Role and Function (1 Viewer)

[2162]

My teacher said that many students lose marks because they fail to distinguish the differences between the two. But she didn't explain it well.

E.g. role of the RBA, functions of the RBA


Anybody know?

 

[whoisurdaddy]

They mean pretty much the same thing but just off the top of my head...

I think "function" refers to the purpose or objectives of the RBA ie to reach full employment and maintain internal balance (inflation targeting of 2-3% etc).

I think "role" might refer to the actions and abilities that the RBA holds to reach their goals ie the ability to manipulate interest rates to loosen or tighten monetary policy to stimulate or contract aggregate demand through effects such as the inter-temporal substitution effect or cash flow effect or maybe even enter the foreign exchange market to reduce volatility of the dollar etc.

Not sure if any of this is right though. Hope this helps.

 

[seano77]

I think role means things along the line of keeping inflation between 2-3%, encouraging sustainable growth, controlling unemployment, etc.

Function would be the manipulation of the cash rate through the purchase and sale of commonwealth securities, selling of domestic and international currency etc.