Multichoice question. plz answer all. much appreciated.

Question 1: 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.

Question 2: 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.

Question 3: Regulations that will make large banks easier to break up, separating their retail (deposits and lending) business from their wholesale (investment banking) operations, are sensible to the extent they: a. Will make large banks less able to use cheap retail deposits to fund their trading business and take risks b. Will diminish an implicit taxpayer subsidy that supports banks that are too big to fail c. Will benefit retail clients e.g. through lower account fees and higher deposit rates since banks will be more profitable and safer d. Will benefit the bank shareholders since it will be easier to force banks creditors, rather than shareholders, to foot the bill if a bank fails e. All of the above answers.

Question 4: During a financial crisis, a central bank may opt to print new money to buy long-term mortgage bonds while simultaneously borrowing back this money for short periods using reverse repos. This is likely to: a. Raise anxieties that money printing could fuel inflation later b. Steepen the yield curve (by raising long-term rates), while forcing market players out of supposedly safer, longer-term instruments c. Take distressed assets off banks balance sheets and free up usable capital that should in turn spur investment in equities, and help homeowners refinance their mortgages d. All of the above answers e. None of the above answers.

Question 5: Which of the following statements are NOT correct: a. The Federal Funds Rate is the interest rate at which member banks may borrow shortterm funds directly from a Federal Reserve Bank b. In a reverse repo, a central bank lends securities for a set period, temporarily draining cash from the banking system c. As part of its response to the recent crisis, the Federal Reserve expanded its traditional tool of open market operations to support the functioning of credit markets through the purchase of longer-term Treasury and mortgage-backed securities d. Movements in overseas interest rates can lead to changes in New Zealand market rates even if the OCR has not changed e. None of the above answers.

Question 6: A US bank facing a cash-flow shortfall because of large net deposit outflows may opt for which of the following: a. Borrow from other banks in the interbank lending market at an interest rate known as the federal funds rate b. Use a repurchase agreement (repo) selling some of its securities to another bank or securities dealer with the promise to buy it back at later date at an interest known as the repo rate c. Acquire reserves by borrowing from the Fed at a rate known as the discount rate d. All of the above answers are feasible choices e. None of the above answers are feasible choices.

Question 7: The presence of a large capital surplus in a bank well above regulatory ratios may be causing: a. The return on equity to be too low b. The equity multiplier to be too low c. The return on assets to be too low d. All of the above answers e. None of the above answers.

Question 8: To raise the equity multiplier, you may opt for which of the following: a. Reduce the amount of bank capital by buying back some of the banks stock b. Reduce the amount of bank capital by paying higher dividends to stockholders, thereby reducing the banks retained earnings c. Keep bank capital constant but increase the banks assets by acquiring new funds, say by issuing CDs and then increasing loans or purchasing more securities with these funds d. All of the above answers e. None of the above answers.

Question 9: Under the maturity extension program better known as Operation Twist between September 2011 and the end of 2012 the Federal Reserve purchased about $700 billion of longer-term Treasury securities and sold or allowed to run off an equal amount of shorter-term Treasury securities. This policy aimed to: a. Put upward pressure on shorter-term bond prices and therefore lower their yields. b. Put upward pressure on prices of financial assets (e.g. corporate bonds, mortgagebacked securities) that investors consider to be close substitutes for longer-term Treasury securities. c. Put downward pressure on longer-term bond prices and therefore raise their yields. d. All of the above answers e. None of the above answers.

Question 10: Canada, the UK, New Zealand, Australia and Sweden have no reserve requirements. a. This means that banks in these countries can create money without limit since the money multiplier is practically infinite. b. This means that banks in these countries are likely to hold zero reserves at the central bank. c. This means the ability of banks to create money through lending is constrained by capital requirements. d. All of the above answers e. None of the above answers.