Wealth-Forum e-zine

Test your understanding of this topic

Q1.

A central bank of a country tries to reduce or increase the interest rates by buying or selling securities in the open debt market through

a. Open market operations

b. Auctions

c. Both of these

Q2.

Interest rates and bond prices are:

a. inversely related

b. directly related

c. are independent of each other

Q3.

To reduce the interest rates, the central bank of a country will:

a. buy debt securities

b. sell debt securities

Q4.

When the central bank of a country keeps selling the debt securities in the open market:

a. interest rates will increase

b. asset prices will increase

c. interest rate will decrease

Q5.

When the central bank of a country is worried about asset bubbles being created, it will aggressively :

a. Buy up securities

b. Sell securities

c. Do both