Discuss the transmission mechanism of the monetary policy

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Question - The RBA has implemented a contractionary monetary policy since May 2022. However, the Prime Minister Anthony Albanese has expressed his concern over the hikes and the 'real pressure' it would place on Australians, and warned Reserve Bank Governor Philip Lowe not to "overreach" in his efforts to control inflation.

Use an IS-LM model to analyse the short run effects of the expansionary monetary policy. Discuss the transmission mechanism of the monetary policy. How do you interpret the Prime Minister's warning?

Reference no: EM133276641

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