The Two Policy Tools the Reserve Bank Uses to Influence

question 84

Multiple Choice

The two policy tools the Reserve Bank uses to influence the interest rate and regulate the amount of money circulating in the economy are

• A) setting the cash rate and the market interest rate.
• B) credit easing and setting the required reserve ratio.
• C) open market operations and setting the cash rate.
• D) open market operations and setting tax rates.
• E) open market operations and setting the excess reserve ratio.

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Definitions:

Profit-volume Chart

A Profit-Volume Chart is a graphical representation that shows the relationship between a firm's profits and its volume of sales, illustrating the impact of different sales levels on profits.

Total Sales Revenues

The total income received by a company from its sales of goods or services, before any expenses are subtracted.

Total Costs

The complete sum of expenses incurred by a company in producing goods or services, including fixed, variable, and semi-variable costs.

Margin Of Safety

The difference between actual or expected sales and the breakeven sales, indicating how much sales can decrease before a company incurs a loss.