In a recession, the Reserve Bank's monetary policy aims to ________ the real interest rate, ________ aggregate demand, and ________ aggregate supply.

Question

Quizplus · Accepted Answer

In a recession, the Reserve Bank (or any central bank) typically aims to decrease the real interest rate to make borrowing cheaper, which in turn is intended to increase aggregate demand as consumers and businesses are more likely to spend and invest. The policy does not directly aim to change aggregate supply in the short term.

In a Recession, the Reserve Bank's Monetary Policy Aims to ________