Question: Please show it step by step clearly,Thank you so much!!!! Suppose the Reserve Bank of Australia (RBA) buys $150 million worth of bonds from banks.

Please show it step by step clearly,Thank you so much!!!!

Suppose the Reserve Bank of Australia (RBA) buys $150 million worth of bonds from banks. (a) State whether this is expansionary or contractionary monetary policy. (1 mark) (b) What is the impact of the RBA's sale of bonds on the cash rate? (1 mark) (c) If every commercial bank is committed to maintaining a reserve ratio of 20%, calculate the change to the money supply resulting from the RBA's purchase of $150 million worth of bonds. (4 marks) (d) Illustrate the short-run impact of the RBA's sale of bonds to commercial banks on equilibrium real output and price levels with an appropriate AD-AS diagram. Briefly explain the shifts to any curves. (6 marks) (e) Suppose the Australian economy is experiencing a negative supply shock caused by a sudden and substantial increase in the price of oil. Will the RBA's purchase of bonds be able to completely counteract the negative supply shock's impact on the real output and price levels? Briefly explain your answer. (2 marks)

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