How is the size of countrys money supply likely to be affect

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Reference no: EM133713067

Problem

What is monetary policy? First explain carefully what Central Bank open-market operation is; and second, explain what effect a contractionary monetary policy may have on the size of the money supply, the rate of interest, investment, aggregate demand, GDP and the price level. How is the size of country's money supply likely to be affected by each of the following? The country's banks all choose to hold a lower liquidity ratio? The non-private sector chooses to hold more cash? There is an outflow of funds to economies abroad?

Reference no: EM133713067

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