Q1) A rise in the amount of inflation people expect causes: a. The nominal inter
ID: 1101636 • Letter: Q
Question
Q1) A rise in the amount of inflation people expect causes:
a. The nominal interest rate to rise
b. The nominal interest rate to fall
c. The real interest rate to rise
d. The real interest rate to fall
Q2) Which of the following statements about credit cards is correct ?
a. Credit cards area a method of deferring payments.
b. Credit cards are included in measures of the quantity of money.
c. Credit cards are long term loans.
d. Credit cards are considered a form of money.
Q3) When RBA is trying to control rising inflation, it:
a. decreases the interest rate that financial institutions can earn on overnight loans of their currency.
b. targets inflation at 2
Q1) A rise in the amount of inflation people expect causes:
a. The nominal interest rate to rise
b. The nominal interest rate to fall
c. The real interest rate to rise
d. The real interest rate to fall
Q2) Which of the following statements about credit cards is correct ?
a. Credit cards area a method of deferring payments.
b. Credit cards are included in measures of the quantity of money.
c. Credit cards are long term loans.
d. Credit cards are considered a form of money.
Q3) When RBA is trying to control rising inflation, it:
a. decreases the interest rate that financial institutions can earn on overnight loans of their currency.
b. targets inflation at 2
Explanation / Answer
a) nominal interest rate is the real interest rate + inflation.
a) It allows you to make the payment later. more like an instant short term loan at high interest rates.It just delay the inevitable.
c) Banks have to maintain certain ratios as liquid assets. By raising the interest rates RBA "guides" them towards disbursing less money.
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