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QUESTION
(c) How will the equilibrium of money demand and money supply change in response to the decrease in the cash rate by the RBA?
(c) How will the equilibrium of money demand and money supply change in response to the decrease in the cash rate by the RBA? Illustrate your answer with the money market diagram.
(d) What would be the likely impact of the decrease in cash rate on the equilibrium real GDP. Illustrate your answer with the Keynesian PAE model.
