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Which Role(s) of Central Banks Is/are Described in Each Example

Question 116

Short Answer

Which role(s) of central banks is/are described in each example below?
a. Shipments of currency are being made to banks in the region due to unusually heavy withdrawals by the public.
b. Several banks in the region are being subjected to a follow-up examination due to problems unearthed by central bank examiners on a visit last month.
c. Unexpectedly heavy demand for funds by the public associated with a decline in stock prices resulted in a significant increase in depository institutions' seeking funds from the central bank.
d. Concerned over an apparent increase in the cost of living (consumer price index) and above-average rate of growth in transaction deposits the central bank moves to slow the latter through a combination of restrictive policy-directed actions in the financial markets.
e. Dealers in government securities suddenly face a shortage of available loans and a rise in borrowing costs which the central bank moves to counteract immediately.

Correct Answer:

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a. Control of the Money Supply...

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