In which of the following situations would the Reserve Bank of Australia conduct contractionary monetary policy?

Question

Quizplus · Accepted Answer

Contractionary monetary policy is used to decrease aggregate demand and reduce inflationary pressures. If the RBA is concerned that aggregate demand will continue to exceed the growth in potential GDP, they may use tools such as raising interest rates, selling government securities, or increasing reserve requirements to reduce the money supply and slow down economic growth. A, B, and D are situations where expansionary monetary policy would be more appropriate.

In Which of the Following Situations Would the Reserve Bank