Question 1

If there is a recession,the RBA would most likely:

Accepted Answer

A) encourage banks to provide loans by lowering the cash rate. 
B) encourage banks to provide loans by raising the cash rate. 
C) restrict bank lending by lowering the cash rate. 
D) restrict bank lending by raising the cash rate. 
A) encourage banks to provide loans by lowering the cash rate. 
B) encourage banks to provide loans by raising the cash rate. 
C) restrict bank lending by lowering the cash rate. 
D) restrict bank lending by raising the cash rate.

Question 2

According to Keynesian economists,which of the following is not a consequence of increasing the money supply?

Accepted Answer

A) A lower interest rate. 
B) Greater investment. 
C) Lower real GDP. 
D) Higher real GDP. 
E) Lower nominal GDP. 
A) A lower interest rate. 
B) Greater investment. 
C) Lower real GDP. 
D) Higher real GDP. 
E) Lower nominal GDP.

Question 3

Three important motives for people to hold money and forego earning interest payments are:

Accepted Answer

A) the opportunity cost motive, precautionary motive and speculative motive. 
B) the transaction motive, precautionary motive and speculative motive. 
C) the transaction motive, safety motive and speculative motive. 
D) the transaction motive, precautionary motive and special motive. 
E) the future motive, precautionary motive and speculative motive. 
A) the opportunity cost motive, precautionary motive and speculative motive. 
B) the transaction motive, precautionary motive and speculative motive. 
C) the transaction motive, safety motive and speculative motive. 
D) the transaction motive, precautionary motive and special motive. 
E) the future motive, precautionary motive and speculative motive.

Question 4

The currency of Australia is:

Accepted Answer

A) backed dollar for dollar by gold. 
B) backed by a gold cover of 50 per cent. 
C) not backed by any precious metal. 
D) backed by the government's silver reserves. 
E) backed by the government's gold and silver reserves. 
A) backed dollar for dollar by gold. 
B) backed by a gold cover of 50 per cent. 
C) not backed by any precious metal. 
D) backed by the government's silver reserves. 
E) backed by the government's gold and silver reserves.

Question 5

Which of the following falls when bond prices rise?

Accepted Answer

A) Stock prices. 
B) Interest rates. 
C) Money demand. 
D) Money supply. 
A) Stock prices. 
B) Interest rates. 
C) Money demand. 
D) Money supply.

Question 6

Credit cards fail to meet the store-of-value criterion.

Accepted Answer

A) True 
 B)False

Question 7

Precious metals and cigarettes are the example of:

Accepted Answer

A) gold-exempt money. 
B) non-backed money. 
C) paper money. 
D) commodity money. 
A) gold-exempt money. 
B) non-backed money. 
C) paper money. 
D) commodity money.

Question 8

The Australian Securities Exchange (ASX)market is a virtual market similar to the money market.

Accepted Answer

A) True 
 B)False

Question 9

Treasury notes issued by the government are:

Accepted Answer

A) considered to be high risk. 
B) are long-term financial instruments. 
C) sold by the Treasury at a face value. 
D) freely traded in financial markets once issued. 
A) considered to be high risk. 
B) are long-term financial instruments. 
C) sold by the Treasury at a face value. 
D) freely traded in financial markets once issued.

Question 10

The minimum liquidity requirement is the:

Accepted Answer

A) actual amount of reserves that banks must hold. 
B) excess amount of reserves that a bank must hold. 
C) minimum amount of reserves the RBA requires a bank to hold. 
D) total amount of reserves that banks hold at all times. 
E) maximum amount of reserves that banks can hold to remain liquid. 
A) actual amount of reserves that banks must hold. 
B) excess amount of reserves that a bank must hold. 
C) minimum amount of reserves the RBA requires a bank to hold. 
D) total amount of reserves that banks hold at all times. 
E) maximum amount of reserves that banks can hold to remain liquid.

Question 11

One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses.This motive for holding money is called:

Accepted Answer

A) transactions demand. 
B) precautionary demand. 
C) speculative demand. 
D) non-cyclical demand. 
A) transactions demand. 
B) precautionary demand. 
C) speculative demand. 
D) non-cyclical demand.

Question 12

People learn to hold a specific quantity of money for their groceries,theatre tickets,petrol,clothes,film and other items they habitually purchase.This behaviour is representative of the:

Accepted Answer

A) precautionary demand. 
B) speculative demand. 
C) transactions demand. 
D) volatility demand. 
E) habitual demand. 
A) precautionary demand. 
B) speculative demand. 
C) transactions demand. 
D) volatility demand. 
E) habitual demand.

Question 13

The buying and selling of foreign currency occurs in the:

Accepted Answer

A) short-term money market. 
B) exchange settlement accounts. 
C) foreign exchange market (FOREX). 
D) Australian Stock Exchange. 
E) currency exchange market (CURREX). 
A) short-term money market. 
B) exchange settlement accounts. 
C) foreign exchange market (FOREX). 
D) Australian Stock Exchange. 
E) currency exchange market (CURREX).

Question 14

Keynes called the money that people hold in order to buy bonds,stocks or other non-money financial assets the:

Accepted Answer

A) transactions demand for spending money. 
B) precautionary demand for holding money. 
C) speculative demand for holding money. 
D) unit of account demand for holding money. 
A) transactions demand for spending money. 
B) precautionary demand for holding money. 
C) speculative demand for holding money. 
D) unit of account demand for holding money.

Question 15

Which of the following is the best description of fiat money?

Accepted Answer

A) Coins made of gold and silver. 
B) Paper money that can be redeemed for gold or silver. 
C) Legal tender that has no intrinsic value. 
D) Cheque accounts and debit cards. 
A) Coins made of gold and silver. 
B) Paper money that can be redeemed for gold or silver. 
C) Legal tender that has no intrinsic value. 
D) Cheque accounts and debit cards.

Question 16

The minimum liquidity requirement means that a bank:

Accepted Answer

A) must never have a certain minimal reserve level of highly liquid assets. 
B) must always maintain a certain minimal reserve level of highly liquid assets. 
C) must always maintain a certain minimal reserve level of low liquid assets. 
D) must always maintain a certain minimal number of highly important customers. 
A) must never have a certain minimal reserve level of highly liquid assets. 
B) must always maintain a certain minimal reserve level of highly liquid assets. 
C) must always maintain a certain minimal reserve level of low liquid assets. 
D) must always maintain a certain minimal number of highly important customers.

Question 17

Exchange settlement accounts:

Accepted Answer

A) enable a bank to offer cheque-writing facilities to its customers. 
B) are often overdrawn. 
C) earn a high return for banks. 
D) are designed to ensure all banks have adequate liquidity. 
A) enable a bank to offer cheque-writing facilities to its customers. 
B) are often overdrawn. 
C) earn a high return for banks. 
D) are designed to ensure all banks have adequate liquidity.

Question 18

In case of unresolvable disagreement between the RBA board and the government,the ________ view will prevail.

Accepted Answer

A) government's 
B) the RBA board's 
C) majority of the banks' 
D) ACCC's 
A) government's 
B) the RBA board's 
C) majority of the banks' 
D) ACCC's

Question 19

The financial futures market is used to:

Accepted Answer

A) hedge against future interest rate movements. 
B) hedge against current interest rate movements. 
C) influence the money supply. 
D) allow banks to transact with each other. 
A) hedge against future interest rate movements. 
B) hedge against current interest rate movements. 
C) influence the money supply. 
D) allow banks to transact with each other.

Question 20

Commonwealth government securities:

Accepted Answer

A) are bonds issued by the government to raise money for expenditure. 
B) have a high-risk premium. 
C) are used by the RBA to control the currency. 
D) are only used in time of war to raise money for the government. 
A) are bonds issued by the government to raise money for expenditure. 
B) have a high-risk premium. 
C) are used by the RBA to control the currency. 
D) are only used in time of war to raise money for the government.

If there is a recession,the RBA would most likely:

According to Keynesian economists,which of the following is not a consequence of increasing the money supply?

Three important motives for people to hold money and forego earning interest payments are:

The currency of Australia is:

Which of the following falls when bond prices rise?

Credit cards fail to meet the store-of-value criterion.

Precious metals and cigarettes are the example of:

The Australian Securities Exchange (ASX)market is a virtual market similar to the money market.

Treasury notes issued by the government are:

The minimum liquidity requirement is the:

One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses.This motive for holding money is called:

People learn to hold a specific quantity of money for their groceries,theatre tickets,petrol,clothes,film and other items they habitually purchase.This behaviour is representative of the:

The buying and selling of foreign currency occurs in the:

Keynes called the money that people hold in order to buy bonds,stocks or other non-money financial assets the:

Which of the following is the best description of fiat money?

The minimum liquidity requirement means that a bank:

Exchange settlement accounts:

In case of unresolvable disagreement between the RBA board and the government,the ________ view will prevail.

The financial futures market is used to:

Commonwealth government securities:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 15: The monetary and financial system

If there is a recession,the RBA would most likely:

According to Keynesian economists,which of the following is not a consequence of increasing the money supply?

Three important motives for people to hold money and forego earning interest payments are:

The currency of Australia is:

Which of the following falls when bond prices rise?

Credit cards fail to meet the store-of-value criterion.

Precious metals and cigarettes are the example of:

The Australian Securities Exchange (ASX)market is a virtual market similar to the money market.

Treasury notes issued by the government are:

The minimum liquidity requirement is the:

One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses.This motive for holding money is called:

People learn to hold a specific quantity of money for their groceries,theatre tickets,petrol,clothes,film and other items they habitually purchase.This behaviour is representative of the:

The buying and selling of foreign currency occurs in the:

Keynes called the money that people hold in order to buy bonds,stocks or other non-money financial assets the:

Which of the following is the best description of fiat money?

The minimum liquidity requirement means that a bank:

Exchange settlement accounts:

In case of unresolvable disagreement between the RBA board and the government,the ________ view will prevail.

The financial futures market is used to:

Commonwealth government securities:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters