Test “Influence of Policy on Currency”

Test: Influence of Policy on Currency

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What is an expansionary monetary policy?

a) Stimulating the production of money

b) The central bank seeking opportunities to manufacture money

c) The central bank seeking ways to reduce the money supply

d) The central bank seeking ways to increase the money supply

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How does restrictive policy affect the currency?

a) Positively

b) Negatively

c) Insignificantly

d) Does not affect

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How does expansionary policy affect the currency?

a) Positively

b) Negatively

c) Insignificantly

d) Does not affect

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What is a reserve requirement?

a) The minimum amount of funds available for immediate withdrawal

b) The maximum amount of funds available for immediate withdrawal

c) A clearly defined limit that needs to be set aside

d) The amount that must always be in the user's reserve

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What is fiscal policy?

a) Government revenue

b) Additional government funds

c) Government expenditures

d) Options A and C

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When does a budget deficit occur?

a) When the country lends more to private investors than it spends

b) When the country spends more than it receives in loans from private investors

c) When the country’s budget is short of funds

d) When the country makes poor forecasts for next year’s budget

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