What is Monetary Policy?

What are financial markets?

What are the 3 main types of financial markets?

What are loan markets?

Who are involved in loan markets?

What are bond markets?

What is a bond?

What are share markets?

How is does investment come about through savings?

What are the 3 key functions of money?

What erodes the value of money?

Why is the financial sector important?

What do interest rates represent?

What does interest represent?

What do interest rates also represent?

What effect can interest rates have on the economy?

What are nominal interest rates?

What are real interest rates?

What interest rates have an important influence in economic decisions involving borrowing and saving?

What do borrowers and lenders each prefer?

What do the nomial interest rates reflect?

Why do interest rates vary?

Why is there risk?

Why is time important?

What is the market for loanable funds?

What are the loan, bond and share markets classed as?

What is the demand for loanable funds?
(DLF)

What relationship is seen between the DLF and real interest rates?

What is the supply of loanable funds?
(SLF)

What is the main source of loanable funds?

What relationship is seen between the SLF and real interest rates?

What causes real interest rates to fluctuate?

What factors cause the demand and supply curve to shift?

INCREASE IN REAL INTEREST RATES

What factors could increase the DLF?

INCREASE IN REAL INTEREST RATES

What factors could decrease the SLF?

DECREASE IN REAL INTEREST RATES

What factors could decrease the DLF?

DECREASE IN REAL INTEREST RATES

What factors could increase the SLF?

What is the aim of monetary policy?

What does inflation do?

What effect does high inflation have?

What are the objectives of monetary policy?

What is the most important objective and why?

What is stagflation?

What does inflation lead to?

What effect does price stability have?

How can inflation be measured?

How is the headline inflation rate measured?

How is the underlying inflation rate measured?

What measure do economist prefer to use?

How is monetary policy implemented?

How is monetary policy conducted?

What is the tool of monetary policy?

What are open market operations?

How does the RBA tighten monetary policy?

What happens to:
1. The cost of borrowing
2. The demand for credit
3. Spending
4. Economic activity

How does the RBA loosen monetary policy?

What happens to:
1. The cost of borrowing
2. The demand for credit
3. Spending
4. Economic activity

What is the transmission mechanism?

T

What will a change in the cash rate do?

What do changes in interest rates affect?