Which one of the following is not a true statement about the relationship betwee

ID: 2382894 • Letter: W

Question

Which one of the following is not a true statement about the relationship between inflation and interest rates?

a.Government monetary policy may affect inflation but government fiscal policy does not.

b.The RBA may act to increase interest rates before inflation actually occurs.

c.Funds demanders will be willing to pay a higher interest rate when inflation is expected.

d.Suppliers of funds will require a higher interest rate to offset inflation.

Which one of the following is not a true statement about the relationship between inflation and interest rates?

Ans

a.Government monetary policy may affect inflation but government fiscal policy does not.

Both monetary and fiscal policy affects the inflation.

Fiscal policy is used by the government to reduce or increase tax rate and regulate the public spending.

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