Davidson; Management - 3rd Australasian Edition



1.
Which of the following can be associated with original objectives of central banks?
A.
coordinate an efficient payments mechanism.
B.
provide an elastic money supply.
C.
serve as lender of last resort.
D.
all of the above


2.
Who is responsible for monetary policy, systemic stability and the payments system in Australia?
A.
The Reserve Bank of Australia (RBA)
B.
The Australian Prudential Regulation Authority (APRA)
C.
The Australian Securities and Investments Commission (ASIC)
D.
all of the above


3.
The objective of the Reserve Bank of Australia in implementing monetary policy is
A.
printing and issuing of Australia's currency notes
B.
to stabilise the economy
C.
control inflation rates within a target range
D.
change the money supply in the economy


4.
The Reserve Bank of Australia manages the liquidity of the financial system by
A.
issuing of notes and coins
B.
borrowing from the government
C.
by buying and selling securities and other financial instruments
D.
borrowing from foreign banks


5.
The key roles of the Reserve Bank of Australia in the Australian payments system are
A.
Regulatory responsibility for controlling risk in the financial system
B.
Providing facilities for the final settlement of payment transactions
C.
Acting in the payments system as the bank of the Australian Government and various other government and non-government entities
D.
all of the above


6.
Non-cash instruments include
A.
notes and coins
B.
bank checks
C.
paper and non-paper instruments
D.
warrants


7.
Warrants are
A.
notes and coins
B.
government securities
C.
legal tender
D.
direct payments between financial institutions.


8.
An exchange settlement account (ESA) is
A.
an account with the central bank that is used to transfer funds to and from in order to settle transactions in the payments system
B.
payments system at the Reserve Bank of Australian
C.
payment instruments such as cash, cheques and electronic funds transfers
D.
for clearing checks


9.
ESA operates on same-day-funds. There are
A.
funds for clearing checks
B.
funds to earn interest
C.
funds that do not have to be cleared through the payments system
D.
funds to meet liquidity in the financial system


10.
In a repurchase agreement (similar to repo) the Reserve Bank of Australia will
A.
buy specific types of securities (and provide them cash in return) from the ESA holder on the basis that they will be repurchased by the end of the day.
B.
sell specific types of securities (and provide them cash in return) from the ESA holder on the basis that they will be resold back to ESA by the end of the day.
C.
buy and sell securities on behalf of ESA
D.
repurchase facilities for institutions that require same-day-funds


11.
Rediscount facility involves
A.
the Reserve Bank of Australia buying and selling securities
B.
the Reserve Bank of Australia raising same-day-funds
C.
the Reserve Bank of Australia increasing or decreasing cash in the market
D.
the Reserve Bank of Australia buying back treasury-notes (the RBA issues treasury notes) held by institutions at a penalty rate.


12.
The term 'Reserve Bank of Australia independence' means
A.
conducting of monetary policy, it is not directly under the authority of the Government or the Prime Minster
B.
has its own board and charter
C.
free of accountability to the Parliament
D.
none of the above


13.
The Australian Prudential Regulation Authority is responsible for
A.
monitoring the performances of Australian deposit institutions
B.
the supervision of banks from the RBA, insurance and superannuation companies from the Insurance and Superannuation Authority and non-bank deposit-taking institutions from State Governments and the Australian Financial Institutions Commission
C.
monitoring the behaviour of RBA
D.
maintaining stability in the financial system


14.
To become an Australian Depository Institution it must
A.
seek approval from the Reserve Bank of Australia
B.
apply in writing to the Parliament
C.
has cash and assets of at least A$100 million
D.
must apply to APRA in writing


15.
The objective of prudential supervision is to
A.
supervise Australian Depository Institutions
B.
protect the safety of depositor's funds
C.
prevent bank bankruptcy
D.
support a strong economy performance


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