2. * Is a macroeconomic policy that aims to influence the cost and supply of money in the economy in order to influence economic outcomes such as economic growth and inflation. * The Reserve Bank of Australia administers monetary policy by influencing the level of interest rates

3. * Before we go any further.. * http://www.youtube.com/watch?v=8QFoqNiGr pA http://www.youtube.com/watch?v=8QFoqNiGr pA

4. * Cash rate = the interest rate paid on overnight borrowing is called the "cash-rate“ * Cash rate is the interest rate paid on overnight borrowing. The Reserve Bank of Australia can influence the cash rate by changing the amount of money available in the exchange account. * Before we go any further..

5. * Loose monetary policy = government increase the amount of money available causing interest rates to fall. This is called expansionary monetary policy because it is attempting to make the economy grow at a faster rate. * Tight monetary policy = government decreases the amount of money available causing interest rates to rise. This is called contractionary monetary policy because it is attempting to make the economy slow down.