Question

QUESTION 19

When a commercial bank repurchases its security from the Central Bank, the commercial bank's reserves _____________ and the Central Bank's assets _________.

	A.	decrease; increase
	B.	increase; decrease
	C.	decrease; decrease
	D.	decrease; remains unchanged
	E.	increase; increase

QUESTION 20

Which of the following assets is NOT currently accepted by the Reserve Bank of Australia as a collateral for a repo?

	A.	Bank-issued securities
	B.	Treasury securities
	C.	RMBS
	D.	Non-bank corporate securities
	E.	ABCP

QUESTION 21

Which of the following items is NOT an autonomous factor?

	A.	The central bank implements the second stage of the reverse repos with commercial banks.
	B.	The RBA buys securities from commercial banks.
	C.	Commercial banks pay back a loan.
	D.	The government pays social benefits to households.
	E.	A commercial bank uses the lending facility.

QUESTION 22

Which of the following statements is NOT correct?

The demand for reserves, drawn as a function of the interbank interest rate,

	A.	is a decreasing function because the demand for excess reserves takes the interbank rate as an opportunity cost.
	B.	is affected by changes in expectations about the future cash rate.
	C.	is affected by the legal requirements imposed by the central bank.
	D.	is a decreasing function because the commercial banks have to make a choice between borrowing in the interbank market or holding reserves.
	E.	has a kink at the deposit facility rate because at that rate the opportunity cost of holding reserves is exactly compensated by the remuneration on the ESA balances.

QUESTION 24

Which of the following assets is currently accepted by the Reserve Bank of Australia as a collateral for a (rev) repo?

	A.	Banks' shares
	B.	ABCP
	C.	Non-bank corporate securities
	D.	Business loans
	E.	Foreign Treasury securities

QUESTION 25

When a commercial bank brings some notes to the RBA, the stock of ESF _________________ and the money base (M0) _________________.

	A.	is the same; decreases
	B.	increases; is the same
	C.	increases; increases
	D.	decreases; is the same
	E.	is the same; increases

Answer 1

19)When a commercial bank repurchases its security from the Central Bank, the commercial bank's reserves decrease and the Central Bank's assets increase.

21) Autonomous factor- These are simply those items in the central bank balance sheet that are not current account holdings of credit institutions.

The RBA buys securities from commercial banks.

22) D is a decreasing function because the commercial banks have to make a choice between borrowing in the interbank market or holding reserves.

24) Non-bank corporate securities

25) When a commercial bank brings some notes to the RBA, the stock of ESF decreases and the money base (M0) is the same.