Monetary Policy Quiz by Shubhrata Shrestha | May 30, 2025 | 0 comments Monetary Policy Quiz 1. Which of the following is not a direct tool of monetary policy? A. Government subsidies B. Interest rates C. Credit regulations D. Money supply None 2. What happens when a central bank applies contractionary monetary policy? A. Interest rates fall B. The money supply expands C. Borrowing becomes costlier D. Aggregate demand increases None 3. A rightward shift in the aggregate demand curve due to monetary policy likely indicates: A. Higher taxes B. Contractionary policy C. Expansionary policy D. Decrease in investment None 4. Which monetary tool indirectly affects net exports via currency fluctuations? A. Reserve requirement B. Money supply C. Interest rates D. Open market operations None 5. In the AD/AS model, contractionary monetary policy will most likely: A. Increase output and inflation B. Lower output and price level C. Increase employment and reduce inflation D. Leave price level unchanged None 6. One major goal of contractionary monetary policy is to: A. Reduce government debt B. Stimulate consumption C. Control inflation D. Increase aggregate demand None 7. An increase in interest rates usually leads to: A. Increased borrowing and spending B. Decrease in foreign capital inflows C. A stronger domestic currency D. Higher exports None 8. Which of these occurs during expansionary monetary policy? A. Currency appreciates B. Unemployment rises C. Aggregate demand decreases D. Investment rises None 9. If AS is perfectly inelastic, the effect of expansionary monetary policy will be: A. Higher output only B. Higher inflation only C. Higher output and no change in price D. No impact on AD None 10. Which of these statements is true regarding monetary policy time lags? A. Immediate results are always seen B. It has no impact on long-run output C. There is usually a delay before effects are seen D. It is ineffective against inflation None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
