Monetary Policy Quiz

How effective has the implementation of monetary policy been in achieving the Federal Government's economic objectives?

• It has been completely ineffective

• It has been partially effective in stabilizing the economy

• It has only affected the housing market

• It has led to a decrease in employment levels

What is the inflation target range set by the central bank in Australia?

• 1-2%

• 2-3%

• 3-4%

• 4-5%

What is the main objective of the RBA (Reserve Bank of Australia)?

• Achieving full employment and economic prosperity

• Reducing government debt

• Increasing export rates

• Controlling the stock market

What does the headline rate of inflation measure?

• The percentage change in prices over time

• The rate of inflation excluding one-off or seasonal factors

• The target range for inflation set by a central bank

• The rate of inflation measured by changes in government taxes

What is the main objective of the RBA in terms of economic prosperity?

• Achieving economic prosperity and welfare of the people of Australia

• Reducing government debt

• Increasing export rates

• Controlling the stock market

What does one basis point equal to in percentage terms?

• 0.1%

• 0.01%

• 1%

• 10%

What is the purpose of open market operations by the Reserve Bank?

• To influence the level of market interest rates and yields offered by commercial banks

• To increase government spending

• To collect taxes

• To provide subsidies

What is the main focus of monetary policy?

• Influencing the cost and availability of money in the economy

• Increasing government spending

• Reducing taxation

• Providing subsidies

What is the role of the Reserve Bank in the financial sector?

• To influence the level of market interest rates and yields offered by commercial banks

• To manage government spending

• To collect taxes

• To provide subsidies

What happens when Fred deposits a cheque into his bank?

• The Reserve Bank credits Fred's bank's exchange settlement account.

• Fred's bank credits the Swampy Hollow Bank's exchange settlement account.

• The Swampy Hollow Bank credits Fred's bank's exchange settlement account.

• Fred's bank debits the Reserve Bank's exchange settlement account.