I have a couple of questions that need answers (2 Viewers)

[kooltrainer]

a) Outline and describe 2 trends in Australia's cash rate in recent years. [3]


b) Start 2 economic indicators the reserve bank will look at to determine their monetary policy decisions. [2]


c)DISCUSS why reserve bank may increase the cash rate before infation emerges in the australian economy [4]

 

[munchiecrunchie]

have you actually tried answering these yourself?

some points you may want to consider when you answer these yourself:

- cash rate = interest rate

- what are the aims of monetary policy? what kind of figures will indicate the levels/state of this?

- pre-emptive monetary policy

 

[eskimoh]

in answer to b) .. there are heaps of economic indicators the RBA takes notice of.. inflationary pressures, unemployment, economic growth, wage price index (ie wage growth), foreign debts, etc


and yeh^ in answer to c) the RBA acts witha preemtive monetary policy and because there is a time lag bewteen implementing and impact of monetary policy, it tends to look in the future 6-18 months and pressures/expectations of the future; then act accordingly.

 

[runnable]

For c) pre-emptive monetary also decreases inflationary expectations which is a cause of inflation itself.

 

[Breeza170]

sorry to post my question in your thing but i need to know how to post one of these things. this site is harder to understand than facebook
please help!