(a) Consider the following conditions:

1. In your new job you are paid each month, instead of weekly.
2. The rate of interest rate on bond and other financial assets rises.
3. An automatic telling machine (ATM) is installed next door, and you have a debit card; and
4. Bond prices are expected to fall.

Briefly discuss whether you will increase or decrease your average holding of money for each of the above four conditions and indicatewhich of the three motives for holding money (a medium of exchange; a unit of account; a store of value) is involved in each of the cases.

(b) Consider the statement "Banks do not create money because this is RBA's responsibility". Do you agree or disagree? Explain.