When the Reserve Bank fears inflation, it will ________ the target cash rate by _______ government securities in open market operations and the quantity of money ________.

Question

Quizplus · Accepted Answer

When the Reserve Bank fears inflation, it will raise the target cash rate to cool down the economy. It does this by selling government securities in open market operations, which decreases the quantity of money in the economy. This makes borrowing more expensive and reduces spending, helping to control inflation.

When the Reserve Bank Fears Inflation, It Will ________ the Target