Monetary Policy Flashcards
1
Q
What are automatic stabilisers?
A
- Unemployment benefits
- Income/business tax (fiscal policy)
Balance each other out (automatically becomes stable)
2
Q
Who is monetary policy carried out by?
A
The country’s central bank
3
Q
What are commercial banks main function?
A
- Hold deposits for customers
- Make loans to their customers, transfer funds from one bank to another
- To buy government banks
4
Q
What is the role of central banks?
A
Government financial institution
- Banker to the government
- Banker to commercial banks
- Regulator of commercial banks
- Conduct monetary policy
5
Q
What is Australia’s central bank called?
A
Reserve Bank of Australia
6
Q
What are the Reserve Bank’s goals?
A
- Low and stable inflation
- Full employment
- Promoting economic wellbeing
7
Q
How does the Reserve Bank inject money into the economy?
A
- Changes reserve requirments
- Short term loan (Discount roles/cash rates/interest rates)
- Open market operations (buying or selling government securities/bonds in the secondary market)
