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Number of dollars in circulation

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1. We studied how the Reserve Bank of Australia (RBA) can influence the money supply in the Australian financial market. Answer each question briefly.

a) How does the open market operations increase the number of dollars in circulation?

b) How does the reserve ratio influence the money supply?

c) What do you think happens to the money multiplier (M) in a financial crisis and what is the likely impact of change in M to the economy?

Reference no: EM131985570

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