Monetary Policy Quiz

Which of the following statistics is least likely to cause the RBA Board to consider tightening monetary policy

• A higher Terms of Trade

• Strong consumer confidence

• A higher value for the Australian dollar

• Higher levels of capacity utilisation in the economy

A monetary policy tightening is likely to be assisted by which of the following events:

• A fall in tax rates

• A fall in the value of the exchange rate

• A fall in unemployment

• A fall in the terms of trade

An increase in the cash rate is least likely to be in response to

• a global financial crisis

• higher levels of confidence in Australia

• continued strong growth in China

• high rates of capacity utilisation reported by businesses

Which of the following economic statistics available to the RBA is not likely to provide an additional reason for tightening monetary policy

• Strong growth in employment

• Strong credit growth

• Strong growth in mortgage defaults

• Strong growth in vacancy rates

Which of the following indicators is unlikely to cause the RBA to consider tightening monetary policy

• Strong growth in China and India

• Higher global oil prices

• Lower levels of unemployment

• A higher value for the Australian dollar

The RBA will not necessarily wait for inflation to fall before loosening monetary policy. This illustrates that monetary policy is used

• retrospectively

• effectively

• pre-emptively

• selectively

Which of the following indicators is unlikely to cause the RBA to consider loosening of monetary policy

• A lower level of job vacancies

• Declining consumer and investor confidence

• Strong growth in prices received for exports

• Slower global growth rates

A more restrictive or contractionary monetary policy stance is likely to

• Reduce the Current Account Deficit

• Reduce pressure on the value of the Australian dollar

• Increase the demand for labour and reduce unemployment

• Reduce Investment expenditure by businesses

Which of the following events, or combination of events, may result in the Reserve Bank of Australia (RBA) adopting a more restrictive monetary policy stance?

• an increase in the world oil price over two consecutive months

• an increase in the growth of both credit and household debt to income ratio, combined with the rapid depreciation of the Australian dollar

• an increase in the official Australian Bureau of Statistics (ABS) unemployment rate and evidence of a higher level of labour force under-utilisation

• a decrease in consumer confidence and aggregate demand, accompanied by renewed concerns about declining rates of economic growth in the economies of Australia’s major trading partners

In the event that the RBA decides to increase the target cash rate to 4.6% in October 2024?

• It needs to sell government securities which will result in a restrictive monetary policy stance

• It needs to purchase government securities which will result in an expansionary monetary policy stance

• It needs to purchase government securities which will result in a restrictive monetary policy stance

• None of the above