The Reserve Bank of Australia's (RBA) Monetary Policy Can Reduce

question 62

Multiple Choice

The Reserve Bank of Australia's (RBA) monetary policy can reduce an FI's interest rate risk:

• A)by smoothing or targeting the level of interest rates it increases unexpected interest rate shocks and interest volatility.
• B)by smoothing or targeting the level of interest rates it decreases unexpected interest rate shocks and interest volatility.
• C)by letting interest rates find their own level it increases interest volatility.
• D)All of the listed options are correct.

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Definitions:

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