OMO to Eliminate Recessionary Output Gap Flashcards

1
Q

Steps 1

OMO to Eliminate Recessionary Output Gap

A
  1. IR will decrease
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2
Q

Steps 4

OMO to Eliminate Recessionary Output Gap

A
  1. Cash rate decrease
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3
Q

Steps 7

OMO to Eliminate Recessionary Output Gap

A
  1. Increase price of bills
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4
Q

Step 3

OMO to Eliminate Recessionary Output Gap

A
  1. Banks increase lending in overnight cash market
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5
Q

Step 2

OMO to Eliminate Recessionary Output Gap

A
  1. RBA buys bonds from ESA and puts money in reserve account
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6
Q

Step 5

OMO to Eliminate Recessionary Output Gap

A
  1. Lending increase in 30 day bill market
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7
Q

Step 6

OMO to Eliminate Recessionary Output Gap

A
  1. Demand for bills increase in 30 day bill market
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8
Q

Step 8

OMO to Eliminate Recessionary Output Gap

A
  1. Decrease interest rate for 30 day bill market
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9
Q

Step 9

OMO to Eliminate Recessionary Output Gap

A
  1. Similarly IR decrease in all substitute lending markets
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