Free CIMAPRA17-BA1-1 Exam Braindumps (page: 60)

Page 60 of 118

The ability of commercial banks to create credit would be reduced if:

  1. their stock of cash assets increased
  2. the required cash ratio was raised
  3. the central bank bought bonds from the banks
  4. interest rates were lowered

Answer(s): B



Other things remaining equal, which one of the following is likely to increase as a result of the sale by the central bank of a large quantity of government bonds?

  1. The quantity of money
  2. The yield of government bonds
  3. The liquid reserves of banks
  4. The price of government bonds

Answer(s): B



The real rate of interest is

  1. The rate of interest charged by banks on loans.
  2. The nominal rate of interest adjusted for inflation.
  3. The compound rate of interest.
  4. The rate of interest charged on loans plus administrative charges.

Answer(s): B



The stock market fulfils all of the following functions except which one?

  1. A market for government bonds.
  2. A market for foreign exchange.
  3. A market for company shares.
  4. A market for short term loans.

Answer(s): D



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