The Islamia University of Bahawalpur, Pakistan.

Department of Economics
Name: _______________________ Roll No: __________ (M/E) Signature: _____________
Exam: QUIZ-1, Marks: 10, Course Title: Monetary Theory and Policy, Course Code: ECON-21304,
Class: M.Sc. (Economics), Semester: 3rd, Session: 2018– 2020, Time Allowed: 15 Min,
Paper Type: Objective Date: 15–03– 2019, Course Instructor: Mr. Altaf Hussain
Note: Encircle the appropriate option. Cutting and over-writing is not allowed.
1) Financial markets promote greater economic efficiency by channeling funds from ________ to
________.
A) investors; savers
B) borrowers; savers
C) savers; borrowers
D) savers; lenders
2 An increase in interest rates might ________ saving because more can be earned in interest
income.
A) encourage
B) discourage
C) disallow
D) invalidate
3) A share of common stock is a claim on a corporationʹs
A) debt.
B) liabilities.
C) expenses.
D) earnings and assets.
4) Channeling funds from individuals with surplus funds to those desiring funds when the saver
does not purchase the borrowerʹs security is known as
A) barter.
B) redistribution.
C) financial intermediation.
D) taxation.
5) Financial institutions that accept deposits and make loans are called ________.
A) exchanges
B) banks
C) over-the-counter markets
D) finance companies
6) Money is defined as
A) bills of exchange.
B) anything that is generally accepted in payment for goods and services or in the repayment
of debt.
C) a risk-free repository of spending power.
D) the unrecognized liability of governments.
7) ________ theory relates changes in the quantity of money to changes in aggregate economic
activity and the price level.
A) Monetary
B) Fiscal
C) Financial
D) Systemic
8) Which of the following can be described as involving direct finance?
A) A corporation issues new shares of stock.
B) People buy shares in a mutual fund.
C) A pension fund manager buys a short-term corporate security in the secondary market.
D) An insurance company buys shares of common stock in the over-the-counter markets.
9) Which of the following can be described as involving indirect finance?
A) You make a loan to your neighbor.
B) You buy shares in a mutual fund.
C) You buy a U.S. Treasury bill from the U.S. Treasury.
D) A corporation buys a short-term security issued by another corporation in the primary
market.
10) Securities are ________ for the person who buys them, but are ________ for the individual or
firm that issues them.
A) assets; liabilities
B) liabilities; assets
C) negotiable; nonnegotiable
D) nonnegotiable; negotiable

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