Call Money Rate in Bangladesh

MONETARY ECONOMICS

1. “Inflation is always and everywhere a monetary phenomenon.” Who said this? – a) John Maynard Keynes; b) James Tobin; c) Milton Friedman; d) Irving Fisher.

1. The relationship between wage-price inflation and the level of economic activity is known as – a) GNP-inflation effect; b) Demand-supply effect; c) Phillips curve; d) None of the above.

2. Monetary policy stance of the central bank in Bangladesh can be found in which of the following publications? – a) Economic Review of the Ministry of Finance; b) Bangladesh Bank Bulletin c) Economic Trends (Bangladesh Bank); d) Monetary Policy Statement (Bangladesh Bank).

3. In the IS-LM framework, what does LM stand for? – a) Liquidity management; b) The supply of nominal quantity of money; c) The demand for money; d) None of the above. 4. For optimal macroeconomic effectiveness, monetary policy should be – a) Independently applied; b) Coordinated with fiscal policy; c) Coordinated with trade, fiscal and exchange rate policy; d) All of the above.

5. In conducting monetary policy, Bangladesh Bank pursues a strategy of – a) Inflation targeting; b) Monetary targeting; c) Both of the above; d) None of the above.

6. An increase in the rate of interest would increase – a) The transactions demand for money; b) The prices of bonds; c) The asset demand for money; d) The opportunity cost of holding money.

INTERNATIONAL ECONOMICS

1. “Dumping” in international trade means – a) Forcing other countries to buy a country’s goods; b) Charging a lower price for exported goods than the same goods sold domestically; c) Resorting to price discrimination; d) Both (a) and (c).

2. The theory of “Purchasing Power Parity” holds that – a) All countries’ price levels are equal, when measured in terms of the same currency; b) Price levels are equal, ignoring transportation costs and official barriers to trade; c) Both (a) and (b); d) None of the above.

3. The IMF Articles of Agreement encourages currency convertibility on – a) Current account of the balance of payments; b) Capital account of the Balance of Payments; c) None of the above; d) Both (a) and (b).

4. “Managed floating” of the exchange rate allows a central bank to – a) Control volatility of the exchange rate; b) Control money supply but at the cost of greater exchange rate instability; c) Both of the above; d) None of the above.

5. The Doha Round of multilateral trade negotiations failed because of – a) Disagreements over agricultural subsidy issues; b) Disagreements over tariff issues; c) Refusal to negotiate; d) None of the above.