetary policy and keeps the financial system running smoothly is the:

  1. Central bank
  2. Chamber bank
  3. Clearing bank
  4. Contract bank
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Correct answer: A. Central bank

1. Commercial banks serve households and firms. 2. One national institution stands above them. 3. That institution is the central bank. _Source: OpenStax Principles of Economics 3e, Chapter 28, Monetary Policy and Bank Regulation._

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In setting the money supply, a central bank aims at low inflation and low:

  1. Understanding
  2. Unemployment
  3. Underwriting
  4. Undertaking
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Correct answer: B. Unemployment

1. Two macroeconomic evils are targeted together. 2. One is rising prices. 3. The other is joblessness, or unemployment. _Source: OpenStax Principles of Economics 3e, Chapter 28, Monetary Policy and Bank Regulation._

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Regional Federal Reserve banks supporting commercial banks in their districts number:

  1. 12
  2. 10
  3. 14
  4. 20
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Correct answer: A. 12

1. Each covers a defined geographic district. 2. Together they span the country. 3. There are 12 of them. _Source: OpenStax Principles of Economics 3e, Chapter 28, Monetary Policy and Bank Regulation._

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