When I download a .dmg file it somehow ends up on my desktop automatically. Even after I install the .dmg, it is still on my desktop.
How do I stop these from appearing on my desktop? Should they be there?
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Depends on which browser you're using but you likely have safari settings configured to save all downloads to desktop. You can change this behavior in the preferences menu and have it save everything to downloads or simply ask you where you want to save.
As for the .dmg files, after installing, you want to "eject" the dmg file by going into finder, left sidebar, scroll down, and clicking the eject icon next to the dmg file you see mounted there. Then you can simply trash the dmg file or move it to another folder if you want to keep it.