Principles of Macroeconomics – Monetary Policy (Lecture 11.2)

Principles of Macroeconomics – Monetary Policy (Lecture 11.2)

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Principles of Macroeconomics – Monetary Policy (Lecture 11.2) The Reserve Bank of Australia conducts monetary policy, works to maintain a strong financial system and issues the nation’s currency. Short run: The quantity of money and real GDP are given and the IR adjusts achieve equilibrium. Long run: The supply and demand for loanable funds determines the IR, real GDP equals potential real GDP, and the price level adjusts to make the quantity of money supplied equal the quantity demanded. Results in a movement up the AD curve as well Eventually leads to higher wages, which creates a decrease in SAS and so on.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
As wages are going up too, the economy will go into an inflationary spiral. Shift in SRPC will occur rightwards back to the natural rate of unemployment, but higher price level.
Image of page 2
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
IE – Interest sensitive expenditure Monetary policy: Increase in money supply > decrease in IR More effect on interest rate for IE elastic, therefore more impact on investment. Increase in MS >
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern