Monetary & Microeconomic Policy

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

• Managing Australia's monetary policy

• Providing loans to businesses

• Setting wages for workers

• Controlling the stock market

What is monetary policy?

• Controlling the supply of money in the economy

• Increasing government spending on infrastructure

• Reducing taxes for businesses

• Encouraging businesses to hire more workers

How does the RBA influence the economy?

• By adjusting the official interest rate

• By deciding the prices of all goods and services

• By controlling international trade

• By managing government-owned businesses

What happens when interest rates go up?

• Borrowing becomes more expensive, so people and businesses spend less

• Borrowing becomes cheaper, encouraging more spending

• People and businesses save less money

• Inflation increases rapidly

How do lower interest rates affect borrowing?

• Borrowing becomes cheaper, encouraging spending and investment

• Borrowing becomes more expensive, discouraging investment

• People are less likely to take out loans

• It has no impact on borrowing

Why does the RBA increase interest rates during high inflation?

• To reduce spending and slow down rising prices

• To encourage businesses to take out more loans

• To make it easier for people to buy houses

• To increase government revenue

What is microeconomic policy?

• Policies that target specific businesses, industries or markets

• Policies that affect the entire economy

• Policies that increase government spending on infrastructure

• Policies that aim to reduce interest rates

What is trade liberalisation?

• Removing barriers to international trade

• Increasing tariffs to protect local industries

• Giving subsidies to local businesses

• Limiting the number of imported goods

Which of the following is an example of a trade barrier?

• Tariffs on imported goods

• Increased competition among businesses

• Improved productivity in the workforce

• Lower interest rates

What is deregulation?

• Reducing government rules in industries to encourage competition

• Increasing taxes on businesses

• Preventing companies from competing with each other

• Making it harder for new businesses to enter the market