Question

A decrease in the supply of AUD dollars by the Reserve Bank of Australia will

Question 6 options:

	1) Decrease the value of the dollar because it will force other countries to raise their interest rates.
	2) Decrease the value of the dollar because it will lead to higher Australian interest rates
	3) Raise the value of the dollar because it will stimulate Australian economic growth.
	4) Raise the value of the dollar because of reduced inflation fears in Australia
	5) None of the given answers

Answer 1

4.) raise the value of dollar because of reduced inflation fears in australia.

When the supply of a currency decreases its value will increase, moreover reduced supply of currency will also help in reducing the inflationary tendencies.