Subject: Money and bancking

1. What is the primary objective of most central banks? a) To maximize profits b) To control inflation c) To regulate the stock market d) To promote economic growth 2. Which of the following is NOT a tool used by central banks to control inflation? a) Changing interest rates b) Printing more money c) Regulating the banking system d) Managing foreign exchange rates 3. What is the main role of central banks in the global economy? a) To control the supply and demand of goods and services b) To regulate international trade c) To manage the flow of capital between countries d) To promote financial stability and economic growth 4. How do central banks influence the economy? a) By creating more jobs b) By controlling interest rates and money supply c) By setting price controls d) By investing in public works projects 5. What is the yield curve? a) A graph showing the relationship between bond yields and maturity b) A curve showing the relationship between interest rates and GDP growth c) A measure of the risk of a particular investment d) A curve showing the relationship between inflation and unemployment 6. What does an inverted yield curve indicate? a) A recession is imminent b) Economic growth is likely to accelerate c) Inflation is likely to rise d) Interest rates are likely to stay the same 7. What is a steep yield curve? a) A curve where long-term interest rates are significantly higher than short-term interest rates b) A curve where short-term interest rates are significantly higher than long-term interest rates c) A flat yield curve d) A curve where interest rates remain constant over time 8. What is the most common shape of the yield curve? a) Inverted b) Steep c) Flat d) Upward-sloping 9. What is the Phillips Curve? a) A graph showing the relationship between inflation and unemployment b) A graph showing the relationship between bond yields and bond prices c) A measure of the risk of a particular investment d) A curve showing the relationship between interest rates and GDP growth 10. What is the Great Moderation? a) A period of low volatility in the stock market b) A period of high inflation and economic growth c) A period of low inflation and economic stability d) A period of high unemployment and social unrest 11. What is Okun's Law? a) A law stating that the velocity of money is directly proportional to the money supply b) A law stating that the unemployment rate and GDP growth are inversely related c) A law stating that interest rates and inflation are directly related d) A law stating that the price level and the money supply are directly related 12. What is the Fisher Equation? a) An equation describing the relationship between interest rates and bond prices b) An equation describing the relationship between inflation and unemployment c) An equation describing the relationship between the nominal interest rate, the real interest rate, and inflation d) An equation describing the relationship between the money supply and GDP 13. Which of the following is an implication of the Fisher Equation? a) Real interest rates increase with higher inflation b) Nominal interest rates decrease with higher inflation c) The money supply is directly related to GDP d) Unemployment is inversely related to GDP 14. What is bank regulation? a) Rules and guidelines set by governments to control the activities of banks and financial institutions b) A process of self-regulation in which banks monitor their own activities and adhere to ethical standards c) The process of investing in new bank technologies to improve efficiency and reduce costs d) The process of merging multiple banks into one large institution 15. Which of the following is an example of a regulatory requirement for banks? a) Reporting quarterly profits to shareholders b) Keeping a minimum amount of capital on hand to cover losses c) Investing in high-risk assets to maximize returns d) Offering free checking accounts to all customers 16. What is the purpose of bank stress tests? a) To determine the profitability of individual banks b) To assess the overall health and stability of the banking system c) To identify potential mergers and acquisitions d) To determine the interest rates on loans and deposits 17. Which of the following is NOT a function of a central bank in regulating banks? a) Ensuring that banks have adequate capital b) Regulating the interest rates that banks can charge on loans c) Conducting regular stress tests to evaluate the health of the banking system d) Monitoring and supervising the activities of individual banks 18. What is the Saudi Monetary Authority? a) The central bank of Saudi Arabia b) A government agency responsible for regulating the oil industry c) A private financial institution in Saudi Arabia d) A non-profit organization dedicated to promoting economic development in Saudi Arabia 19. What is the primary objective of the Saudi Monetary Authority? a) To promote economic growth and stability in Saudi Arabia b) To regulate the oil industry in Saudi Arabia c) To manage the flow of capital between Saudi Arabia and other countries d) To control inflation in Saudi Arabia 20. According to the quantity theory of money, which of the following is true? a) Inflation is caused by changes in the money supply b) Inflation is caused by changes in the demand for goods and services c) The velocity of money is directly proportional to the money supply d) The real interest rate is directly proportional to the money supply