Question 1

Assume a fixed demand for money curve and the RBA increases the money supply.The result is a temporary:

Accepted Answer

A) excess quantity of money demanded. 
B) excess quantity of money supplied. 
C) new equilibrium interest rate. 
D) decrease in the demand for loans. 
A) excess quantity of money demanded. 
B) excess quantity of money supplied. 
C) new equilibrium interest rate. 
D) decrease in the demand for loans.

Question 2

Which of the following is not counted as part of M1?

Accepted Answer

A) Silver coins. 
B) Reserve Bank notes or 'paper money'. 
C) Passbook savings deposits. 
D) Cheque account deposits. 
E) Traveller's cheques. 
A) Silver coins. 
B) Reserve Bank notes or 'paper money'. 
C) Passbook savings deposits. 
D) Cheque account deposits. 
E) Traveller's cheques.

Question 3

Money is a mechanism for transforming income earned in the present into:

Accepted Answer

A) past experience. 
B) a sacred treasure. 
C) future purchases. 
D) a unit of selling capacity. 
A) past experience. 
B) a sacred treasure. 
C) future purchases. 
D) a unit of selling capacity.

Question 4

According to Keynesians,an increase in the money supply will:

Accepted Answer

A) decrease the interest rate and increase investment and aggregate demand, prices, real GDP and employment. 
B) decrease the interest rate and decrease investment and aggregate demand, prices, real GDP and employment. 
C) increase the interest rate and decrease investment and aggregate demand, prices, real GDP and employment. 
D) only increases prices. 
A) decrease the interest rate and increase investment and aggregate demand, prices, real GDP and employment. 
B) decrease the interest rate and decrease investment and aggregate demand, prices, real GDP and employment. 
C) increase the interest rate and decrease investment and aggregate demand, prices, real GDP and employment. 
D) only increases prices.

Question 5

The Australian Securities Exchange is:

Accepted Answer

A) where goods of foreign companies are traded. 
B) where shares of black-market companies are traded. 
C) where shares of publicly listed companies are traded. 
D) where goods and services of various companies are traded. 
A) where goods of foreign companies are traded. 
B) where shares of black-market companies are traded. 
C) where shares of publicly listed companies are traded. 
D) where goods and services of various companies are traded.

Question 6

Unused lines of credit on credit cards are part of M3.

Accepted Answer

A) True 
 B)False

Question 7

The relationship between bond prices and the interest rate is:

Accepted Answer

A) an undefined relationship. 
B) a steady relationship. 
C) a direct relationship. 
D) an inverse relationship. 
A) an undefined relationship. 
B) a steady relationship. 
C) a direct relationship. 
D) an inverse relationship.

Question 8

Banks are subject to which of the following regulations?

Accepted Answer

A) Their exchange settlement account must have a positive balance at the end of each day. 
B) They can have any level of liquidity. 
C) Their capital adequacy requirements are not essential. 
D) They don't have to have an exchange settlement account with the RBA. 
A) Their exchange settlement account must have a positive balance at the end of each day. 
B) They can have any level of liquidity. 
C) Their capital adequacy requirements are not essential. 
D) They don't have to have an exchange settlement account with the RBA.

Question 9

The effect of expansionary monetary policy on aggregate demand is as follows:

Accepted Answer

A) the decrease in money supply causes the interest rates to drop and investment and production to increase. 
B) the increase in money supply causes the interest rates to grow and investment and production to increase. 
C) the increase in money supply causes the interest rates to drop and investment and production to increase. 
D) the increase in money supply causes the interest rates to drop and investment and production to decrease. 
A) the decrease in money supply causes the interest rates to drop and investment and production to increase. 
B) the increase in money supply causes the interest rates to grow and investment and production to increase. 
C) the increase in money supply causes the interest rates to drop and investment and production to increase. 
D) the increase in money supply causes the interest rates to drop and investment and production to decrease.

Question 10

The buying and selling of short-term securities by financial institutions occurs mainly in:

Accepted Answer

A) the stock market. 
B) the Treasury. 
C) the short-term money market. 
D) the foreign exchange market. 
A) the stock market. 
B) the Treasury. 
C) the short-term money market. 
D) the foreign exchange market.

Question 11

When the interest rate falls:

Accepted Answer

A) the opportunity cost of holding money rises. 
B) people shift out of holding interest-yielding bonds into holding money. 
C) the quantity of money people will hold decreases. 
D) investment spending decreases. 
E) real GDP will decrease. 
A) the opportunity cost of holding money rises. 
B) people shift out of holding interest-yielding bonds into holding money. 
C) the quantity of money people will hold decreases. 
D) investment spending decreases. 
E) real GDP will decrease.

Question 12

The speculative demand for money shows the relationship between money demand and:

Accepted Answer

A) income levels. 
B) interest rates. 
C) price levels. 
D) investment rates. 
E) consumption patterns. 
A) income levels. 
B) interest rates. 
C) price levels. 
D) investment rates. 
E) consumption patterns.

Question 13

Comparison of the price of a cup of coffee and the price of a glass of juice represents the use of money as:

Accepted Answer

A) a medium of exchange. 
B) a unit of account. 
C) a store of value. 
D) a leverage of your income. 
A) a medium of exchange. 
B) a unit of account. 
C) a store of value. 
D) a leverage of your income.

Question 14

According to Keynesians,an increase in the money supply will:

Accepted Answer

A) decrease the interest rate and increase investment, aggregate demand, prices, real GDP and employment. 
B) decrease the interest rate and decrease investment, aggregate demand, prices, real GDP and employment. 
C) increase the interest rate and decrease investment, aggregate demand, prices, real GDP and employment. 
D) only increases prices. 
E) decrease investment but increase aggregate demand, prices, nominal GDP and employment. 
A) decrease the interest rate and increase investment, aggregate demand, prices, real GDP and employment. 
B) decrease the interest rate and decrease investment, aggregate demand, prices, real GDP and employment. 
C) increase the interest rate and decrease investment, aggregate demand, prices, real GDP and employment. 
D) only increases prices. 
E) decrease investment but increase aggregate demand, prices, nominal GDP and employment.

Question 15

If the money supply increases this will cause the interest rate to rise,investment to fall and GDP to fall.

Accepted Answer

A) True 
 B)False

Question 16

If the minimum liquidity requirement is a uniform 25 per cent on all deposits,the money multiplier will be:

Accepted Answer

A) 4. 
B) 2.5. 
C) 0.4. 
D) 0.25. 
A) 4. 
B) 2.5. 
C) 0.4. 
D) 0.25.

Question 17

The only institutions allowed to trade in the foreign exchange market are:

Accepted Answer

A) banks. 
B) the RBA. 
C) publicly listed companies. 
D) those authorised by the RBA to do so. 
A) banks. 
B) the RBA. 
C) publicly listed companies. 
D) those authorised by the RBA to do so.

Question 18

Assume that Paris First National Bank is a thriving bank with deposits of $20 million.If the minimum liquidity requirement is 20 per cent and the bank is fully loaned out,the bank will keep what amount of required reserves?

Accepted Answer

A) $2 million. 
B) $4 million. 
C) $10 million. 
D) $16 million. 
E) $20 million. 
A) $2 million. 
B) $4 million. 
C) $10 million. 
D) $16 million. 
E) $20 million.

Question 19

The short-term money market is:

Accepted Answer

A) located in Sydney for the purpose of providing short-term funds for financial institutions. 
B) used by financial institutions to borrow or lend money for short periods of time. 
C) can only be accessed by trading banks. 
D) used for the trading of shares in companies. 
A) located in Sydney for the purpose of providing short-term funds for financial institutions. 
B) used by financial institutions to borrow or lend money for short periods of time. 
C) can only be accessed by trading banks. 
D) used for the trading of shares in companies.

Question 20

Money can:

Accepted Answer

A) remove a problem of increasing wants. 
B) create a problem of coincidence of wants. 
C) remove the problem of coincidence of wants. 
D) create a problem of reducing wants. 
A) remove a problem of increasing wants. 
B) create a problem of coincidence of wants. 
C) remove the problem of coincidence of wants. 
D) create a problem of reducing wants.

Assume a fixed demand for money curve and the RBA increases the money supply.The result is a temporary:

Which of the following is not counted as part of M1?

Money is a mechanism for transforming income earned in the present into:

According to Keynesians,an increase in the money supply will:

The Australian Securities Exchange is:

Unused lines of credit on credit cards are part of M3.

The relationship between bond prices and the interest rate is:

Banks are subject to which of the following regulations?

The effect of expansionary monetary policy on aggregate demand is as follows:

The buying and selling of short-term securities by financial institutions occurs mainly in:

When the interest rate falls:

The speculative demand for money shows the relationship between money demand and:

Comparison of the price of a cup of coffee and the price of a glass of juice represents the use of money as:

According to Keynesians,an increase in the money supply will:

If the money supply increases this will cause the interest rate to rise,investment to fall and GDP to fall.

If the minimum liquidity requirement is a uniform 25 per cent on all deposits,the money multiplier will be:

The only institutions allowed to trade in the foreign exchange market are:

Assume that Paris First National Bank is a thriving bank with deposits of $20 million.If the minimum liquidity requirement is 20 per cent and the bank is fully loaned out,the bank will keep what amount of required reserves?

The short-term money market is:

Money can:

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

Assume a fixed demand for money curve and the RBA increases the money supply.The result is a temporary:

Which of the following is not counted as part of M1?

Money is a mechanism for transforming income earned in the present into:

According to Keynesians,an increase in the money supply will:

The Australian Securities Exchange is:

Unused lines of credit on credit cards are part of M3.

The relationship between bond prices and the interest rate is:

Banks are subject to which of the following regulations?

The effect of expansionary monetary policy on aggregate demand is as follows:

The buying and selling of short-term securities by financial institutions occurs mainly in:

When the interest rate falls:

The speculative demand for money shows the relationship between money demand and:

Comparison of the price of a cup of coffee and the price of a glass of juice represents the use of money as:

According to Keynesians,an increase in the money supply will:

If the money supply increases this will cause the interest rate to rise,investment to fall and GDP to fall.

If the minimum liquidity requirement is a uniform 25 per cent on all deposits,the money multiplier will be:

The only institutions allowed to trade in the foreign exchange market are:

Assume that Paris First National Bank is a thriving bank with deposits of $20 million.If the minimum liquidity requirement is 20 per cent and the bank is fully loaned out,the bank will keep what amount of required reserves?

The short-term money market is:

Money can:

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