When the RBA is trying to control rising inflation, it:

Question

Quizplus · Accepted Answer

When the RBA is trying to control rising inflation, it increases the interest rate that financial institutions can earn on overnight loans of their currency. This makes borrowing more expensive and reduces spending in the economy, slowing down inflation. The RBA has a target inflation rate of 2-3 percent, but this is not necessarily a direct action taken to control inflation. Decreasing the interest rate would actually stimulate spending and potentially exacerbate inflation, so option A is incorrect. Option D is incorrect because not all of the listed options are valid actions to control inflation.

When the RBA Is Trying to Control Rising Inflation, It