The Reserve Bank of Australia:

Question

Quizplus · Accepted Answer

Shifting aggregate demand to keep the economy at its potential GDP level is a complex task that may pose challenges for the Reserve Bank of Australia. While the bank has various tools at its disposal to influence aggregate demand, the effectiveness of these tools can depend on various factors, such as the state of the economy, consumer behavior, and external shocks. Therefore, the bank may not always be able to shift aggregate demand in the desired way or at the right time, which can affect economic outcomes. Options A, C, and D are incorrect because they imply an unrealistic level of precision and predictability for the bank's decision-making process. Economic fluctuations and recessions can be difficult to predict, and the bank may not have all the information it needs to make perfect policy responses.