If the Reserve Bank of Australia lowers the interest rate, this will: ________ inflation and ________ the rate of growth of real GDP in the short run.

Question

Quizplus · Accepted Answer

Lowering the interest rate typically makes borrowing cheaper, which can increase spending and investment, leading to higher inflation and stimulating economic growth, thus raising the rate of real GDP growth in the short run.

If the Reserve Bank of Australia Lowers the Interest Rate