The use of the bank rate, cash ratio and open market operations constitute
Fiscal policy
Monetary policy
Import policy
Export policy
Correct answer is B
Monetary policy refers to the policy taken by the Central Bank to control and regulate the supply of money with the public (economy). Examples are Open market operation, Bank rate, Cash reserve ratio etc.
Commercial banks are different from development banks in that the latter
Lend on short-term basis
Pay interest on current accounts only
Are mostly joint-stock companies
Do not deal in foreign currencies
Correct answer is D
Commercial bank is the bank organized to perform public utility banking services such as accepting deposits, lending of money etc. On the other hand, development bank refers to a multi-purpose financial undertaking set up to provide financial aid to the industrial and agricultural sector, to encourage development.
The difference is that raise funds from accepting deposit from the public while development banks borrow, grants and sells securities.
If the Central Bank increases its bank rate
Many banks will shut down their operations
Customers will borrow more from banks
The supply of money may be reduced
Interest charges by banks will fall
Correct answer is C
A rise in the bank rate means that the interest charge from commercial banks will increase their interest which reduce the borrowing by general public and interest rate is high, so the money supply would decrease.
If inflation is anticipated, people may
Save more money
Spend more money
Give out more loans
Save less money
Correct answer is B
Anticipated inflation occurs when people know inflation is going to occur and prepare for it. For example, increased interest rates.
An example of commodity money is
Currency note
Mobile money
Cheques
Silver
Correct answer is D
Commodity money are money who has value has money and commodity e.g. gold, silver coin, diamond, cattle, bead etc.