Illustrate what effect do rising interest rates have value

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Reference no: EM1345129

Go to the Articles of Interest section of student portal, open the file rbainflation, watch the video and answer the following:

(a) Why could low interest rates undermine the economy?

(b) Why did the RBA put up interest rates?

(c) Use an AD/AS diagram to show the effects of the government fiscal stimulus on real GDP and the price level and how the change in the stance of monetary policy can reduce the inflationary consequences of the fiscal stimulus.

(d) Illustrate what effect do rising interest rates have on the value of the Australian dollar? Use an AD/AS diagram to show the effects on Real GDP and the price level of an appreciating Australian dollar.

Reference no: EM1345129

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