OMO to Eliminate Recessionary Output Gap Flashcards
1
Q
Steps 1
OMO to Eliminate Recessionary Output Gap
A
- IR will decrease
2
Q
Steps 4
OMO to Eliminate Recessionary Output Gap
A
- Cash rate decrease
3
Q
Steps 7
OMO to Eliminate Recessionary Output Gap
A
- Increase price of bills
4
Q
Step 3
OMO to Eliminate Recessionary Output Gap
A
- Banks increase lending in overnight cash market
5
Q
Step 2
OMO to Eliminate Recessionary Output Gap
A
- RBA buys bonds from ESA and puts money in reserve account
6
Q
Step 5
OMO to Eliminate Recessionary Output Gap
A
- Lending increase in 30 day bill market
7
Q
Step 6
OMO to Eliminate Recessionary Output Gap
A
- Demand for bills increase in 30 day bill market
8
Q
Step 8
OMO to Eliminate Recessionary Output Gap
A
- Decrease interest rate for 30 day bill market
9
Q
Step 9
OMO to Eliminate Recessionary Output Gap
A
- Similarly IR decrease in all substitute lending markets