Monetary Policy

What is the primary tool used for monetary policy in Australia?

• Cash rate target

• Quantitative easing

• Exchange rates

• Term funding

What is the main objective of monetary policy in Australia?

• To control inflation

• To promote full employment

• To stabilize the currency

• To increase the nation's wealth

What does full employment mean?

• No unemployment

• High-paying jobs for all

• Jobs for everyone who wants to work

• Employment in government sectors only

What is the target inflation rate set by the Reserve Bank of Australia?

• 3-4%

• 2-3%

• 1-2%

• 4-5%

What does the stability of the currency aim to achieve?

• High exchange rates

• Low and stable inflation

• Elimination of foreign currency

• Rapid economic growth

Which of the following is NOT a tool of monetary policy mentioned?

• Cash rate target

• Forward guidance

• Direct investment

• Yield target

What does the Reserve Bank consider when setting monetary policy?

• Only inflation rates

• Only employment rates

• Only the cash rate target

• Financial stability and other factors

How does monetary policy influence the economy?

• By influencing interest rates

• By creating jobs directly

• By directly setting prices of goods

• By changing the weather patterns

What is the purpose of smoothing the business cycle?

• To increase government spending

• To reduce the population's wealth

• To eliminate all economic fluctuations

• To avoid recessions and financial crises

What might the Reserve Bank do when economic growth is too slow?

• Increase the cash rate target

• Decrease the cash rate target

• Increase taxes

• Stop all investments