CENTRAL BANKING

1. Discount rate of State Bank of Pakistan is: More than 5% but not more than 15%
2. State Bank was established in: 1948
3. 10-rupees note is issued by: State Bank of Pakistan
4. Acting as lender of last resort, a central bank lends to: Commercial banks
5. Which statement is true of the relationship between bond prices and bond yields? They vary inversely
6. When the State Bank wants to decrease money supply in the country, it: Buys govt. securities in stock market
7. Which is the most widely used tool of monetary policy: Open-market operations
8. Monetary policy consists of: Changing total money supply
9. State Bank of Pakistan has departments: Issue, research and banking department
10. Central bank's rate of landing to commercial banks is called: Discount rate
11. When a central bank wants to increase money supply in circulation: Purchases govt. securities and Lowers
bank rate
12. State Bank of Pakistan is run by: Board of directors
13. Credit money is controlled by: Central bank
14. Every country establishes central bank to: Issue notes and Supervise commercial banks
15. It is NOT an instrument of monetary policy: Issue notes
16. Which is a monetary measure to increase employment: Reducing interest rate
17. In order to reduce consumer borrowing this is raised: Interest rate
18. Which organization controls the banking system in most countries? Central bank
19. Treasury bill is used for Getting short term loans
20. It creates credit: Commercial banks
21. Out of the following the only recognized legal tender is: Bank notes and coins
22. Open market operations is: Buying and selling govt. securities
23. Monetary policy has the objective: Decrease inflation rate
24. Every country establishes central bank to: Issue currency
25. It is a monetary employment: Reducing interest rate
26. In order to reduce consumer borrowing: Interest rate is increased
27. Which organization controls the banking system: Central bank
28. The money called legal tender includes: Currency notes and coins
29. Open market operations refer to: Buying and selling govt. securities
30. If SLR (statutory liquidity ratio) is 20% and a bank gets a new deposit of 10 million, the total increase in its
deposits can rise up to: 50 millions
31. State Bank policy of regulating interest rate is called: Monetary policy

What is National Savings?

It is a concept studied in economics. Saving means something kept from being used for instance, if a person earns
an amount of 10 rupees, he keep 2 rupees aside from being used we call it those 2 rupees saving of that person.
Whereas on aggregate level the concept of National savings describes the sum of private and public savings in an
economy as a whole.

GDP is national income. We can deduce the national savings from the formula GDP is used to calculate.
So, Y= National income, I= Investment, C= Consumption, G= Government Expenditure.

GDP or Y= C+I+G

National Savings = Y-C-G = I

The amount of money saved is equal to the amount of money invested in a closed economy. Gross domestic
savings (% of GDP) in Pakistan was last measured at 9.37 in 2011, according to the World Bank.

What are determinants of Savings?

1. Demographic Factors (dependent and aging sections of population)

2. Consumerism (spending more)
3. Income Level (as high incomes are associated with high savings)
4. Public Finance (the more the govt: expenditure the less is the saving)
5. Economic Uncertainty
6. Inflation, interest rates and other business cycle fluctuations
Concept of opportunity cost and diminishing marginal returns and many other
concepts on individual level determine the rate of savings.