Quiz chapter 3 The Reserve Bank of Australia and interest rates Flashcards Preview

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Flashcards in Quiz chapter 3 The Reserve Bank of Australia and interest rates Deck (16):
1

1. The cash rate is a market-determined rate negotiated between banks and central bank.
a. True
b. False

F

2

2. The cash-holding behaviour of the public affects the monetary base. a. True
b. False

T

3

3. When reserve requirements are increased, interest rates should increase.
a. True
b. False

T

4

4. When a bank orders currency from the Reserve Bank of Australia, the monetary base does not change.
a. True
b. False

T

5

5. A significant move by the Reserve Bank of Australia toward a "tight" money policy is likely to enhance exports.
a. True
b. False

F

6

6. The cash rate is the central banks' lending rate to commercial banks
a. True
b. False

F

7

7. Monetary policy is thought to affect the economy through money channel
a. True
b. False

F

8

8. Restrictive monetary policy in Australia may slow down net exports and GNP.
a. True
b. False

T

9

9. Monetarists think changing the money supply impacts economic units directly rather than just through interest rates.
a. True
b. False

T

10

10. A prolonged "tight" monetary policy can be associated with falling bond prices.
a. True
b. False

T

11

11. Discount window rates refer to the practice of some central banks to offer funds facilities to banks so that they can increase their liquidity or loans business with the general public.
a. True
b. False

T

12

12. The Reserve Bank of Australia exclusively controls the money supply. a. True
b. False

F

13

Interest rates and the money supply tend to vary inversely, at least in the short term.
a. True
b. False

T

14

14. Frictional unemployment is caused by a mismatch between the workers’ skill levels and available jobs
a. True
b. False

F

15

15. Monetary policy first affects financial markets and institutions, then the real economy.
a. True
b. False

T

16

16. Monetarist economists believe that when people have more money relative to their needs, they will save more for the future.
a. True
b. False

F