Question 1

The Australian Stock Exchange deals only with:

Accepted Answer

A)  shares of privately listed companies to allow people to buy and sell their shares. 
B)  publicly listed companies. 
C)  futures options on securities. 
D)  foreign companies trading in Australia. 
A)  shares of privately listed companies to allow people to buy and sell their shares. 
B)  publicly listed companies. 
C)  futures options on securities. 
D)  foreign companies trading in Australia. B

Question 2

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. A

Question 3

Commonwealth government securities:

Accepted Answer

A)  are bonds issued by the government to raise money for expenditure. 
B)  have a high-risk premium. 
C)  are used by the RBA to control the currency. 
D)  are only used in time of war to raise money for the government. 
A)  are bonds issued by the government to raise money for expenditure. 
B)  have a high-risk premium. 
C)  are used by the RBA to control the currency. 
D)  are only used in time of war to raise money for the government. A

Question 4

If people attempt to sell bonds because of excess money demand, then the interest rate will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  react unpredictably.

Question 5

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

Question 6

People learn to hold a specific quantity of money for their groceries, theatre tickets, petrol, clothes, film and other items they habitually purchase. This behaviour is representative of the:

Accepted Answer

A)  precautionary demand. 
B)  speculative demand. 
C)  transactions demand. 
D)  volatility demand. 
A)  precautionary demand. 
B)  speculative demand. 
C)  transactions demand. 
D)  volatility demand.

Question 7

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 8

Credit cards are money because they serve the three functions of money.

Accepted Answer

A) True 
 B)False

Question 9

A decrease in the money supply:

Accepted Answer

A)  lowers the interest rate, causing a decrease in investment and a decrease in GDP. 
B)  lowers the interest rate, causing a decrease in investment and an increase in GDP. 
C)  raises the interest rate, causing an increase in investment and a decrease in GDP. 
D)  raises the interest rate, causing an increase in investment and an increase in GDP. 
A)  lowers the interest rate, causing a decrease in investment and a decrease in GDP. 
B)  lowers the interest rate, causing a decrease in investment and an increase in GDP. 
C)  raises the interest rate, causing an increase in investment and a decrease in GDP. 
D)  raises the interest rate, causing an increase in investment and an increase in GDP.

Question 10

A T-note is:

Accepted Answer

A)  an expensive note. 
B)  a T-shape note. 
C)  a Treasury note. 
D)  a Today's note. 
A)  an expensive note. 
B)  a T-shape note. 
C)  a Treasury note. 
D)  a Today's note.

Question 11

As the interest rate decreases, the quantity of money people will hold:

Accepted Answer

A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  rises and then falls. 
A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  rises and then falls.

Question 12

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)  only 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)  only accessed by trading banks. 
D)  used for the trading of shares in companies.

Question 13

When there is an excess demand for money, individuals, business and agencies will attempt to purchase bonds.

Accepted Answer

A) True 
 B)False

Question 14

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. 
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.

Question 15

Exchange settlement accounts:

Accepted Answer

A)  enable a bank to offer cheque-writing facilities to its customers. 
B)  are often overdrawn. 
C)  earn a high return for banks. 
D)  are designed to ensure all banks have adequate liquidity. 
A)  enable a bank to offer cheque-writing facilities to its customers. 
B)  are often overdrawn. 
C)  earn a high return for banks. 
D)  are designed to ensure all banks have adequate liquidity.

Question 16

Each bank maintains:

Accepted Answer

A)  good communication with the RBA. 
B)  strong control over the RBA's decisions. 
C)  an exchange settlement account with the RBA. 
D)  an exchange lending account with the RBA. 
A)  good communication with the RBA. 
B)  strong control over the RBA's decisions. 
C)  an exchange settlement account with the RBA. 
D)  an exchange lending account with the RBA.

Question 17

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 18

Three important motives for people to hold money and forego earning interest payments are:

Accepted Answer

A)  the opportunity cost motive, precautionary motive and speculative motive. 
B)  the transaction motive, precautionary motive and speculative motive. 
C)  the transaction motive, safety motive and speculative motive. 
D)  the transaction motive, precautionary motive and special motive. 
A)  the opportunity cost motive, precautionary motive and speculative motive. 
B)  the transaction motive, precautionary motive and speculative motive. 
C)  the transaction motive, safety motive and speculative motive. 
D)  the transaction motive, precautionary motive and special motive.

Question 19

Narrbegin 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 20

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. 
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.

The Australian Stock Exchange deals only with:

Banks are subject to which of the following regulations?

Commonwealth government securities:

If people attempt to sell bonds because of excess money demand, then the interest rate will:

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

People learn to hold a specific quantity of money for their groceries, theatre tickets, petrol, clothes, film and other items they habitually purchase. This behaviour is representative of the:

The characteristics that money should have include:

Credit cards are money because they serve the three functions of money.

A decrease in the money supply:

A T-note is:

As the interest rate decreases, the quantity of money people will hold:

The short-term money market is:

When there is an excess demand for money, individuals, business and agencies will attempt to purchase bonds.

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

Exchange settlement accounts:

Each bank maintains:

People react to an excess supply of money by:

Three important motives for people to hold money and forego earning interest payments are:

Narrbegin 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:

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

Thinking Like an Economist

Applying Graphs to Economics

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: Housing Affordability 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

Filters

Exam 16: The Monetary and Financial System

The Australian Stock Exchange deals only with:

Banks are subject to which of the following regulations?

Commonwealth government securities:

If people attempt to sell bonds because of excess money demand, then the interest rate will:

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

People learn to hold a specific quantity of money for their groceries, theatre tickets, petrol, clothes, film and other items they habitually purchase. This behaviour is representative of the:

The characteristics that money should have include:

Credit cards are money because they serve the three functions of money.

A decrease in the money supply:

A T-note is:

As the interest rate decreases, the quantity of money people will hold:

The short-term money market is:

When there is an excess demand for money, individuals, business and agencies will attempt to purchase bonds.

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

Exchange settlement accounts:

Each bank maintains:

People react to an excess supply of money by:

Three important motives for people to hold money and forego earning interest payments are:

Narrbegin 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:

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

Thinking Like an Economist

Applying Graphs to Economics

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: Housing Affordability 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

Filters

Narrbegin 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: