Question

The Reserve Bank of Australia manages the supply of cash on a daily basis to: ensure that every bank has sufficient cash to meet the demand for funds sterilise deficits and surpluses of cash in the financial system ensure that there are no large injections of cash into or withdrawals of cash out of the financial system ensure that the interest rate changes to create equilibrium in the money market. If the Reserve Bank of Australia sells bonds and securities in the open market, this is likely to lead to a: rise in interest rates and an appreciation of the Australian dollar. rise in interest rates and a depreciation of the Australian dollar fall in interest rates and an appreciation of the Australian dollar fall in interest rates and a depreciation of the Australian dollar Consider the hypothetical information in Table below for potential GDP, real GDP and the price level in 2013 if the Reserve Bank of Australia does not use monetary policy. If the following will be higher than if the RBA had taken no action? RBA uses monetary policy successfully to keep real GDP at its potential level in 2013, which of the Year Potential GDP Real GDP Price Level 2013 $1.8 trillion $1.4 trillion 152 Real GDP and the unemployment rate Real GDP and potential GDP Real GDP and the price level Potential GDP and the price level

Answer 1

Ans) the correct option is sterilize deficits and surpluses of cash in the financial system.

Ans) the correct option is rise in interest rates and an appreciation of the Australian dollar

Ans) the correct option is real GDP and the Price level