In the central bank's first public speech since increasing the cash rate 0.25 of a percentage point to 4.35 percent last week, the RBA's acting chief economist. Marion Kohler, said that the next stage in bringing inflation back to target is likely to be more difficult than the first. a. Briefly outline the relationship between money supply and interest rate b. With the help of aggregate demand- aggregate supply (AD-AS) model, explain how increasing interest rate will impact the Australian economy.

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a The relationship between money supply and interest rates is typically described by the theory of m... View the full answer