Question 2 The interest rate is the price that you pay to borrow money. By raising the interest rate, the Reserve Bank of New Zealand (RBNZ) can drive up the cost of borrowing for real estate mortgages, slow the economy. and cause prices to come down. However: there is a risk. The combination of higher borrowing costs, high inflation, and slower growth could tip the New Zealand economy into a recession. So: the onus is on the RBNZ to choose its moves carefully. 2(a) Critically evaluate the statement with impacts of housing wealth effects on household consumption. {5 marks) 2(b) Discuss the use of the yield curve to gauge whether the economic recession would happen. {5 marks)