Monetary Theory & Public Finance MCQs

What is the primary function of monetary policy?

A) To regulate government spending

B) To control inflation and unemployment

C) To manage international trade

D) To oversee public finance

Which institution typically oversees monetary policy in most countries?

A) Ministry of Finance

B) Central Bank

C) World Bank

D) International Monetary Fund (IMF)

What is the primary tool used by central banks to influence monetary policy?

A) Fiscal policy

B) Exchange rate management

C) Open market operations

D) Tariff adjustments

Which of the following is an objective of expansionary monetary policy?

A) To reduce money supply

B) To combat inflation

C) To stimulate economic growth

D) To increase interest rates

Which of the following is a function of money?

A) Store of value

B) Store of resources

C) Store of labor

D) Store of knowledge

What is the significance of the money multiplier in monetary theory?

A) It represents the ratio of currency to money supply

B) It measures the impact of government spending on inflation

C) It shows how banks create money through lending

D) It reflects the impact of international trade on money supply

Which policy tool involves the purchase or sale of government securities?

A) Fiscal policy

B) Monetary base adjustment

C) Open market operations

D) Trade agreements

What is the name of the interest rate at which the central bank lends to commercial banks?

A) Prime rate

B) Discount rate

C) Inflation rate

D) Market rate

Which of the following is a goal of public finance?

A) To maximize corporate profits

B) To promote social welfare

C) To encourage monopolies

D) To minimize international trade

What is the primary source of government revenue?

A) Corporate donations

B) Personal income tax

C) Export tariffs

D) Public borrowing