Republic of the Philippines

CAVITE STATE UNIVERSITY

Imus Campus

Name : _Rowela Pahilagao_______________ Score: ____________

Course & Section: ___FMGT 2B_______________ Date: __06-17-21______

First Part of the FINAL EXAMINATION for Monetary Policy and Central Banking (FMGT 65)
I. Write TRUE if the statement is correct and write FALSE if otherwise.
_ TRUE ___1. Interest is the money you either owe when you lend the money or deposit funds into an
interest-bearing bank account.

__ TRUE ___2. The amount of money that needs to be kept in the vault also refers to the reserve
requirement of the BSP to the banks.

_ TRUE ___3. The exchange rate affects the cost of servicing on the country’s foreign debt. A higher
peso value increases the amount of pesos needed to pay for the interest and maturing
obligation.

__ TRUE ___4. Lower asset prices reduces the wealth of owners and it moderate the demand and
inflation.
FALSE ___5. BSP keeps interest rate at 2% even if the Philippines is still in recession with a positive
projection that inflation stay in lower level within 2021 target

_ TRUE ____6. The largest contributor to inflation from year 2020 up to year 2021 is the food index

__ TRUE ___7. The BSP with the help of PSA monitors inflation both in NCR and outside NCR
differently.
__ TRUE ____8. Changes in BSP policy rate which is transmitted to various channels takes 1-2
years
before it is fully felt across the economy.
.
TRUE_______9. The Philippines negative growth in the year 2020 is the first experience after more than
21 years.

FALSE_____10. The outstanding loans of Universal and Commercial banks, net of reverse repurchase
decline by 5.0 percent year on year in April.

TRUE______11. Philippines is already experiencing recession starting year 2020 up to present.

FALSE 12. Any decrease in the reserve requirement of the bank is not an ideal scenario because it
indicates that the banks are not doing well and consumers and business owners will
surely withdraw all their bank deposits due to fear of bankruptcy.

FALSE____13 When Inflation is high, the cost of living gets higher and the peso purchasing power
increases too.

TRUE____14. Price Stability is a condition of low and stable inflation.

FALSE_____15. The expansionary monetary policy decreases unemployment and at the same time
helps
reduced inflation
_ TRUE ___16. Reserve Requirements have a significant effect on money supply in the banking system,
making this a powerful means of liquidity management by the BSP.

TRUE 17. DOLE approved a wage increase despite pandemic to help people cope with the rising
prices of goods and services.

TRUE___18. GDP of the Philippines is in a positive mark, showing a faster recovery on pandemic.

_TRUE____19. By the year 2025, Philippines will be transacting on a coinless and cashless transaction
due to digital banking.

TRUE___20. The more individual got employed, the more money will circulate in the economy leading
to higher GDP

_ TRUE ___21. The condition of inflation is transitory, but the average inflation for the 1 st quarter of 2021
is expected to last even up to the 4 th quarter of the year.

_ TRUE ___22. The Monetary stimulus that the authorities have provided ensures that liquidity will not be
at risk since the onset of the crisis.

TRUE_____23. The digitalization of Finance is inevitably broadening but glitches will surely be visible that
needs to be monitor.

FALSE____24. Reverse Repo Rate is a mechanism to increase liquidity in the market and giving much
opportunity for the borrowing power of the investors.

TRUE____25. The Philippine Financial system has a steady growth in liquidity.

.

II. Write the correct answer on the blank provided.

RRP interest rate_1. It is the rate that is used by BSP to implement or signal its monetary policy. This is
commonly set by the monetary board

_________2. The new preferential tax percentage for proprietary educational institutions starting July 1,
2020 to June 30, 2023.

__3.0 %________3. BSP’s annual inflation target for the year 2021

The reverse repurchase (RRP) 4. The primary monetary policy instrument of the BSP.
or borrowing rate

__________5. It merges when the total demand for goods and supply is higher than the capacity of
production in the market.

Galloping Inflation6. This refers to a rapid rising inflation wherein the general prices in an economy is
rapidly increasing out of control.

2.7500 __7. The overnight reverse repurchase rate since November 2020 up to present.

__________8. The main reason for the meat pork’s price hike.

exchange rate_9. It is the price of a unit of foreign currency in terms of the domestic currency.

__________10. An exchange rate that are decided by the mechanism of market demand and supply.

Money supply 11. Refers to the total amount of currency and other liquid instruments circulating in the
 economy

____0.4%____12. Percentage decline of GDP in the 1st quarter of 2021

____0.6%___13. The approved CPI base year comes fourth quarter of 2021

Gross domestic product (GDP) 14. Standard measure of the value added created through the production
of goods and services in a country during a certain period.

P10,774 Billion 15. The total Gov’t debt as of March 2021.

__________16 Refers to the percentage of banks deposit and deposit substitute liabilities that banks
must set aside and cannot be lend out.

12%______17. Philippines Reserve Requirement Ratio

__4.5%____18. The highest inflation rate during the first quarter of year 2021.

___3.2%___19. The annual average consumer price index in the year 2020

USD 2.5 billion20. The Total amount of remittances in March 2021.

___5%______21. The decline in percentage of the outstanding loans of Universal and Commercial banks
year on year in the month of April.

When unemployment rates 22. The relationship between the inflation and unemployment.
increase the inflation decreases

3.44 million 23. Total number of Filipinos with no jobs (unemployed) as of May 6 data from PSA.

LANDBANK_24. The digital bank that has acquired license from the BSP

________ 25. This monetary policy strategy will result to an increase in investment and consumption
spending

________________________________________________________________________________________________________
God Bless section 2B and 2A!