PRESIDENTIAL SCHOOL IN FERGANA

0455 Cambridge IGCSE Economics

Grade ___________Students full name _________________________________________________

Type of assessment: ___________________Term : ___________date:_______________________

Case Study Questions on Market Failure:

1. The central bank of a country decides to lower the base rate to stimulate economic growth. Analyze the
potential effects of this decision on borrowing costs, consumer spending, and investment levels.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
_____________________________________________________________________________
2. A commercial bank introduces a new digital banking platform to enhance customer convenience and
reduce operational costs. Evaluate the potential benefits and drawbacks of this innovation, considering
factors such as security, accessibility, and customer satisfaction.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. A government introduces a new policy to encourage the use of Islamic finance principles in the banking
sector. Assess the economic and social implications of this policy, including its impact on financial
inclusion, ethical banking practices, and market competition.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4. A country experiences a surge in counterfeit currency circulating in the economy. Analyze the economic
consequences of this situation, including its impact on consumer confidence, inflationary pressures, and
the credibility of the monetary system.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
5. The central bank implements an expansionary monetary policy by increasing the money supply. Evaluate
the potential effects of this policy on inflation, interest rates, and exchange rates, considering the
influence on investment and export competitiveness.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
6. A commercial bank faces liquidity challenges due to a significant number of non-performing loans.
Explore the economic implications of this situation, including the impact on the bank's ability to lend,
financial stability, and credit availability for businesses and individuals.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
7. A government decides to introduce a limited edition commemorative coin to celebrate a national event.
Assess the economic rationale behind this decision, considering the potential impact on collector
demand, revenue generation, and the perception of the national currency.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
8. A central bank implements a contractionary monetary policy by increasing the reserve requirements for
commercial banks. Analyze the economic effects of this policy on the money supply, lending capacity, and
overall economic activity.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
9. A commercial bank faces reputational damage due to involvement in a high-profile financial scandal.
Evaluate the economic consequences of this situation, including the impact on customer trust, deposit
levels, and the bank's ability to attract new clients.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
10. A government decides to implement a new unit of account for tax purposes, different from the national
currency. Analyze the economic implications of this decision, considering factors such as transaction
costs, currency stability, and the impact on businesses and consumers.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
QMultiple Choice Questions:

1. Which of the following is NOT one of the functions b) The total value of money held in an economy
of money?
c) The interest rate charged on loans by commercial
a) Medium of exchange banks

b) Store of value d) The total amount of debt held by a commercial

bank
c) Unit of account
7.Islamic finance principles emphasize:
d) Standard of deferred payment
a) Interest-based lending and financial speculation
2. Which characteristic of money refers to its ability
to be easily divided into smaller units? b) Profit-sharing and risk-sharing arrangements

a) Counterfeit c) Exclusive lending to the Muslim community

b) Limited edition d) The use of gold and silver as currency

c) Divisible 8. Which of the following is an advantage of digital

banking?
d) Portable
a) Limited accessibility for customers
3. The main role of a central bank is to:
b) Higher operational costs for banks
a) Provide loans to commercial banks
c) Enhanced convenience and 24/7 access to banking
b) Regulate the commercial banking sector
services
c) Conduct monetary policy and control the money
d) Increased security risks for customer data
supply
9. The central bank's primary tool for conducting
d) Facilitate international money transfers
monetary policy is:
4.Commercial banks play a significant role in the
a) Open market operations
economy by:
b) Fiscal policy adjustments
a) Issuing the national currency
c) Government spending programs
b) Setting the base rate for interest rates
d) Tariff and trade regulations
c) Providing loans to individuals and businesses
10. Which of the following refers toApologies for the
d) Controlling fiscal policy and government spending
cutoff response. Here are the remaining 10 multiple-
5.The base rate set by the central bank is: choice questions:

a) The interest rate charged by commercial banks to
their customers
b) The interest rate paid by commercial banks on
customer deposits
11. Which of the following refers to the main
function of money that allows it to be widely
accepted in exchange for goods and services?
a) Store of value

c) The benchmark rate used to calculate mortgage b) Medium of exchange

rates
c) Unit of account
d) The rate at which commercial banks borrow from
d) Standard of deferred payment
the central bank
12. When the central bank decreases the reserve
6.Liquidity refers to:
requirements for commercial banks, it is likely to:
a) The ability of an asset to be easily converted into
a) Decrease the money supply
cash
b) Increase the money supply
c) Decrease interest rates
d) Increase interest rates
13. The term "counterfeit" refers to:
a) The divisibility of money
b) Limited edition banknotes
c) Fake or fraudulent currency
d) The portability of money
14. The primary goal of monetary policy is to:
a) Stabilize prices and control inflation
b) Promote economic growth and employment
c) Regulate the banking sector
d) Control government spending
15. Which of the following is NOT a characteristic of
money?
a) Durability
b) Limited supply
c) Acceptability
d) Portability
16. The role of commercial banks includes:
a) Controlling monetary policy
b) Issuing currency
c) Providing loans to individuals and businesses
d) Conducting open market operations
17.In Islamic finance, interest-based lending is
prohibited, and instead, transactions are based on:
a) Profit-sharing and risk-sharing
b) Fixed interest rates
Q# Answer Q# Answer
1 11
2 12
3 13
4 14
5 15
6 16
7 17
c) Collateralized loans
d) Variable interest rates
18. The central bank can influence the money supply
through open market operations, which involve:
a) Buying and selling government securities
b) Setting interest rates for commercial banks
c) Regulating reserve requirements for commercial
banks
d) Controlling government spending
19. Which of the following best describes the
concept of a "store of value"?
a) Money's ability to be easily divided into smaller
units
b) Money's function as a medium of exchange
c) Money's ability to retain purchasing power over
time
d) Money's use as a unit of account in economic
transactions
20. The central bank acts as the "lender of last
resort," which means it:
a) Provides loans to commercial banks during
financial crises
b) Sets the base rate for interest rates in the
economy
c) Regulates the commercial banking sector
d) Facilitates international money transfers
21. The term "standard of deferred payment" refers
to money's function as:
a) A medium of exchange
b) A unit of account
c) A store of value
d) A means of settling debts over time
8 18
9 19
10 20