Which of the Following Characterises the Ability of the Reserve

question 54

Multiple Choice

Which of the following characterises the ability of the Reserve Bank of Australia (RBA) to prevent recessions?

• A)The RBA is able to 'fine tune' the economy and entirely eliminate recessions.
• B)The RBA is incapable of changing aggregate demand through its monetary policy tools.
• C)The RBA may be able to keep a recession shorter and milder than it would otherwise be.
• D)The RBA may be able to eliminate the business cycle and achieve absolute price stability.

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Definitions:

Foreign Exchange Gain

A gain resulting from changes in exchange rates affecting the value of assets, liabilities, or transactions denominated in foreign currencies.

Income Statement

A financial statement that reports a company's financial performance over a specific period, illustrating revenues, expenses, and net income or loss.

Interest-Bearing Note

A debt instrument that pays interest to the lender over the term of the loan.

Put Option

A financial contract giving the option holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.