If the Reserve Bank decreases the cash rate, other short-term interest rates ________ and the quantity of money and the supply of loanable funds ________.

Question

Quizplus · Accepted Answer

When the Reserve Bank decreases the cash rate, it becomes cheaper for banks to borrow money. This typically leads to a decrease in other short-term interest rates as well. With lower borrowing costs, more money is available for lending, which increases the supply of loanable funds.

If the Reserve Bank Decreases the Cash Rate, Other Short-Term