You must complete both Section A and Section B

Section A: Please answer all $10$ MCQs in the answer book $(20$ marks$)$

$1.$ When money fails to maintain its purchasing power over time due to inflation, which primary function of money is compromised?

a$.$ Medium of exchange

b$.$ Store of value

c$.$ Unit of account

d$.$ Standard of deferred payment

$2.$ On a bank's balance sheet, which of the following is typically considered a liability?

a$.$ Mortgages lent out to homeowners

b$.$ Government securities owned by the bank

c$.$ Deposits from customers

d$.$ Loans extended to businesses

$3.$ How do Fintechs primarily differentiate themselves from traditional financial intermediaries?

a$.$ By offering fewer product choices and limited service options.

b$.$ By relying on legacy systems and avoiding technology$-$driven solutions.

c$.$ By prioritising customer experience through technological innovation and tailored services.

d$.$ By setting higher fees and interest rates than conventional banks.

$4.$ The US Federal Reserve's dual mandate includes:

a$.$ Regulating commercial banks and providing consumer loans.

b$.$ Ensuring stable commodity prices and overseeing the stock market.

c$.$ Maintaining stable prices and maximum sustainable employment.

d$.$ Supervising international trade agreements and ensuring currency stability.

$5.$ The Targeted Longer$-$Term Refinancing Operations $($TLTROs$)$ initiated by the ECB aim to:

a$.$ Provide immediate short$-$term liquidity exclusively for central banks.

b$.$ Encourage banks to lend to non$-$financial companies and households in the Eurozone.

c$.$ Stabilise the exchange rate of the Euro against the US dollar.

d$.$ Buy distressed assets from banks to clean their balance sheets. $6.$ The concept of "web$3"$ in the context of finance emphasises:

a$.$ A centralised internet dominated by a few corporations.

b$.$ A return to traditional, non$-$crypto financial mechanisms.

c$.$ A vision for a decentralised internet where users control their data and interactions, often powered by blockchain.

d$.$ A new type of web browser focused on faster browsing speeds without blockchain integrations.

$7.$ While both money and cash facilitate transactions, what distinguishes cash in most modern economies?

a$.$ Cash can earn interest, while money cannot.

b$.$ Cash is a form of digital currency used online.

c$.$ Cash represents physical tokens or notes, whereas money can also encompass digital or virtual representations.

d$.$ Cash's primary function is to serve as collateral for loans, while money is for everyday transactions.

$8.$ When a central bank wants to combat inflation using Open Market Operations $($OMOs$),$ it will most likely:

a$.$ Purchase government securities to increase the money supply.

b$.$ Lower the reserve requirement to allow more bank lending.

c$.$ Sell government securities to absorb excess liquidity.

d$.$ Decrease the interest rate it charges banks for borrowing.

$9.$ A central bank decides to decrease the reserve requirement. This would most likely result in:

a$.$ A decrease in the number of loans banks can issue.

b$.$ An increase in the interest rates on savings accounts.

c$.$ A contraction in the money supply due to lower liquidity.

d$.$ An expansion of the money supply due to increased lending capacity for banks.

$10.$ The "Paradox of banknotes", often referred to as the cash paradox, is a phenomenon observed in many countries. What does this paradox primarily address?

a$.$ The decreasing use of physical cash as digital payment methods rise.

b$.$ The increasing demand for banknotes even as electronic transactions become more prevalent.

c$.$ The consistent value of banknotes across different economies.

d$.$ The correlation between the printing of banknotes and inflation rates.