11. The term “repo rate” is associated with which market?
a. Money market
b. Bond market
c. Stock market
d. Foreign exchange market
12. When the central bank conducts open market operations to buy government securities, it will likely:
a. Decrease interest rates
b. Increase interest rates
c. Have no effect on interest rates
d. Decrease the money supply
13. Which of the following is a contractionary monetary policy tool?
a. Increasing government spending
b. Decreasing taxes
c. Buying government securities
d. Increasing the reserve requirement
14. The term “moral suasion” refers to the central bank’s use of:
a. Legal regulations to control money supply
b. Persuasion and informal influence to control money supply
c. Interest rates to control money supply
d. Government bonds to control money supply
15. The primary purpose of a central bank is to:
a. Conduct fiscal policy
b. Regulate commercial banks
c. Control inflation
d. Provide loans to individuals
