The Money Market (HSC SSCE Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What do interest rates represent in an economic system?
What do interest rates represent in an economic system?
The cost of borrowing money
At equilibrium point , what relationship exists?
At equilibrium point , what relationship exists?
Quantity supplied equals quantity demanded
If a bank pays 2% on deposits and charges 5% on loans, what is the interest rate differential?
If a bank pays 2% on deposits and charges 5% on loans, what is the interest rate differential?
3 percentage points
Why do long-term securities typically carry higher interest rates than short-term ones?
Why do long-term securities typically carry higher interest rates than short-term ones?
Increased risk and lower liquidity
What effect does stronger investment demand have on interest rates?
What effect does stronger investment demand have on interest rates?
Puts upward pressure on rates
What happens to interest rates when the level of savings increases?
What happens to interest rates when the level of savings increases?
Downward pressure on rates
How does a stronger liquidity preference affect interest rates?
How does a stronger liquidity preference affect interest rates?
Reduces supply, upward pressure
Why do higher inflationary expectations lead to higher interest rates?
Why do higher inflationary expectations lead to higher interest rates?
Lenders demand compensation for loss
What effect does a government budget deficit have on interest rates?
What effect does a government budget deficit have on interest rates?
Upward pressure on rates
Which institution plays the dominant role in setting Australian interest rates?
Which institution plays the dominant role in setting Australian interest rates?
Reserve Bank of Australia