NZQA registered unit standard
8420 version 5
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Title
Demonstrate knowledge of monetary policy and evaluate its
effectiveness
Level
5
Credits
3
Purpose
People credited with this unit standard are able to demonstrate
knowledge of the operation of, and evaluate the effectiveness
of, monetary policy.
Classification
Economic Theory and Practice > Macro Economics
Available grade
Achieved
Explanatory notes
1
Monetary policy should be considered in the context of the New Zealand economy.
2
Sophisticated (modern) quantity theory of money is based on the equation of
exchange which states that the money value of Gross Domestic Product (GDP)
transactions must be equal to the product of the money stock times the velocity of
circulation (that is MV = PQ). The sophisticated quantity theory of money assumes
that velocity can be taken to be virtually constant. Therefore, any increase in money
stock must impact upon nominal GDP.
3
Responses to monetary policy must show awareness of the current Policy Target
Agreement (PTA) between the New Zealand Minister of Finance and the Governor of
the Reserve Bank of New Zealand. Current PTA and supporting information is
available from the Reserve Bank of New Zealand's website http://www.rbnz.govt.nz.
Outcomes and evidence requirements
Outcome 1
Demonstrate knowledge of the operation of monetary policy.
Evidence requirements
1.1
The New Zealand financial system is described in relation to the monetary
policy.
Range
Reserve Bank of New Zealand, registered banks, other financial
institutions, monetary aggregates.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
1.2
Policy instruments available to pursue monetary objectives are described.
Range
1.3
8420 version 5
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official cash rate (OCR), open market operations (OMO), monetary
policy statements.
Transmission mechanisms through which monetary policy operates to control
inflation are described.
transmission mechanisms include – interest rates, exchange rate,
credit availability, inflationary expectations.
Range
Outcome 2
Evaluate the effectiveness of monetary policy.
Evidence requirements
2.1
The evaluation determines the effectiveness of monetary policy in terms of
achieving price stability.
price stability – one from – short term, medium term, long term.
Range
2.2
The evaluation determines the indirect impact of monetary policy in terms of
economic indicators.
may include but is not limited to – two from – economic growth,
balance of payments, exchange rates, equitable distribution of
income, full employment.
Range
Planned review date
31 December 2019
Status information and last date for assessment for superseded versions
Process
Version Date
Last Date for Assessment
Registration
1
29 October 1996
31 December 2016
Revision
2
21 July 1999
31 December 2016
Revision
3
14 September 2005
31 December 2016
Review
4
16 October 2009
31 December 2016
Rollover and
Revision
5
16 April 2015
N/A
Consent and Moderation Requirements (CMR) reference
0116
This CMR can be accessed at http://www.nzqa.govt.nz/framework/search/index.do.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
8420 version 5
Page 3 of 3
Please note
Providers must be granted consent to assess against standards (accredited) by NZQA,
before they can report credits from assessment against unit standards or deliver courses
of study leading to that assessment.
Industry Training Organisations must be granted consent to assess against standards by
NZQA before they can register credits from assessment against unit standards.
Providers and Industry Training Organisations, which have been granted consent and
which are assessing against unit standards must engage with the moderation system that
applies to those standards.
Requirements for consent to assess and an outline of the moderation system that applies
to this standard are outlined in the Consent and Moderation Requirements (CMR). The
CMR also includes useful information about special requirements for organisations wishing
to develop education and training programmes, such as minimum qualifications for tutors
and assessors, and special resource requirements.
Comments on this unit standard
Please contact NZQA National Qualifications Services nqs@nzqa.govt.nz if you wish to
suggest changes to the content of this unit standard.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016