Question 1

With a floating exchange rate,intervention in the FOREX market is usually known as:

Accepted Answer

A) violating. 
B) fixing. 
C) testing. 
D) volatility. 
A) violating. 
B) fixing. 
C) testing. 
D) volatility.

Question 2

Keynesians argue that the velocity of money is:

Accepted Answer

A) constant over time. 
B) stable over time. 
C) constant in the short run, but volatile in the long run. 
D) zero. 
E) volatile. 
A) constant over time. 
B) stable over time. 
C) constant in the short run, but volatile in the long run. 
D) zero. 
E) volatile.

Question 3

The policy effectiveness lag refers to the time it takes for:

Accepted Answer

A) the government to make up its mind about what to do. 
B) the government to discover the fluctuation in the economy. 
C) the economy to get back to full employment. 
D) the policy response to impact on economic activity. 
A) the government to make up its mind about what to do. 
B) the government to discover the fluctuation in the economy. 
C) the economy to get back to full employment. 
D) the policy response to impact on economic activity.

Question 4

According to the quantity theory of money,if M = 200,P = 1000 and real output of goods and services is 100,then velocity is:

Accepted Answer

A) 2. 
B) 500. 
C) 10. 
D) 50. 
E) 200 000. 
A) 2. 
B) 500. 
C) 10. 
D) 50. 
E) 200 000.

Question 5

The time taken to decide on an appropriate policy response is known as the:

Accepted Answer

A) information lag. 
B) policy determination lag. 
C) policy response lag. 
D) policy effectiveness lag. 
E) policy inefficiency lag. 
A) information lag. 
B) policy determination lag. 
C) policy response lag. 
D) policy effectiveness lag. 
E) policy inefficiency lag.

Question 6

If the RBA decides to leave the cash rate unchanged,then it will:

Accepted Answer

A) do nothing. 
B) try to ensure ESAs will be in balance that day. 
C) try to sell securities to ensure ESAs have a healthy surplus that day. 
D) try to buy securities to ensure ESAs have a healthy surplus that day. 
A) do nothing. 
B) try to ensure ESAs will be in balance that day. 
C) try to sell securities to ensure ESAs have a healthy surplus that day. 
D) try to buy securities to ensure ESAs have a healthy surplus that day.

Question 7

Exhibit 16-1
  
-According to Exhibit 16-1,if the economy is currently operating at point C,the RBA is likely to:

Accepted Answer

A) decrease interest rates to stimulate aggregate demand and shift the AD curve to the right. 
B) increase interest rates to suppress aggregate demand and shift the AD curve to the left. 
C) increase interest rates to stimulate aggregate demand and shift the AD curve to the right. 
D) decrease interest rates to discourage investments and shift the AD curve to the left. 
A) decrease interest rates to stimulate aggregate demand and shift the AD curve to the right. 
B) increase interest rates to suppress aggregate demand and shift the AD curve to the left. 
C) increase interest rates to stimulate aggregate demand and shift the AD curve to the right. 
D) decrease interest rates to discourage investments and shift the AD curve to the left.

Question 8

Today Australia has:

Accepted Answer

A) a floating exchange rate. 
B) a fixed exchange rate. 
C) a high exchange rate. 
D) a low exchange rate. 
E) a regular exchange rate. 
A) a floating exchange rate. 
B) a fixed exchange rate. 
C) a high exchange rate. 
D) a low exchange rate. 
E) a regular exchange rate.

Question 9

The V in the equation of exchange represents the:

Accepted Answer

A) variation in the GDP. 
B) variation in the CPI. 
C) variation in real GDP. 
D) average number of times per year a dollar is spent on final goods and services. 
A) variation in the GDP. 
B) variation in the CPI. 
C) variation in real GDP. 
D) average number of times per year a dollar is spent on final goods and services.

Question 10

Which of the following is a reason for the Keynesian view that monetary policy plays a minor role in affecting the economy?

Accepted Answer

A) The money demand curve is vertical. 
B) The investment curve is very steep. 
C) The money demand curve is horizontal at any interest rate. 
D) The monetary rule. 
A) The money demand curve is vertical. 
B) The investment curve is very steep. 
C) The money demand curve is horizontal at any interest rate. 
D) The monetary rule.

Question 11

With a fixed exchange rate,the RBA:

Accepted Answer

A) had to buy Australian dollars when the currency threatened to depreciate. 
B) had to sell Australian dollars when the currency threatened to appreciate. 
C) would alter the domestic money supply when they intervened to keep the Australian dollar at its fixed rate. 
D) had strong control over domestic interest rates. 
A) had to buy Australian dollars when the currency threatened to depreciate. 
B) had to sell Australian dollars when the currency threatened to appreciate. 
C) would alter the domestic money supply when they intervened to keep the Australian dollar at its fixed rate. 
D) had strong control over domestic interest rates.

Question 12

When the velocity of money is unstable,a rules-based approach to monetary policy is likely to be extremely effective.

Accepted Answer

A) True 
 B)False

Question 13

If the velocity of money is constant then the money supply will also be constant.

Accepted Answer

A) True 
 B)False

Question 14

Australia:

Accepted Answer

A) did not implement monetarist policy during 1976-85. 
B) has only used the classical economics approach in designing monetary policy. 
C) rejected a monetarist policy during 1976-85. 
D) implemented a monetarist policy during 1976-85. 
A) did not implement monetarist policy during 1976-85. 
B) has only used the classical economics approach in designing monetary policy. 
C) rejected a monetarist policy during 1976-85. 
D) implemented a monetarist policy during 1976-85.

Question 15

The 'conditional-projections' for the growth of the monetary aggregate,M3,were conditional because:

Accepted Answer

A) they were conditional on government policies. 
B) they depended on local industrial conditions. 
C) they depended on the world or domestic economic conditions. 
D) they depended on the climate change. 
A) they were conditional on government policies. 
B) they depended on local industrial conditions. 
C) they depended on the world or domestic economic conditions. 
D) they depended on the climate change.

Question 16

Classical economists traditionally believed that:

Accepted Answer

A) there are three motives for demanding money. 
B) a change in the money supply can affect real GDP. 
C) the transactions demand for money influences the velocity of money. 
D) the velocity of money is constant. 
E) the economy does not always operate at full employment. 
A) there are three motives for demanding money. 
B) a change in the money supply can affect real GDP. 
C) the transactions demand for money influences the velocity of money. 
D) the velocity of money is constant. 
E) the economy does not always operate at full employment.

Question 17

If the money supply = $100 billion,nominal GDP = $400 billion and real GDP = $200 billion,then the velocity of money is:

Accepted Answer

A) 0.67. 
B) 1.5. 
C) 2. 
D) 4. 
E) 8. 
A) 0.67. 
B) 1.5. 
C) 2. 
D) 4. 
E) 8.

Question 18

Since the Australian dollar was floated in 1983,the RBA has:

Accepted Answer

A) not operated in the FOREX market. 
B) intervened in the FOREX market continually in order to maintain the Australian dollar at a certain level. 
C) intervened in the FOREX market only when the Australian dollar is under speculative pressure or when it is extremely volatile. 
D) handed control of the Australian dollar over to the Treasury. 
A) not operated in the FOREX market. 
B) intervened in the FOREX market continually in order to maintain the Australian dollar at a certain level. 
C) intervened in the FOREX market only when the Australian dollar is under speculative pressure or when it is extremely volatile. 
D) handed control of the Australian dollar over to the Treasury.

Question 19

Since classical economists and monetarists believe that the economy operates at full employment,real GDP,that is,along the vertical segment of aggregate supply,then:

Accepted Answer

A) any increase in the money supply can only end up raising the price level. 
B) any increase in the money supply can only end up lowering the price level. 
C) any decrease in the money supply can only end up raising the price level. 
D) changes in the money supply will not affect the price level. 
E) any increase in the money supply will cause both nominal and real GDP to increase. 
A) any increase in the money supply can only end up raising the price level. 
B) any increase in the money supply can only end up lowering the price level. 
C) any decrease in the money supply can only end up raising the price level. 
D) changes in the money supply will not affect the price level. 
E) any increase in the money supply will cause both nominal and real GDP to increase.

Question 20

The inflation target of the RBA is:

Accepted Answer

A) 2-3 per cent at all times. 
B) 2-3 per cent over the course of the business cycle. 
C) zero per cent at all times. 
D) zero per cent over the course of the business cycle. 
E) 0-5 per cent over the course of the business cycle. 
A) 2-3 per cent at all times. 
B) 2-3 per cent over the course of the business cycle. 
C) zero per cent at all times. 
D) zero per cent over the course of the business cycle. 
E) 0-5 per cent over the course of the business cycle.

With a floating exchange rate,intervention in the FOREX market is usually known as:

Keynesians argue that the velocity of money is:

The policy effectiveness lag refers to the time it takes for:

According to the quantity theory of money,if M = 200,P = 1000 and real output of goods and services is 100,then velocity is:

The time taken to decide on an appropriate policy response is known as the:

If the RBA decides to leave the cash rate unchanged,then it will:

Exhibit 16-1 -According to Exhibit 16-1,if the economy is currently operating at point C,the RBA is likely to:

Today Australia has:

The V in the equation of exchange represents the:

Which of the following is a reason for the Keynesian view that monetary policy plays a minor role in affecting the economy?

With a fixed exchange rate,the RBA:

When the velocity of money is unstable,a rules-based approach to monetary policy is likely to be extremely effective.

If the velocity of money is constant then the money supply will also be constant.

Australia:

The 'conditional-projections' for the growth of the monetary aggregate,M3,were conditional because:

Classical economists traditionally believed that:

If the money supply = $100 billion,nominal GDP = $400 billion and real GDP = $200 billion,then the velocity of money is:

Since the Australian dollar was floated in 1983,the RBA has:

Since classical economists and monetarists believe that the economy operates at full employment,real GDP,that is,along the vertical segment of aggregate supply,then:

The inflation target of the RBA is:

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

The monetary and financial system

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 16: Macroeconomic policy I: monetary policy

With a floating exchange rate,intervention in the FOREX market is usually known as:

Keynesians argue that the velocity of money is:

The policy effectiveness lag refers to the time it takes for:

According to the quantity theory of money,if M = 200,P = 1000 and real output of goods and services is 100,then velocity is:

The time taken to decide on an appropriate policy response is known as the:

If the RBA decides to leave the cash rate unchanged,then it will:

Exhibit 16-1 -According to Exhibit 16-1,if the economy is currently operating at point C,the RBA is likely to:

Today Australia has:

The V in the equation of exchange represents the:

Which of the following is a reason for the Keynesian view that monetary policy plays a minor role in affecting the economy?

With a fixed exchange rate,the RBA:

When the velocity of money is unstable,a rules-based approach to monetary policy is likely to be extremely effective.

If the velocity of money is constant then the money supply will also be constant.

Australia:

The 'conditional-projections' for the growth of the monetary aggregate,M3,were conditional because:

Classical economists traditionally believed that:

If the money supply = $100 billion,nominal GDP = $400 billion and real GDP = $200 billion,then the velocity of money is:

Since the Australian dollar was floated in 1983,the RBA has:

Since classical economists and monetarists believe that the economy operates at full employment,real GDP,that is,along the vertical segment of aggregate supply,then:

The inflation target of the RBA is:

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

The monetary and financial system

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters