Question

The Reserve Bank of Australia uses open market operations to Not yet answered manage monetary conditions. These operations allow the central Marked out of 1.00 bank to manage the overall supply of funds available in the money Flag question markets in order to keep the overnight cash rate consistent with the desired stance of monetary policy. Please select which of the following is/are considered open market operations:

i. Repo based on nominated debt securities;
ii. Direct purchase or selling of Commonwealth Government Securities;
iii, Enter into FX market to conduct FX transactions;
iv. Engage in high valued EFTPOS via NPP:
v. Direct forbid transactions in the market Select one:
a. v only
b. All of the above
c. ii only
d. i, ii, and iii
e. i, ii, iii, and iv

Answer 1

Open market operations by central banks such as the Reserve Bank of Australia typically include repo transactions, buying and selling government securities, and conducting FX transactions to manage monetary policy, with options i, ii, and iii being correct.

Step-by-step explanation:

Open market operations involve a central bank, like the Reserve Bank of Australia, conducting activities such as buying and selling government securities to influence the money supply and interest rates. These operations are an essential tool for managing the monetary conditions in the economy and securing the central bank's target interest rate. For the Reserve Bank of Australia, the activities that represent open market operations include repo transactions based on nominated debt securities, the direct purchase or selling of Commonwealth Government Securities, and entering the foreign exchange (FX) market to conduct FX transactions.

Therefore, the correct response to the multiple-choice question identifying forms of open market operations is option d, which includes repo transactions on nominated debt securities (i), direct purchase or sale of Commonwealth Government Securities (ii), and participation in the FX market to conduct FX transactions (iii).