The behaviour by the Reserve Bank of Australia is a key factor underlying the link between ______ and _____, and is summarised by the aggregate-demand curve.[Fill in the blank]单项选择题
A
a. inflation; input
B
b. inflation; output
C
c. inflation; income
D
d. inflation; taxes

Question

The behaviour by the Reserve Bank of Australia is a key factor underlying the link between ______ and _____, and is summarised by the aggregate-demand curve.[Fill in the blank]

BlackTom AI · Accepted Answer

The Reserve Bank adjusts interest rates to control inflation, creating a direct link between inflation and output that the aggregate-demand curve summarizes.

1. Relevant knowledge points and concepts
- Aggregate demand (AD) curve: shows the relationship between the general price level (or inflationary pressure) and real output (real GDP) demanded in the economy; it slopes downward because higher price levels reduce real money balances, raise interest rates, lower consumption and investment, and reduce net exports.
- Monetary policy (RBA behaviour): the Reserve Bank of Australia sets the cash/interest rate to achieve an inflation target, and these interest-rate changes influence spending, investment and hence output.
- Transmission mechanism: a change in inflation or price level → RBA adjusts nominal interest rates → real interest rates and credit conditions change → aggregate demand and real output respond.

2. Step-by-step reasoning
- Start point: inflation (or higher price level) affects real money balances and the real interest rate if the RBA responds to inflation.
- RBA reaction: if inflation is above target, the RBA raises interest rates; if below target, it lowers rates.
- Effect on AD: higher interest rates reduce household consumption and business investment; they also tend to appreciate the exchange rate reducing net exports.
- Result: aggregate demand falls and real output declines; conversely, lower rates boost AD and output.
- Therefore the behaviour of the RBA is a key factor linking inflation and output, which is exactly the relationship summarized by the AD curve.

3. Calculations
- Not applicable; reasoning is conceptual and causal rather than arithmetic.

4. Why the correct answer is correct
- The AD curve directly links the price level/inflation to real output; the RBA uses interest rates to stabilize inflation and in doing so influences output. Thus “inflation; output” is the correct pair.

5. Why other options are incorrect
- a. inflation; input: “inputs” (factors of production) are not the primary variables on the AD curve.
- c. inflation; income: while income is related to output, AD specifically links price level and real output (GDP), not nominal income.
- d. inflation; taxes: taxes are fiscal policy instruments, not the RBA’s behaviour; AD summarizes price level–output, not price level–taxes.

6. Conclusion
- The correct choice is b. inflation; output, which matches the provided answer.

The behaviour by the Reserve Bank of Australia is a key factor underlying the link between __ and _, and is summarised by the aggregate-demand curve.[Fill in the blank]单项选择题

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The behaviour by the Reserve Bank of Australia is a key factor underlying the link between ______ and _____, and is summarised by the aggregate-demand curve.[Fill in the blank]单项选择题