Endterm Examination (Assessment) Summer 2020

Name: _______________ Reg #:

Department & Program: BBA/BSAF Class & Section: AF/BBA-255-A

Course Code & Name: AF 2404/BA 2401 Money and Banking Total Marks: 50
Marks
Instructor’s
Important Name: Dr. Hassan Raza
Instructions:
 Write in your own words. Any copy from given material, internet or from other collogues
work cannot be claimed for marks.
 Provide page numbers to your submitted document and must be in pdf format.
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Question No 1 [7+7]

Part A:
Economic theory has many explanations for the relative currency movements. Give any three
explanations in relation to the article “Fall of Pakistani Rupee”.
Part B
As an economic student, how you see the hot money flow into the Pakistan during 2019. Discuss its pros
and cons.

Question No 2
Part A [7+7]
What is the difference of real interest rate and nominal interest rate? It is true that high real interest rates
stifle investment, while low interest rate increase inflation and decrease financial stability, so which interest rate
do you support and why?
Part B
What is the role of state bank in establishing the economy? Why is the SBP giving a preference to
borrowers, instead of savers? Does that not erode the savers’ gains?

Question No 3 [8+7+7]
Part A
SBP is mainly using indirect instruments to implement its monetary policy. What are those instruments,
and how those instruments work for financial stability? Also, write a detail note on transmission mechanism of
Monetary Policy.
Part B
Write a brief note on prudential regulations of banking sector. Why it is important to implement them?
Part C
What is the difference between islamic and commercial banking? What are the different products of
islamic banking in comparison to the commercial banking (atleast discuss any two products as example)?