If there is a recession, the RBA would most likely:
A) encourage banks to provide loans by lowering the cash rate.
B) encourage banks to provide loans by raising the cash rate.
C) restrict bank lending by lowering the cash rate.
D) restrict bank lending by raising the cash rate.

Question

Quizplus · Accepted Answer

In times of a recession, the RBA's primary objective is to boost economic activity. To achieve this, the RBA would most likely lower the cash rate, which would encourage banks to provide loans at a cheaper rate to businesses and individuals. This, in turn, would lead to an increase in spending and investment, which can help boost the overall economy.

If There Is a Recession, the RBA Would Most Likely