4.10,4.11

What is the main tool of monetary policy used by the RBA?

• Taxation

• Fiscal spending

• Cash rate

• Foreign exchange rates

What is the ultimate goal of Australia's monetary policy?

• Increase exports

• Stabilize economic activity and improve living standards

• Control government debt

• Reduce imports

Which of the following is NOT a responsibility of the RBA?

• Issuing currency

• Setting fiscal policy

• Acting as banker to the federal government

• Managing foreign reserves

Which institution is accountable to Parliament for its monetary policy decisions?

• Commonwealth Bank

• Department of Treasury

• Reserve Bank of Australia

• Australian Prudential Regulation Authority

The top priority of the RBA in monetary policy is:

• Reducing unemployment

• Promoting exports

• Maintaining low inflation

• Increasing GDP

What is the RBA’s inflation target?

• 1–2%

• 2–3%

• 3–4%

• 4–5%

When the economy is weak and inflation is low, the RBA is likely to:

• Increase taxes

• Raise the cash rate

• Cut the cash rate

• Reduce foreign reserves

What does STMM stand for?

• Short-Term Money Market

• Standard Trade Market Mechanism

• Secure Treasury Management Market

• Short-Term Monetary Mechanism

In the STMM, the interest rate on overnight loans is called:

• Treasury yield

• Deposit rate

• Lending rate

• Cash rate

What characterizes the demand for cash in the STMM?

• It is controlled by the RBA

• It has a positive slope

• It has a negative slope

• It is fixed regardless of interest rates