Question
using an appropriate drawing of money demand and money supply diagram, explain the process that the RBA will undertake in implementing expansionary policy based off
using an appropriate drawing of money demand and money supply diagram, explain the process that the RBA will undertake in implementing expansionary policy based off this information:
"The cash rate is the interest rate which banks lend to and borrow from on an overnight basis. It is a benchmark for setting interest rates for various financial products (Reserve Bank Australia, n.d.). In Australia the Reserve Bank of Australia (RBA) is responsible for setting the target cash rate. In which they make decisions about the cash rate to achieve economic goals, such as controlling inflation and promoting economic growth. As shown on the Cash Rate Target of RBA he recent trend between May 2022 and June 2022 shows a series of consecutive increases in cash rate (Reserve Bank Australia, n.d.). This suggests a tightening monetary policy; said increases can be associated with controlling inflation. Cash rate changes can impact JB HI-FI Group's borrowing costs with the higher cash rate this may increase interest rates on loans, reduce access to credit, impact existing debt, thus affecting investment decisions. The Reserve Bank of Australia (RBA) has taken an expansionary stance on monetary policy, in this instance the RBA wants to boost growth and the economy."
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