1. What did the BSP decide to do in its monetary policy 7. Who sets the inflation target in the Philippines?

meeting on 16 February 2023?

A. The BSP Governor
a. Increase the interest rate on the overnight deposit
facility B. The National Government through the DBCC
b. Decrease the interest rate on the overnight lending C. The Department of Economic Research
facility
c. Increase the interest rate on the overnight reverse D. The Philippine Statistics Authority
repurchase facility
d. Maintain the interest rate on all facilities
e. None of the above 8. What is the inflation target defined as?
A. The average year-on-year change in the GDP over the
2. What is the new interest rate on the overnight reverse
calendar year.
repurchase facility?
B. The average year-on-year change in the GNI over the
a. 5.00 percent
calendar year.
b. 5.50 percent
c. 6.00 percent C. The average year-on-year change in the CPI over the
d. 6.50 percent calendar year.
e. None of the above
D. The average year-on-year change in the interest rate
over the calendar year.
3. What is the forecast for inflation in 2024?
a. 3.1 percent c. 4.1 percent
b. 4.0 percent d. 5.4 percent 9. What is the purpose of the BSP Governor's
announcement of the inflation target?
4. What is the primary downside risk to the inflation A. To signal a change in monetary policy.
outlook?
B. To provide greater transparency and accountability in
a. Increased domestic prices of key food items facing monetary policy.
supply constraints
b. Additional transport fare increases due to elevated oil C. To solicit public opinion on monetary policy.
prices
D. To adjust policy interest rates.
c. Possible higher-than-expected wage adjustments in
2023
d. Impact of a weaker-than-expected global recovery
e. None of the above 10. When did the BSP shift from a variable annual inflation
target to a fixed inflation target?
5. These are the important features of inflation targeting A. In 2002
except :
B. In 2006
a. forward-looking
C. In 2010
b. promotes transparency in the conduct of monetary
policy D. In 2013

c. rediscounting feature
d. simple framework
6. What is the DBCC?
A. An agency responsible for monitoring inflation levels.
B. An inter-agency body responsible for setting the
annual government targets for macroeconomic variables.
C. A government agency responsible for regulating
interest rates.
D. An independent statistical agency responsible for
collecting inflation data.
11. What is the difference between the inflation target
and the inflation forecast?
A. The inflation target represents policymakers' desired
inflation rate, while the inflation forecast represents the
expectation or prediction of the inflation rate over the
policy horizon.
B. The inflation target is a measure of inflation, while the
inflation forecast is a measure of economic growth.
C. The inflation target and the inflation forecast are the
same thing.
D. The inflation target is based on historical inflation rates,
while the inflation forecast is based on current economic
conditions.

12. Why do countries with a history of high inflation tend
to set a decelerating path for inflation targets across
several years?
A. To provide added flexibility to monetary authorities in
steering inflation.
B. To ensure that the design of the inflation target is more
consistent with the country's economic circumstances.
C. To safeguard the credibility of the inflation targeting
framework.
D. To gradually lower inflation expectations and establish
a credible commitment to price stability.
13. What is the measure of inflation used by the BSP?
A. The rate of change in the GDP.
B. The rate of change in the GNI.
C. The rate of change in the interest rate.
D. The rate of change in the CPI.
14. What is the purpose of the CPI?
A. To monitor inflation levels.
B. To regulate interest rates.
C. To collect inflation data.
D. To provide a measure of economic growth.
15. Which of the following is true about higher interest
rates?
a) They can make it more expensive to borrow money
b) They can make it more difficult to generate income
from investments
c) They can make borrowing more affordable
d) Both a and b
16. What is the Expectations Theory of interest rates
based on?
a) Characteristics of different types of borrowers and
lenders
b) The real return that investors expect to earn after
adjusting for inflation
c) Expectations about future inflation and economic
growth
d) What people expect the inflation rate to be in the
future
17. Which theory suggests that interest rates are
determined by the specific characteristics of different
types of borrowers and lenders?
a) Expectations Theory
b) Market Segmentation Theory
c) Real Interest Rate Theory
d) Inflation expectations
18. Why do lenders demand higher interest rates when
they expect inflation to increase?
a) To increase the supply of money in the economy
b) To compensate for the loss of purchasing power that
results from inflation
c) To control inflation
d) To make borrowing cheaper
19. What happens when the central bank lowers interest
rates?
a) It increases the supply of money in the economy,
making borrowing cheaper
b) It decreases the supply of money in the economy,
helping to control inflation
c) It makes it more difficult to generate income from
investments
d) It has no impact on the economy
20 . Question: If the price of a basket of goods and
services increased from $100 to $105 over the course of a
year, what is the inflation rate?
Answer: The inflation rate can be calculated using the
following formula:
Inflation rate = ((Price in year 2 - Price in year 1) / Price in
year 1) x 100%
Using the given information, we can plug in the values:
Inflation rate = (($105 - $100) / $100) x 100%
Inflation rate = ($5 / $100) x 100%
Inflation rate = 5%
Therefore, the inflation rate is 5%.