Australian Monetary Policy

Table of Contents

1 Introduction: Australian Economy 2
1.1 Real Gross Domestic Product 2
1.2 Inflation 2
1.3 Employment 3
1.4 Current Account 3
1.5 Exchange Rate 3
2 Monetary Policy 5
2.1 Objectives of Monetary Policies 6
2.2 Demand for Money 8
2.3 Supply of Money 10
2.4 Money Equilibrium 11
2.5 Effects of Money Supply (Demand) 11
2.6 Keynesians Vs Monetarists 12
3 Monetary Policy Framework 16
4 Monetary Policy Implementation 18
5 Open Market Operations 21
6 Fractional Reserves 23
References 25


1 Introduction: Australian Economy

The Australian economy strengthened as 2001 progressed, in sharp contrast to the weakening seen in most of the rest of the world. Gross Domestic Product (GDP) grew by 4.2 percent through the year to the December quarter 2001. Unemployment remained low and signs of improvement were visible in...