Price stability is the key monetary policy goal of almost every central bank in

Question

Price stability is the key monetary policy goal of almost every central bank in the world

including the Reserve Bank of New Zealand. In this context:

a. Price stability is defined as stable price levels

b. Price stability is defined as low and stable inflation rates

c. There is no difference between inflation targeting and price-level targeting

d. If inflation is unexpectedly high this year, this would be followed by corrective action

to bring inflation below target under an inflation targeting regime

e. All of the above answers.

In the new post crisis environment global banks are:

a. Shifting away from risky and capital-intensive activities, such as trading financial

instruments

b. Shifting towards safer areas such as helping firms raise capital and managing the

money of wealthy investors

c. Finding it harder to compete head-on with non-systemic banks, which have a lower

capital ratio

d. All of the above answers

e. None of the above answers.

Explanation / Answer

1.

Price stability is major goal of all central banks. price stablity means, keep inflation level low and stable. if inflation level is stable then price of goods and services wold be stable. centeral bank tries to keep inflation level below target level and if inflation rate is high then centeral bank take corrective action to reduce it and keep under target level.

So, all of the option s are correct.

Option (E) is correct answer.

2.

Post crisis environment global banks are, Shifting away from risky and capital-intensive activities, such as trading financial instruments, Shifting towards safer areas such as helping firms raise capital and managing the money of wealthy investors. Global banks are compete head-on with non-systemic banks, which have a lower capital ratio.

So all of the option are correct.

Option (D) is correct answer.

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