Question 1

An individual's liability in relation to public companies is:

Accepted Answer

A) unlimited. 
B) limited to their investment in that company. 
C) guaranteed by the Australian Stock Exchange. 
D) guaranteed by the Reserve Bank. 
E) guaranteed by the Corporations Law. 
A) unlimited. 
B) limited to their investment in that company. 
C) guaranteed by the Australian Stock Exchange. 
D) guaranteed by the Reserve Bank. 
E) guaranteed by the Corporations Law.

Question 2

Exhibit 15-1 Money market demand and supply curves
  
-Beginning from an equilibrium at E₁ in Exhibit 15-1,a decrease in the money supply from $150 billion to $100 billion causes people to:

Accepted Answer

A) sell bonds and drive the price of bonds down. 
B) sell bonds and drive the price of bonds up. 
C) buy bonds and drive the price of bonds down. 
D) buy bonds and drive the price of bonds up. 
A) sell bonds and drive the price of bonds down. 
B) sell bonds and drive the price of bonds up. 
C) buy bonds and drive the price of bonds down. 
D) buy bonds and drive the price of bonds up.

Question 3

Which one is not a primary function of money?

Accepted Answer

A) Medium of exchange. 
B) Unit of exchange. 
C) Unit of account. 
D) Store value. 
A) Medium of exchange. 
B) Unit of exchange. 
C) Unit of account. 
D) Store value.

Question 4

Other things being equal,an increase in the rate of interest causes a/an:

Accepted Answer

A) upward movement along the demand for money curve. 
B) downward movement along the demand for money curve. 
C) rightward shift of the demand for money curve. 
D) leftward shift of the demand for money curve. 
A) upward movement along the demand for money curve. 
B) downward movement along the demand for money curve. 
C) rightward shift of the demand for money curve. 
D) leftward shift of the demand for money curve.

Question 5

The RBA currently sets a medium-term inflation target of:

Accepted Answer

A) zero per cent 
B) 1-3 per cent 
C) 2-3 per cent 
D) 0-5 per cent 
A) zero per cent 
B) 1-3 per cent 
C) 2-3 per cent 
D) 0-5 per cent

Question 6

If there is excess money supply in the economy,which of the following is most likely to occur?

Accepted Answer

A) People will buy bonds, raising bond prices and decreasing interest rates. 
B) People will buy bonds, raising bond prices and increasing interest rates. 
C) People will sell bonds, raising bond prices and decreasing interest rates. 
D) People will sell bonds, decreasing bond prices and decreasing the interest rate. 
E) People will sell bonds, decreasing bond prices and increasing the interest rate. 
A) People will buy bonds, raising bond prices and decreasing interest rates. 
B) People will buy bonds, raising bond prices and increasing interest rates. 
C) People will sell bonds, raising bond prices and decreasing interest rates. 
D) People will sell bonds, decreasing bond prices and decreasing the interest rate. 
E) People will sell bonds, decreasing bond prices and increasing the interest rate.

Question 7

Assume a simplified banking system subject to a 20 per cent minimum liquidity requirement.If there is an initial increase in excess reserves of $100 000,the money supply:

Accepted Answer

A) increases $100 000. 
B) increases $500 000. 
C) increases $600 000. 
D) decreases $500 000. 
A) increases $100 000. 
B) increases $500 000. 
C) increases $600 000. 
D) decreases $500 000.

Question 8

The monetary policy transmission mechanism explains changes in:

Accepted Answer

A) monetary policy, money supply, interest rate, investment, aggregate demand, prices, real GDP and employment. 
B) monetary policy, money demand, interest rate, investment, aggregate supply, prices, real GDP and employment. 
C) monetary policy, money supply, interest rate, research and development, aggregate demand, prices, real GDP and employment. 
D) monetary policy, money supply, interest rate, investment, aggregate demand, prices, nominal GDP and employment. 
A) monetary policy, money supply, interest rate, investment, aggregate demand, prices, real GDP and employment. 
B) monetary policy, money demand, interest rate, investment, aggregate supply, prices, real GDP and employment. 
C) monetary policy, money supply, interest rate, research and development, aggregate demand, prices, real GDP and employment. 
D) monetary policy, money supply, interest rate, investment, aggregate demand, prices, nominal GDP and employment.

Question 9

The Reserve Bank of Australia aims to hold an inflation rate to be:

Accepted Answer

A) between 2 and 3 per cent per decade. 
B) between 2 and 3 per cent per annum over the course of the business cycle. 
C) above 3 per cent per annum. 
D) between 5 and 7 per cent per annum over the course of the business cycle. 
A) between 2 and 3 per cent per decade. 
B) between 2 and 3 per cent per annum over the course of the business cycle. 
C) above 3 per cent per annum. 
D) between 5 and 7 per cent per annum over the course of the business cycle.

Question 10

The Reserve Bank of Australia:

Accepted Answer

A) is America's central bank. 
B) is Australia's central bank. 
C) is Australia's only bank. 
D) is Australia's best bank. 
A) is America's central bank. 
B) is Australia's central bank. 
C) is Australia's only bank. 
D) is Australia's best bank.

Question 11

Credit cards are:

Accepted Answer

A) M1 money. 
B) M2 money. 
C) M3 money. 
D) near money. 
E) not money. 
A) M1 money. 
B) M2 money. 
C) M3 money. 
D) near money. 
E) not money.

Question 12

The RBA will:

Accepted Answer

A) follow the federal government's instructions. 
B) follow the Treasury Department's instructions. 
C) consult the Australian Prudential Regulation Authority. 
D) act as a banker to the federal government. 
A) follow the federal government's instructions. 
B) follow the Treasury Department's instructions. 
C) consult the Australian Prudential Regulation Authority. 
D) act as a banker to the federal government.

Question 13

If an exporter believes the $A is going to rise in three months when it receives payment for a shipload of its good,it may decide to:

Accepted Answer

A) enter the short-term money market to hedge against this. 
B) borrow money in the interim. 
C) enter the futures market to hedge against this. 
D) buy Treasury notes in the interim. 
A) enter the short-term money market to hedge against this. 
B) borrow money in the interim. 
C) enter the futures market to hedge against this. 
D) buy Treasury notes in the interim.

Question 14

Assume a fixed demand for money curve and the RBA decreases the money supply.In response,people will:

Accepted Answer

A) sell bonds, thus driving up the interest rate. 
B) sell bonds, thus driving down the interest rate. 
C) buy bonds, thus driving up the interest rate. 
D) buy bonds, thus driving down the interest rate. 
A) sell bonds, thus driving up the interest rate. 
B) sell bonds, thus driving down the interest rate. 
C) buy bonds, thus driving up the interest rate. 
D) buy bonds, thus driving down the interest rate.

Question 15

Keynesian economists argue that monetary policy works through its effects on:

Accepted Answer

A) budget deficits and trade deficits. 
B) price and wage flexibility. 
C) interest rates and investment. 
D) the spending and money multipliers. 
E) unemployment and budget deficits. 
A) budget deficits and trade deficits. 
B) price and wage flexibility. 
C) interest rates and investment. 
D) the spending and money multipliers. 
E) unemployment and budget deficits.

Question 16

The statement that Computech's profits totalled $500 million last year represents the use of money as a:

Accepted Answer

A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) means of coincidence. 
A) medium of exchange. 
B) store of value. 
C) unit of account. 
D) means of coincidence.

Question 17

Currency is:

Accepted Answer

A) the less liquid of all financial assets. 
B) the sum of M1 and M3. 
C) the sum of M3 and the non-deposit borrowings from the private sector by AFIs. 
D) the sum of coins and paper money. 
A) the less liquid of all financial assets. 
B) the sum of M1 and M3. 
C) the sum of M3 and the non-deposit borrowings from the private sector by AFIs. 
D) the sum of coins and paper money.

Question 18

Exhibit 15-1 Money market demand and supply curves
  
-As shown in Exhibit 15-1,assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve.The result will be a:

Accepted Answer

A) higher investment, lower real GDP and lower price level. 
B) lower investment, lower real GDP and lower price level. 
C) higher investment, higher real GDP and higher price level. 
D) higher interest rate and no effect on real GDP or the price level. 
A) higher investment, lower real GDP and lower price level. 
B) lower investment, lower real GDP and lower price level. 
C) higher investment, higher real GDP and higher price level. 
D) higher interest rate and no effect on real GDP or the price level.

Question 19

Which of the following items does not provide a store of value?

Accepted Answer

A) Currency. 
B) Bonds. 
C) Credit cards. 
D) Gold. 
A) Currency. 
B) Bonds. 
C) Credit cards. 
D) Gold.

Question 20

The M1 money supply is defined to be the sum of currency,traveller's cheques and:

Accepted Answer

A) cheque account deposits. 
B) Treasury bonds. 
C) savings accounts. 
D) long-time deposits. 
A) cheque account deposits. 
B) Treasury bonds. 
C) savings accounts. 
D) long-time deposits.

An individual's liability in relation to public companies is:

Exhibit 15-1 Money market demand and supply curves -Beginning from an equilibrium at E₁ in Exhibit 15-1,a decrease in the money supply from $150 billion to $100 billion causes people to:

Which one is not a primary function of money?

Other things being equal,an increase in the rate of interest causes a/an:

The RBA currently sets a medium-term inflation target of:

If there is excess money supply in the economy,which of the following is most likely to occur?

Assume a simplified banking system subject to a 20 per cent minimum liquidity requirement.If there is an initial increase in excess reserves of $100 000,the money supply:

The monetary policy transmission mechanism explains changes in:

The Reserve Bank of Australia aims to hold an inflation rate to be:

The Reserve Bank of Australia:

Credit cards are:

The RBA will:

If an exporter believes the $A is going to rise in three months when it receives payment for a shipload of its good,it may decide to:

Assume a fixed demand for money curve and the RBA decreases the money supply.In response,people will:

Keynesian economists argue that monetary policy works through its effects on:

The statement that Computech's profits totalled $500 million last year represents the use of money as a:

Currency is:

Exhibit 15-1 Money market demand and supply curves -As shown in Exhibit 15-1,assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve.The result will be a:

Which of the following items does not provide a store of value?

The M1 money supply is defined to be the sum of currency,traveller's cheques and:

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

An individual's liability in relation to public companies is:

Exhibit 15-1 Money market demand and supply curves -Beginning from an equilibrium at E₁ in Exhibit 15-1,a decrease in the money supply from $150 billion to $100 billion causes people to:

Which one is not a primary function of money?

Other things being equal,an increase in the rate of interest causes a/an:

The RBA currently sets a medium-term inflation target of:

If there is excess money supply in the economy,which of the following is most likely to occur?

Assume a simplified banking system subject to a 20 per cent minimum liquidity requirement.If there is an initial increase in excess reserves of $100 000,the money supply:

The monetary policy transmission mechanism explains changes in:

The Reserve Bank of Australia aims to hold an inflation rate to be:

The Reserve Bank of Australia:

Credit cards are:

The RBA will:

If an exporter believes the $A is going to rise in three months when it receives payment for a shipload of its good,it may decide to:

Assume a fixed demand for money curve and the RBA decreases the money supply.In response,people will:

Keynesian economists argue that monetary policy works through its effects on:

The statement that Computech's profits totalled $500 million last year represents the use of money as a:

Currency is:

Exhibit 15-1 Money market demand and supply curves -As shown in Exhibit 15-1,assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve.The result will be a:

Which of the following items does not provide a store of value?

The M1 money supply is defined to be the sum of currency,traveller's cheques and:

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