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Economics

Home > Economics > Economic policies and management > Monetary policy

Exercise 1

Provide a True of False response to the following statements.

1. An objective of monetary policy is sustainable economic growth.
   True/False
   
   
2. When determining the monetary stance the Reserve Bank Board only considers inflation rates.
   True/False
   
   
3. Market operations refer to the sale of CGS and Repos to influence long-term interest rates.
   True/False
   
   
4. Exchange settlement accounts are used to settle debts between the banks.
   True/False
   
   
5. The cash rate is the price of borrowing cash overnight in the money market.
   True/False
   
   
6. Higher interest rates discourage borrowing and spending by consumers and discourage savings.
   True/False
   
   
7. The government targets inflation rates between 3% and 5%.
   True/False
   
   
8. Depreciation in the value of the Australian dollar can cause inflationary pressures in the economy.
   True/False
   
   
9. A rise in real interest rates relative to our trading partners can cause an appreciation in the value of the Australian dollar.
   True/False
   
   
10. A neutral stance of monetary policy means that the Reserve Bank wants to maintain the cash rate at current levels.
    True/False

Answers

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