The ultimate objective of monetary policy is to achieve....
Price Stability
Economic Growth
Full Employment
Economic prosperity and welfare of a nation
The key medium term economic objective for monetary policy is
Price stability
Economic Growth
Full Employment
External Stability
The RBA Act (1959) requires the RBA Board to conduct monetary policy in a way that will contribute to 'stability of the currency' in Australia. This is now interpreted by the RBA to mean which of the following:
To ensure that the $A is not volatile
To ensure that the $A does not increase by too much
To ensure that the $A does not decrease by too much
To achieve stability in prices (i.e. price stability/low inflation)
Which of the following best describes the government's price stability (low inflation) goal?
To keep consumer price inflation between 1 and 3 per cent, on average, over time
To keep consumer price inflation between 2 and 3 per cent, on average, over time
To keep consumer price inflation between 3 and 4 per cent, on average, over time
To keep consumer price inflation between 2 and 4 per cent, on average, over time
Once low inflation is achieved, the RBA is more likely to focus its attention on achieving which combination of economic goals
Economic Growth and External Stability
Economic Growth and Full Employment
Economic Growth and Equity in the Distribution of Income
Full Employment and External Stability
In the event of a potential conflict between the RBA and the government of the day
the RBA's independence ensures that the government cannot change monetary policy
the RBA's independence ensures that the government will find it difficult to change monetary policy
the RBA is not independent because the Head of the Treasury Department is on the Board of the RBA
the RBA is not independent when the Liberal Party has formed the government in Australia
The Reserve Bank’s objective is to keep consumer price inflation between 2 to 3 per cent, on average, over time. When deliberating on monetary policy, the RBA will focus primarily on
The Headline rate of inflation as measured by growth in the CPI
The underlying or core rate of inflation as measured by growth in the CPI, excluding volatile items like petrol and fruit and vegetable prices
The underlying or core rate of inflation as measured by growth in the CPI, adjusting for changes in the value of the dollar
The Headline rate of inflation as measured by growth in the CPI, excluding volatile items like petrol and fruit and vegetable prices
Which of the following interest rates is the one most under the control of the RBA
The cash rate
The 90 Day Bank Bill rate
The housing loan rate
The credit card rate
To loosen monetary policy the RBA will seek to
Increase the money supply
Increase the cash rate
Decrease the money supply
Decrease the cash rate
A tightening of monetary policy will involve the RBA
announcing an increase in the target cash rate and then increasing liquidity in the cash market
announcing an increase in the target cash rate and then decreasing liquidity in the cash market
announcing a decrease in the target cash rate and then increasing liquidity in the cash market
announcing a decrease in the target cash rate and then decreasing liquidity in the cash market