Question 1

The expansionary monetary policy can be seen as an:

Accepted Answer

A) outward shift in the aggregate demand curve. 
B) inward shift in the aggregate supply curve. 
C) outward shift in the aggregate supply curve. 
D) inward shift in the aggregate demand curve. 
A) outward shift in the aggregate demand curve. 
B) inward shift in the aggregate supply curve. 
C) outward shift in the aggregate supply curve. 
D) inward shift in the aggregate demand curve.

Question 2

If the economy is inflationary,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 3

Which bank controls the Monetary Base in Australia?

Accepted Answer

A) The Commonwealth Bank. 
B) The ANZ Bank. 
C) The State Bank. 
D) The Australian National Bank. 
E) The Reserve Bank. 
A) The Commonwealth Bank. 
B) The ANZ Bank. 
C) The State Bank. 
D) The Australian National Bank. 
E) The Reserve Bank.

Question 4

Which of the following could not serve as commodity money?

Accepted Answer

A) Gold. 
B) Cattle. 
C) Sugar. 
D) Paper money that is not backed up by valuable commodity. 
A) Gold. 
B) Cattle. 
C) Sugar. 
D) Paper money that is not backed up by valuable commodity.

Question 5

Keynes called the money that people hold to make routine day-to-day purchases the:

Accepted Answer

A) transactions demand for holding money. 
B) precautionary demand for spending money. 
C) speculative demand for holding money. 
D) store of value demand for holding money. 
A) transactions demand for holding money. 
B) precautionary demand for spending money. 
C) speculative demand for holding money. 
D) store of value demand for holding money.

Question 6

People react to an excess supply of money by:

Accepted Answer

A) selling bonds, thus driving up the interest rate. 
B) selling bonds, thus driving down the interest rate. 
C) buying bonds, thus driving up the interest rate. 
D) buying bonds, thus driving down the interest rate. 
A) selling bonds, thus driving up the interest rate. 
B) selling bonds, thus driving down the interest rate. 
C) buying bonds, thus driving up the interest rate. 
D) buying bonds, thus driving down the interest rate.

Question 7

Suppose you transfer $1000 from your cheque account to your savings account.How does this action affect the M1 and M3 money supplies?

Accepted Answer

A) M1 and M3 are both unchanged. 
B) M1 falls by $1000 and M3 rises by $1000. 
C) M1 is unchanged and M3 rises by $1000. 
D) M1 falls by $1000 and M3 is unchanged. 
E) It depends on MPS. 
A) M1 and M3 are both unchanged. 
B) M1 falls by $1000 and M3 rises by $1000. 
C) M1 is unchanged and M3 rises by $1000. 
D) M1 falls by $1000 and M3 is unchanged. 
E) It depends on MPS.

Question 8

The Australian Securities and Investment Commission's role is to:

Accepted Answer

A) ensure competition among financial companies. 
B) control interest rates. 
C) control inflation. 
D) oversee financial market integrity. 
A) ensure competition among financial companies. 
B) control interest rates. 
C) control inflation. 
D) oversee financial market integrity.

Question 9

Which of the following statements is true?

Accepted Answer

A) The speculative demand for money at possible interest rates gives the demand for money curve its upward slope. 
B) There is a direct relationship between the quantity of money demanded and the interest rate. 
C) According to the quantity theory of money, any change in the money supply will have no effect on the price level. 
D) People hold money to pay unpredictable expenses or against 'rainy days'. 
A) The speculative demand for money at possible interest rates gives the demand for money curve its upward slope. 
B) There is a direct relationship between the quantity of money demanded and the interest rate. 
C) According to the quantity theory of money, any change in the money supply will have no effect on the price level. 
D) People hold money to pay unpredictable expenses or against 'rainy days'.

Question 10

The characteristics that money should have include:

Accepted Answer

A) portability, durability and flexibility. 
B) durability, flexibility and stability. 
C) durability, portability and homogeneity. 
D) scarcity, portability and divisibility. 
A) portability, durability and flexibility. 
B) durability, flexibility and stability. 
C) durability, portability and homogeneity. 
D) scarcity, portability and divisibility.

Question 11

The primary functions of money are:

Accepted Answer

A) velocity, liquidity and transactions. 
B) speculative demand, measure of value and precautionary demand. 
C) a medium of exchange, a measure of value and a store of value. 
D) a store of value, heterogeneity and a medium of exchange. 
E) currency value, fiat value and accepted value. 
A) velocity, liquidity and transactions. 
B) speculative demand, measure of value and precautionary demand. 
C) a medium of exchange, a measure of value and a store of value. 
D) a store of value, heterogeneity and a medium of exchange. 
E) currency value, fiat value and accepted value.

Question 12

The precautionary demand for money:

Accepted Answer

A) varies inversely with the income level. 
B) varies inversely with the price level. 
C) is used as an insurance agent against unexpected needs. 
D) states that nominal income must exceed real income. 
A) varies inversely with the income level. 
B) varies inversely with the price level. 
C) is used as an insurance agent against unexpected needs. 
D) states that nominal income must exceed real income.

Question 13

Comparing how many dollars it takes to run your car each year to annual earnings on a job instead of recording costs in terms of litres of petrol and oil represents the use of money as:

Accepted Answer

A) a means of payment. 
B) a unit of account. 
C) a store of purchasing power. 
D) a form of plastic money. 
A) a means of payment. 
B) a unit of account. 
C) a store of purchasing power. 
D) a form of plastic money.

Question 14

Fiat money is paper money:

Accepted Answer

A) backed dollar for dollar by gold. 
B) backed dollar for dollar by silver. 
C) produced by an Italian car manufacturer. 
D) which is not backed by or convertible into any good. 
E) which is backed by and convertible into a specific good. 
A) backed dollar for dollar by gold. 
B) backed dollar for dollar by silver. 
C) produced by an Italian car manufacturer. 
D) which is not backed by or convertible into any good. 
E) which is backed by and convertible into a specific good.

Question 15

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

Accepted Answer

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

Question 16

The RBA uses the short-term money market in order to influence:

Accepted Answer

A) banks' capital adequacy requirements. 
B) the buying and selling of foreign exchange. 
C) the monetary base. 
D) bank profitability. 
A) banks' capital adequacy requirements. 
B) the buying and selling of foreign exchange. 
C) the monetary base. 
D) bank profitability.

Question 17

Which of the following is often traded in the short-term money market?

Accepted Answer

A) Treasury notes. 
B) Shares. 
C) Ten-year Commonwealth government securities. 
D) Foreign exchange. 
A) Treasury notes. 
B) Shares. 
C) Ten-year Commonwealth government securities. 
D) Foreign exchange.

Question 18

If people are selling bonds,it causes the interest rate to:

Accepted Answer

A) rise and MD > MS. 
B) fall and MS > MD. 
C) fall and MD = MS. 
D) The demand for money has fallen. 
A) rise and MD > MS. 
B) fall and MS > MD. 
C) fall and MD = MS. 
D) The demand for money has fallen.

Question 19

Using the aggregate supply and demand model,assume the economy is operating along the intermediate portion of the aggregate supply curve.An increase in the money supply will increase the price level and:

Accepted Answer

A) lower both the interest rate and real GDP. 
B) raise both the interest rate and nominal GDP. 
C) lower the interest rate and raise GDP. 
D) raise the interest rate and lower real GDP. 
A) lower both the interest rate and real GDP. 
B) raise both the interest rate and nominal GDP. 
C) lower the interest rate and raise GDP. 
D) raise the interest rate and lower real GDP.

Question 20

The role of the Reserve Bank of Australia in the economy is to:

Accepted Answer

A) control prices. 
B) look into research and development portfolios. 
C) manage the government's investments. 
D) control interest rates. 
A) control prices. 
B) look into research and development portfolios. 
C) manage the government's investments. 
D) control interest rates.

The expansionary monetary policy can be seen as an:

If the economy is inflationary,the RBA would most likely:

Which bank controls the Monetary Base in Australia?

Which of the following could not serve as commodity money?

Keynes called the money that people hold to make routine day-to-day purchases the:

People react to an excess supply of money by:

Suppose you transfer $1000 from your cheque account to your savings account.How does this action affect the M1 and M3 money supplies?

The Australian Securities and Investment Commission's role is to:

Which of the following statements is true?

The characteristics that money should have include:

The primary functions of money are:

The precautionary demand for money:

Comparing how many dollars it takes to run your car each year to annual earnings on a job instead of recording costs in terms of litres of petrol and oil represents the use of money as:

Fiat money is paper money:

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

The RBA uses the short-term money market in order to influence:

Which of the following is often traded in the short-term money market?

If people are selling bonds,it causes the interest rate to:

Using the aggregate supply and demand model,assume the economy is operating along the intermediate portion of the aggregate supply curve.An increase in the money supply will increase the price level and:

The role of the Reserve Bank of Australia in the economy is to:

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

The expansionary monetary policy can be seen as an:

If the economy is inflationary,the RBA would most likely:

Which bank controls the Monetary Base in Australia?

Which of the following could not serve as commodity money?

Keynes called the money that people hold to make routine day-to-day purchases the:

People react to an excess supply of money by:

Suppose you transfer $1000 from your cheque account to your savings account.How does this action affect the M1 and M3 money supplies?

The Australian Securities and Investment Commission's role is to:

Which of the following statements is true?

The characteristics that money should have include:

The primary functions of money are:

The precautionary demand for money:

Comparing how many dollars it takes to run your car each year to annual earnings on a job instead of recording costs in terms of litres of petrol and oil represents the use of money as:

Fiat money is paper money:

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

The RBA uses the short-term money market in order to influence:

Which of the following is often traded in the short-term money market?

If people are selling bonds,it causes the interest rate to:

Using the aggregate supply and demand model,assume the economy is operating along the intermediate portion of the aggregate supply curve.An increase in the money supply will increase the price level and:

The role of the Reserve Bank of Australia in the economy is to:

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