Question 1

What is the primary function of a central bank?

Accepted Answer

To regulate the country's money supply and maintain financial stability

Answer

To offer investment advice to corporations

Answer

To facilitate international trade

Answer

To provide banking services to individual consumers

Question 2

What is meant by 'liquidity' in banking terms?

Accepted Answer

The availability of liquid assets to a bank to meet short-term obligations

Answer

The total amount of deposits held by a bank

Answer

The interest earned on savings accounts

Answer

The process of granting loans to customers

Question 3

What is the primary purpose of the 'reserve requirement' set by central banks?

Accepted Answer

To ensure that banks maintain a certain percentage of deposits as reserves

Answer

To determine the fees banks can charge their customers

Answer

To control the interest rates charged on loans

Answer

To limit the number of loans banks can issue

Question 4

What does the term 'interest rate spread' refer to in banking?

Accepted Answer

The difference between the interest rates charged on loans and the rates paid on deposits

Answer

The fees charged for processing loan applications

Answer

The rate at which central banks lend to commercial banks

Answer

The total interest earned by a bank over a year

Question 5

What is the term for a bank's loan that is secured by collateral?

Accepted Answer

Secured loan

Answer

Convertible loan

Answer

Bridge loan

Answer

Unsecured loan

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