Question 1

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 2

The Australian Prudential Regulation Authority's role is to:

Accepted Answer

A)  control inflation. 
B)  monitor interest rates. 
C)  monitor Australia's deposit-taking institutions. 
D)  uphold consumer protection. 
A)  control inflation. 
B)  monitor interest rates. 
C)  monitor Australia's deposit-taking institutions. 
D)  uphold consumer protection.

Question 3

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 4

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. 
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.

Question 5

A rightward shift in the money supply curve is likely to produce a leftward shift in the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 6

The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.

Accepted Answer

A) True 
 B)False

Question 7

If there is excess money supply in the economy, which of the following is most likely to occur?

Accepted Answer

A)  People will buy bonds, raising bond prices and decreasing interest rates. 
B)  People will buy bonds, raising bond prices and increasing interest rates. 
C)  People will sell bonds, raising bond prices and decreasing interest rates. 
D)  People will sell bonds, decreasing bond prices and decreasing the interest rate. 
A)  People will buy bonds, raising bond prices and decreasing interest rates. 
B)  People will buy bonds, raising bond prices and increasing interest rates. 
C)  People will sell bonds, raising bond prices and decreasing interest rates. 
D)  People will sell bonds, decreasing bond prices and decreasing the interest rate.

Question 8

Which of the following statements is false?

Accepted Answer

A)  Round stones with holes in the centre can serve as money. 
B)  Money eases the process of exchanging goods and services in a modern economy. 
C)  Money serves as a measure of value only when it is backed by gold or silver. 
D)  Money is used as a measure of the relative value of goods and services in an economy. 
A)  Round stones with holes in the centre can serve as money. 
B)  Money eases the process of exchanging goods and services in a modern economy. 
C)  Money serves as a measure of value only when it is backed by gold or silver. 
D)  Money is used as a measure of the relative value of goods and services in an economy.

Question 9

The minimum liquidity requirement is the:

Accepted Answer

A)  actual amount of reserves that banks must hold. 
B)  excess amount of reserves that a bank must hold. 
C)  minimum amount of reserves the RBA requires a bank to hold. 
D)  total amount of reserves that banks hold at all times. 
A)  actual amount of reserves that banks must hold. 
B)  excess amount of reserves that a bank must hold. 
C)  minimum amount of reserves the RBA requires a bank to hold. 
D)  total amount of reserves that banks hold at all times.

Question 10

Barter is:

Accepted Answer

A)  the indirect exchange of a service for money. 
B)  the direct exchange of a dollar for an orange. 
C)  the direct exchange of an apple for an orange. 
D)  the direct exchange of coins for a pizza. 
A)  the indirect exchange of a service for money. 
B)  the direct exchange of a dollar for an orange. 
C)  the direct exchange of an apple for an orange. 
D)  the direct exchange of coins for a pizza.

Question 11

The M1 definition of the money supply includes currency plus:

Accepted Answer

A)  cheque account deposits and savings accounts. 
B)  cheque account deposits and credit cards. 
C)  cheque account deposits and debit cards. 
D)  cheque account deposits and traveller's cheques. 
A)  cheque account deposits and savings accounts. 
B)  cheque account deposits and credit cards. 
C)  cheque account deposits and debit cards. 
D)  cheque account deposits and traveller's cheques.

Question 12

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

Accepted Answer

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

Question 13

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 14

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 15

Fiat money:

Accepted Answer

A)  is accepted because of the market value of the material. 
B)  has intrinsic worth. 
C)  does not have intrinsic worth. 
D)  is accepted by law. 
A)  is accepted because of the market value of the material. 
B)  has intrinsic worth. 
C)  does not have intrinsic worth. 
D)  is accepted by law.

Question 16

The minimum liquidity requirement means that a bank:

Accepted Answer

A)  must never have a certain minimal reserve level of highly liquid assets. 
B)  must always maintain a certain minimal reserve level of highly liquid assets. 
C)  must always maintain a certain minimal reserve level of low liquid assets. 
D)  must always maintain a certain minimal number of highly important customers. 
A)  must never have a certain minimal reserve level of highly liquid assets. 
B)  must always maintain a certain minimal reserve level of highly liquid assets. 
C)  must always maintain a certain minimal reserve level of low liquid assets. 
D)  must always maintain a certain minimal number of highly important customers.

Question 17

In case of unresolvable disagreement between the RBA board and the government, the ________ view will prevail.

Accepted Answer

A)  government's 
B)  the RBA board's 
C)  majority of the banks' 
D)  ACCC's 
A)  government's 
B)  the RBA board's 
C)  majority of the banks' 
D)  ACCC's

Question 18

If there is a recession, 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 19

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 20

The key property of money is that it is:

Accepted Answer

A)  always desired. 
B)  fluent. 
C)  liquid. 
D)  expensive. 
A)  always desired. 
B)  fluent. 
C)  liquid. 
D)  expensive.

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

The Australian Prudential Regulation Authority's role is to:

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

When the interest rate falls:

A rightward shift in the money supply curve is likely to produce a leftward shift in the aggregate demand curve.

The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.

If there is excess money supply in the economy, which of the following is most likely to occur?

Which of the following statements is false?

The minimum liquidity requirement is the:

Barter is:

The M1 definition of the money supply includes currency plus:

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

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

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

Fiat money:

The minimum liquidity requirement means that a bank:

In case of unresolvable disagreement between the RBA board and the government, the ________ view will prevail.

If there is a recession, the RBA would most likely:

The Australian Securities Exchange is:

The key property of money is that it is:

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

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

The Australian Prudential Regulation Authority's role is to:

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

When the interest rate falls:

A rightward shift in the money supply curve is likely to produce a leftward shift in the aggregate demand curve.

The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.

If there is excess money supply in the economy, which of the following is most likely to occur?

Which of the following statements is false?

The minimum liquidity requirement is the:

Barter is:

The M1 definition of the money supply includes currency plus:

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

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

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

Fiat money:

The minimum liquidity requirement means that a bank:

In case of unresolvable disagreement between the RBA board and the government, the ________ view will prevail.

If there is a recession, the RBA would most likely:

The Australian Securities Exchange is:

The key property of money is that it is:

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