Open Market Operations

Open Market Operations

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Multiple Choice

The cash rate is

• The interest rate the RBA charges banks on overnight loans

• The interest rate the RBA pays to banks on overnight deposits

• The interest rate banks charge each other on overnight loans

• The interest rate banks charge individuals on overnight loans

Multiple Choice

ANZ's exchange settlement account is

• A bank account into which the RBA provides money for banks to lend out

• A bank account containing all of the funds ANZ has collected from customers' savings accounts

• A bank account with the RBA that is used to convert Australian dollars into other currencies

• A bank account with the RBA that is used to settle transfers between banks

Multiple Choice

How would the RBA cause the cash rate to increase?

• Buy new government securities

• Buy second-hand government securities

• Sell new government securities

• Sell second-hand government securities

Multiple Choice

Which of the following would the RBA do if it was targeting a cash rate of 2%?

• Charge a lending rate of 2.25% and pay a deposit rate of 1.9%

• Charge a lending rate of 2.1% and pay a deposit rate of 1.75%

• Charge a lending rate of 1.75% and pay a deposit rate of 2.1%

• Charge a lending rate of 1.9% and pay a deposit rate of 2.25%

Multiple Choice

In a downturn in the business cycle, the RBA would be most likely to

• Purchase government securities and raise the interest rate it pays on surplus funds in banks' exchange settlement accounts

• Purchase government securities and reduce the interest rate it pays on surplus funds in banks' exchange settlement accounts

• Sell government securities and raise the interest rate it pays on surplus funds in banks' exchange settlement accounts

• Sell government securities and reduce the interest rate it pays on surplus funds in banks' exchange settlement accounts