Question 1

If the price level increases,

Accepted Answer

A)  there will be an upward movement along the money demand curve. 
B)  there will be a downward movement along the money demand curve. 
C)  the money demand curve will shift to the right. 
D)  the money demand curve will shift to the left. 
A)  there will be an upward movement along the money demand curve. 
B)  there will be a downward movement along the money demand curve. 
C)  the money demand curve will shift to the right. 
D)  the money demand curve will shift to the left.

Question 2

When the RBA uses contractionary policy,

Accepted Answer

A)  the price level rises by more than it would if the RBA did not pursue policy. 
B)  the price level rises by less than it would if the RBA did not pursue policy. 
C)  it does not change the price level. 
D)  it causes inflation. 
A)  the price level rises by more than it would if the RBA did not pursue policy. 
B)  the price level rises by less than it would if the RBA did not pursue policy. 
C)  it does not change the price level. 
D)  it causes inflation.

Question 3

Refer to Figure 17.5 for the following question.
Figure 17.5  
-Refer to Figure 17.5.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Accepted Answer

A)  Decrease income taxes 
B)  Increase government spending 
C)  Buy financial securities 
D)  Sell financial securities 
A)  Decrease income taxes 
B)  Increase government spending 
C)  Buy financial securities 
D)  Sell financial securities

Question 4

The overnight cash rate is determined

Accepted Answer

A)  administratively by the Reserve Bank of Australia. 
B)  by the supply of and demand for cash. 
C)  directly by household demand for funds. 
D)  directly by firm demand for funds. 
A)  administratively by the Reserve Bank of Australia. 
B)  by the supply of and demand for cash. 
C)  directly by household demand for funds. 
D)  directly by firm demand for funds.

Question 5

How does 'monetary policy' affect the share market?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Monetary policy affects the cash rate,wh

Question 6

If the Reserve Bank of Australia sells financial instruments in the open market,net exports are likely to decrease.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are goals of monetary policy?

Accepted Answer

A)  Maximising the value of the dollar relative to other currencies, economic growth, and high employment 
B)  Price stability, maximising the value of the dollar relative to other currencies, and high employment 
C)  Price stability, economic growth, and high employment 
D)  Price stability, economic growth, and maximising the value of the dollar relative to other currencies 
A)  Maximising the value of the dollar relative to other currencies, economic growth, and high employment 
B)  Price stability, maximising the value of the dollar relative to other currencies, and high employment 
C)  Price stability, economic growth, and high employment 
D)  Price stability, economic growth, and maximising the value of the dollar relative to other currencies

Question 8

What are the main reasons for keeping a central bank independent from the government?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

One main reason to keep the central bank

Question 9

In the 1970s and 1980s,which method did the Reserve Bank of Australia use in conducting monetary policy?

Accepted Answer

A)  Interest rate targeting 
B)  Inflation targeting 
C)  Monetary targeting 
D)  Employment rate targeting 
A)  Interest rate targeting 
B)  Inflation targeting 
C)  Monetary targeting 
D)  Employment rate targeting

Question 10

Explain how monetary policy affects aggregate demand,the price level and real GDP.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Changes in monetary policy,which leads t

Question 11

Refer to Figure 17.4 for the following question.
Figure 17.4  
-Refer to Figure 17.4.In this figure,if the economy in Year 1 is at point A and expected in Year 2 to be at point B,then the appropriate monetary policy by the Reserve Bank of Australia would be to

Accepted Answer

A)  lower interest rates. 
B)  raise interest rates. 
C)  lower income taxes. 
D)  raise income taxes. 
A)  lower interest rates. 
B)  raise interest rates. 
C)  lower income taxes. 
D)  raise income taxes.

Question 12

Which of the following situations is one in which the Reserve Bank of Australia will potentially pursue expansionary monetary policy?

Accepted Answer

A)  Potential GDP is forecast to be higher than equilibrium GDP. 
B)  Potential GDP is forecast to be lower than equilibrium GDP. 
C)  Aggregate demand is growing too fast to keep the economy at full employment. 
D)  Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment. 
A)  Potential GDP is forecast to be higher than equilibrium GDP. 
B)  Potential GDP is forecast to be lower than equilibrium GDP. 
C)  Aggregate demand is growing too fast to keep the economy at full employment. 
D)  Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.

Question 13

The main goal of monetary policy in Australia is a low inflation rate.

Accepted Answer

A) True 
 B)False

Question 14

From an initial long-run macroeconomic equilibrium,if the Reserve Bank of Australia anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply,then the RBA would most likely

Accepted Answer

A)  increase income tax rates. 
B)  decrease income tax rates. 
C)  increase interest rates. 
D)  decrease interest rates. 
A)  increase income tax rates. 
B)  decrease income tax rates. 
C)  increase interest rates. 
D)  decrease interest rates.

Question 15

A decrease in the supply of cash on the overnight money market will lead to a(n)____________ in interest rates and a(n)_________ in investment expenditure.

Accepted Answer

A)  decrease; decrease 
B)  increase; decrease 
C)  decrease; increase 
D)  increase; increase 
A)  decrease; decrease 
B)  increase; decrease 
C)  decrease; increase 
D)  increase; increase

Question 16

Explain the consequences of expansionary monetary policy if the economy was close to,or at,potential GDP level.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Expansionary monetary policy involves th

Question 17

Which of the following is an argument that supports the non-independence of a country's central bank from its government?

Accepted Answer

A)  Independent monetary policy decision makers are not answerable to the voting public. 
B)  Non-independence removes monetary policy from the political electoral cycle. 
C)  Independent monetary policy is more likely to be inflationary. 
D)  Non-independence allows the government to sell bonds to finance spending more efficiently. 
A)  Independent monetary policy decision makers are not answerable to the voting public. 
B)  Non-independence removes monetary policy from the political electoral cycle. 
C)  Independent monetary policy is more likely to be inflationary. 
D)  Non-independence allows the government to sell bonds to finance spending more efficiently.

Question 18

If the Reserve Bank of Australia raises its target for the cash rate,this indicates that it is

Accepted Answer

A)  pursuing an expansionary monetary policy. 
B)  pursuing a contractionary monetary policy. 
C)  attempting to combat deflation. 
D)  concerned that the growth in aggregate demand is too slow to keep up with changes in potential GDP. 
A)  pursuing an expansionary monetary policy. 
B)  pursuing a contractionary monetary policy. 
C)  attempting to combat deflation. 
D)  concerned that the growth in aggregate demand is too slow to keep up with changes in potential GDP.

Question 19

Refer to Figure 17.3 for the following question.
Figure 17.3  
-Refer to Figure 17.3.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Accepted Answer

A)  Decrease income taxes 
B)  Increase government spending 
C)  Buy financial securities 
D)  Sell financial securities 
A)  Decrease income taxes 
B)  Increase government spending 
C)  Buy financial securities 
D)  Sell financial securities

Question 20

Which of the following does the Reserve Bank of Australia use as its main measure of monetary movements in Australia?

Accepted Answer

A)  Credit 
B)  The cash rate 
C)  The money supply 
D)  The demand for money 
A)  Credit 
B)  The cash rate 
C)  The money supply 
D)  The demand for money

If the price level increases,

When the RBA uses contractionary policy,

Refer to Figure 17.5 for the following question. Figure 17.5 -Refer to Figure 17.5.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

The overnight cash rate is determined

How does 'monetary policy' affect the share market? _ _

If the Reserve Bank of Australia sells financial instruments in the open market,net exports are likely to decrease.

Which of the following are goals of monetary policy?

What are the main reasons for keeping a central bank independent from the government? _ _

In the 1970s and 1980s,which method did the Reserve Bank of Australia use in conducting monetary policy?

Explain how monetary policy affects aggregate demand,the price level and real GDP. _ _

Refer to Figure 17.4 for the following question. Figure 17.4 -Refer to Figure 17.4.In this figure,if the economy in Year 1 is at point A and expected in Year 2 to be at point B,then the appropriate monetary policy by the Reserve Bank of Australia would be to

Which of the following situations is one in which the Reserve Bank of Australia will potentially pursue expansionary monetary policy?

The main goal of monetary policy in Australia is a low inflation rate.

From an initial long-run macroeconomic equilibrium,if the Reserve Bank of Australia anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply,then the RBA would most likely

A decrease in the supply of cash on the overnight money market will lead to a(n)____ in interest rates and a(n)_ in investment expenditure.

Explain the consequences of expansionary monetary policy if the economy was close to,or at,potential GDP level. _ _

Which of the following is an argument that supports the non-independence of a country's central bank from its government?

If the Reserve Bank of Australia raises its target for the cash rate,this indicates that it is

Refer to Figure 17.3 for the following question. Figure 17.3 -Refer to Figure 17.3.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Which of the following does the Reserve Bank of Australia use as its main measure of monetary movements in Australia?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 17: Monetary Policy

If the price level increases,

When the RBA uses contractionary policy,

Refer to Figure 17.5 for the following question. Figure 17.5 -Refer to Figure 17.5.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

The overnight cash rate is determined

How does 'monetary policy' affect the share market? _____________________________________________________________________________________________ _____________________________________________________________________________________________

If the Reserve Bank of Australia sells financial instruments in the open market,net exports are likely to decrease.

Which of the following are goals of monetary policy?

What are the main reasons for keeping a central bank independent from the government? _____________________________________________________________________________________________ _____________________________________________________________________________________________

In the 1970s and 1980s,which method did the Reserve Bank of Australia use in conducting monetary policy?

Explain how monetary policy affects aggregate demand,the price level and real GDP. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Refer to Figure 17.4 for the following question. Figure 17.4 -Refer to Figure 17.4.In this figure,if the economy in Year 1 is at point A and expected in Year 2 to be at point B,then the appropriate monetary policy by the Reserve Bank of Australia would be to

Which of the following situations is one in which the Reserve Bank of Australia will potentially pursue expansionary monetary policy?

The main goal of monetary policy in Australia is a low inflation rate.

From an initial long-run macroeconomic equilibrium,if the Reserve Bank of Australia anticipated that next year aggregate demand would grow significantly slower than long-run aggregate supply,then the RBA would most likely

A decrease in the supply of cash on the overnight money market will lead to a(n)____________ in interest rates and a(n)_________ in investment expenditure.

Explain the consequences of expansionary monetary policy if the economy was close to,or at,potential GDP level. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following is an argument that supports the non-independence of a country's central bank from its government?

If the Reserve Bank of Australia raises its target for the cash rate,this indicates that it is

Refer to Figure 17.3 for the following question. Figure 17.3 -Refer to Figure 17.3.In this figure,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Which of the following does the Reserve Bank of Australia use as its main measure of monetary movements in Australia?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

How does 'monetary policy' affect the share market? _ _

What are the main reasons for keeping a central bank independent from the government? _ _

Explain how monetary policy affects aggregate demand,the price level and real GDP. _ _

A decrease in the supply of cash on the overnight money market will lead to a(n)____ in interest rates and a(n)_ in investment expenditure.

Explain the consequences of expansionary monetary policy if the economy was close to,or at,potential GDP level. _ _