Since the early 1990s, the RBA has implemented monetary policy primarily by focusing on:
A) interest rates.
B) the money supply.
C) the demand for money.
D) the velocity of money.

Question

Quizplus · Accepted Answer

The RBA has primarily used interest rates as its tool for implementing monetary policy since the early 1990s. This is evident in its regular changes to the official cash rate, which affect the interest rates that banks and other financial institutions offer to borrowers and depositors. By raising or lowering interest rates, the RBA can influence the level of economic activity, inflation, and employment. While the RBA does also consider other factors such as the money supply and demand for money, these are not its primary focus in implementing monetary policy.

Since the Early 1990s, the RBA Has Implemented Monetary Policy