MACROECONOMIC Essay Example | Topics and Well Written Essays - 1000 words

MACROECONOMIC - Essay Example It has also seen that the market and business of the country getting to have a sense of decency and accountability. The banks major role is to regulate the money or the Australian currency. It is also responsible for the management of other banks. In essence the RBA has a regulatory role in the Australian economy rather than profit making like other banks. The absence of this bank could have seen a scenario was prices of commodities rise insignificantly and no one has control over them. Financial institutions could have also been free to impose any interest rates and totally create a situation of anarchy in the economy. It is then necessary that we keenly look at the role of the RBA in the economy of Australia. The role of the RBA Though the reserve bank can play several other roles there are three major roles that can be sidelined in the study of the functions of the RBA to the economy of Australia. These roles are. ... Interest rates are a significant and basic thing that loaners look at before they can take a lone from the bank. The RBA then plays a very basic role of regulating the availability of money in the economy to be borrowed, these is done by the bank regulating and defining the general cost rate of interest in the whole banking sector. These are ideally achieved through the domestic market operations (RBO). In these case then the bank is responsible for the granting of government securities, these securities are like the treasury notes and also the treasury bonds. These two will directly influence the general interest rate of the banks. Maintenance of employment Unemployment is one key factor in the determination of the economic status of a country. Unemployment is majorly or in most cases high when inflation is high. With the prices of commodities being high and purchase power of citizen being low then a situation presents itself were many employees will not employ more workers or in ev en other case downsize there labor force. The RBA has a major role of regulating inflation by ensuring that it remains at a very low value. This low inflation is very critical in marginalizing prices in the market and thus the purchase power remains high. These unable more people to get employed and thus in such a case the RBA is playing a very critical role of maintaining employment. Ensuring economic prosperity Finally the RBA has a very major role of developing the economy of Australia. From the roles it plays it ensures that there is stability in the currency of Australia. A stable currency is a very good indicator of economy growth. When the currency is strong against other international currencies then the economy