The Reserve Bank fights recession via open market operations, the supply of loanable funds curve shifts and the aggregate demand curve shifts .

Question

Quizplus · Accepted Answer

When the Reserve Bank conducts open market operations to fight a recession, it typically buys government securities, which increases the money supply. This action shifts the supply of loanable funds curve to the right, as there is more money available for lending. Consequently, the aggregate demand curve also shifts to the right due to increased spending and investment stimulated by lower interest rates.

The Reserve Bank Fights Recession Via Open Market Operations, the Supply