Republic of the Philippines

Davao Oriental State College of Science and Technology

Guang-guang, Dahican, City of Mati, Davao Oriental

Finals Exam
Monetary Policy
First Semester (2020-2021)

I Write “True” if the statement is true and write “False” if the statement is
false.

_____1. Central bank monetary liabilities are everyone else's liabilities?

_____2. Currency in circulation (C) and reserves (R), are everyone else's
liabilities?
_____3. In accounting, reserves are recorded by debiting the retained
earnings account then crediting the same amounting to the reserve account?
_____4. Central bank liabilities includes’ commercial bank accounts, otherwise
known as reserves?
_____5. Basically, C = MB + R, an equation you’ll want to internalize?
_____6. Excess reserves are reserves banks must hold as a legal minimum to
ensure their financial soundness?
_____7. The creation of money is sometimes called contraction of the central
bank's balance sheet?
_____8. Reserves are commercial bank assets but central bank liabilities?
_____9. Required reserves is the amount exceeding the required reserves, which
banks keep, to conduct their daily business or because they failed to lend it?
____10. As the assets increase, the equity increases. Likewise, if you have a
decrease in assets or an increase in liabilities, the equity decreases?

II ENUMIRATION:

Reserve has three expansionary monetary policy methods:

11.
12.
13.
There are different types of reserves used in financial accounting like:
14.
15.
16.
17.
18.

The four tools to achieve its monetary policy goals:

19.
20.
21.
22.

the three motives for demanding money:

23.
24.
25.

Types of demand for money:

26.
27.
28.
The monetary policy macroeconomic objectives:
29.
29.
30.
31.

Monetary policy can be broadly classified as:

32.
33.
III -ESSAY (5 POINTS EACH)

Explain in your own words the following:

1. What is a Central Bank Balance Sheet?

2. Is quantitative easing good for the economy?

3. What Is Monetary Policy?