Economics of Money and Banking Short Answer Questions Essay

Economics of Money and Banking Short dish up Questions - Essay ExampleFloating is through with(p) in two major ways. These are the selling of Australian dollar and the buying of other foreign currencies mostly the United States Dollar. Whenever the Reserve Bank of Australia wants to support the modify rate against depreciation, the Reserve Bank of Australia sells foreign currency and in return buys Australian dollars. When the needed arises for insight to be resisted, the Reserve Bank does the opposite by buying foreign exchange and selling the Australian dollars. This is basically how the reserve bank intervenes in the foreign exchange. The reason behind the intervention described supra is basically to ensure that the Australian dollar gets a stronger nurse in the foreign exchange merchandise. Sustaining the determine of the Australian dollar is very important and the need for it cannot be underestimated. This is because on the foreign exchange market and in all other major i nvestment transactions that take place in Australia, the value of the Australian dollar plays a highly instrumental role in determining the amount of currency investors spend in transactions.2) What are the main objectives of fiscal polity in Australia? Explain how monetary policy is implemented in Australia and how changes in monetary policy are transmitted by means of the economy to hazard the overall level of economic activityMonetary policy basically refers to the manipulation of short-term mess conditions mostly interest rates to help in the realization of domestic policy objectives. This means that monetary policy is put in place to favor the successful implementation of domestic economic policies. In Australia, monetary policy is implemented by the Reserve Bank. The implementation of monetary policy is done through a number of ways in several countries. In Australia however, the major monetary implementation is done by managing interest rate in such a way that it respon ses to international monetary compress and shock. This