Imagine that the economy is experiencing inflation and that the Reserve Bank of Australia (RBA) decides to implement a contractionary monetary policy or 'tight money' to return inflation to its target level. 1.What type of open market operations (OMOs) will the RBA undertake consistent with a contractionary monetary policy approach?  2. How will the money supply be affected? 3.Explain how the three stages of transmission process from a contractionary monetary policy link a change in interest rates with a change in an economy’s equilbrium level of output. 4.Using the IS-LM curve diagram, illustrate the impact of a contractionary monetary policy. Make sure to clearly indicate the new equilibrium position including the interest rate and output

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