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1、Exercises fiveI. Answer following questions in English1. How do central banks earn money?Central banks generally earn money by issuing currency notes and selling them to the public for interest-bearing assets, such as government bonds.2. What is primary responsibility of central bank?Its primary res
2、ponsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the natio
3、nal financial system).3. What is central banks primary liability? Central banks primary liabilities are the currency outstanding, and these liabilities are backed by the assets the bank owns.4.What is open market operations? Open market operations are the means of implementing monetary policy by whi
4、ch a central bank controls its national money supply by buying and selling government securities, or other financial instruments. 5.What are the function of legal reserve requirements? The function of legal reserve requirements is to reduce the risk of banks overextending themselves and suffering fr
5、om bank runs, as this could lead to knock-on effects on other banks.6.What is mean about M1 and M2?M1: currency in circulation + checkable deposits (checking deposits, officially called demand deposits, and other deposits that work like checking deposits) + travelers checks. M1 represents the assets
6、 that strictly conform to the definition of money: assets that can be used to pay for a good or service or to repay debt. Although checks linked to checking deposits are gradually becoming less popular, debit cards linked to these deposits are becoming more popular. Like checks, debit cards, as a me
7、ans to complete a transaction through their links to checkable deposits, can also be considered as a form of money. M2: M1 + savings deposits, time deposits less than $100,000 and money market deposit accounts for individuals. M2 represents money and close substitutes for money. M2 is a key economic
8、 indicator used to forecast inflation. 7.Why do central banks establish reserve requirements for other banks? The reserve requirements can limit the money supply.8.Does the lower interest rate stimulate economy development?The lower interest rate stimulates investment because it declines apital cost
9、.II.Fill in blank with suitable words and expressions1. Through open market operations, a central bank influences the money supply in an economy directly. Each time it buys securities, exchanging money for the security, it raises the money supply. Conversely, selling of securities lowers the money s
10、upply.2. Central banks generally earn money by issuing currency notes and selling them to the public for interest-bearing assets, such as government bonds. 3. Typically a central bank controls certain types of short-term interest rates. These influence the stock and bond markets as well as mortgage
11、and other interest rates. 4. All banks are required to hold a certain percentage of their assets as capital, a rate which may be established by the central bank or the banking supervisor.5. The mechanism to move the market towards a target rate is generally to lend money or borrow money in theoretic
12、ally unlimited quantities, until the targeted market rate is sufficiently close to the target.6. Most countries control bank mergers and are wary of concentration in this industry due to the danger of groupthink and runaway lending bubbles based on a single point of failure, the credit culture of th
13、e few large banks. Translate the following sentences and passage into English:1. 中国人民银行运用的货币政策工具包括准备金率，中央银行基准利率，再贴现率，中央银行贷款，公开市场操作和其他由国务院规定的政策工具。The monetary policy instruments applied by the PBC include reserve requirement ratio, central bank base interest rate, rediscounting, central bank lending,
14、 open market operation and other policy instruments specified by the State Council.2. 货币政策与银行监管两者的关系是既相互独立,又相互联系。The relations between monetary policy and banking supervision are mutual independence and mutual influence. 3. 1942年起，中央银行垄断了货币发行，成为中国历史上第一个真正的中央银行。From 1942, the Central Bank of China ce
15、ntralized the banknote issue and became the first central bank in the history of China. 4. 随着银行不良资产绝对数量的增加,央行加强对商业银行提高存款准备金率、加强资产流动性和分散资金风险的管理,以及银行贷款利率空间的扩大,我国商业银行等金融机构推行资产证券化的呼声越来越高。Along with the increase of absolute quantity of banks harmful property, the Central Bank of China strengthens the man
16、agement on commercial bank in the aspects of increasing deposit reserve rate, enhancing property liquidity and scattering funds risk, and the widening of the space of bank loan interest rate, the voice of promoting the property stock certificate is higher and higher。5. 1984年国家将商业银行的职能从中国人民银行中剥离出去，成立了独立的四大国家银行，并决定中国人民银行专门行使国家中央银行的职能，主要控制货币政策，调控各金融机构。In 1984, the government separated the supervisory responsibilities of the
