Monetary Aggregates and Money Supply

6. The process by which the central bank controls the money supply is known as:

a) Monetary policy

b) Fiscal policy

c) Exchange rate policy

d) Inflation targeting

7. When the central bank buys government securities, it leads to:

a) Increase in money supply

b) Decrease in money supply

c) No impact on money supply

d) Increase in interest rates

8. When the central bank sells government securities, it leads to:

a) Increase in money supply

b) Decrease in money supply

c) No impact on money supply

d) Lower inflation rates

9. Which of the following is not a measure of money supply?

a) M1

b) M2

c) M3

d) GDP

10. Which of the following is a function of money?

a) Medium of exchange

b) Store of value

c) Unit of account

d) All of the above