When the Australian Reserve Bank wants to ease the monetary policy,it will:

Question

Quizplus · Accepted Answer

When the Reserve Bank of Australia wants to ease the monetary policy, it will buy Commonwealth government securities. This is because the purchase of these securities will increase the money supply in the economy, making credit cheaper and more available to consumers and businesses. This can stimulate economic growth and help to achieve the Reserve Bank's inflation targets. Selling Commonwealth government securities, as in option A, would have the opposite effect and tighten monetary policy. Increasing the overnight cash rate, as in option B, would also tighten monetary policy by making credit more expensive. Selling repurchase agreements, as in option D, would involve the Reserve Bank selling securities with the promise to buy them back at a future date, which would not necessarily ease monetary policy.

When the Australian Reserve Bank Wants to Ease the Monetary