If the RBA believes the economy is likely to fall into a recession over the next two quarters, its likely response to this will be to:

Question

Quizplus · Accepted Answer

The RBA is likely to respond to an expected economic downturn by implementing an expansionary monetary policy. This involves buying government securities from banks in order to increase the money supply, boost spending, and stimulate economic growth. This strategy involves decreasing interest rates to make borrowing more attractive for businesses and individuals. Therefore, the best choice is C.

If the RBA Believes the Economy Is Likely to Fall