Question 1:

Which of the following would shift the money demand curve to the right? Real GDP decreased. The price level increased. The interest rate decreased. The RBA sold government bonds. With an increase in real GDP, households' demand for money would , thus the RBA has to money supply to the banking system. decrease; decrease 0 increase; decrease increase; increase decrease; increase If the RBA is very sensitive to changes in the inflation rate and adjusts the target cash rate accordingly to keep inflation rate within a particular band, how would this affect AD curve in ADAS model? AD curve will shift right. AD curve will shift left. O AD curve is relatively steep. AD curve is relatively flat. Suppose the Australian economy is currently at the long-run macroeconomic equilibrium. Using the AD-AS model, if the RBA anticipates that next year the aggregate supply would grow significantly slower than aggregate demand , then the RBA would most likely decrease interest rates. increase interest rates. decrease income tax rates. increase income tax rates. How exactly can the RBA conduct an expansionary policy, and how can it be represented in AD-AS model? The RBA buys government bonds and Treasury bills, and AD curve shifts right. The RBA sells government bonds and Treasury bills, and AS curve shifts right. The RBA increase the required-reserve ratio, and AD curve shifts left. The RBA decreases income taxes, and AD curve shifts right