Consider a macro economy was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy, graphically illustrate

Choose Your Topic

All Subject Accounting Finance Engineering Science Computer Science

Economics Management Writing Mathematics Statistics Law Auditing Nursing Childcare Others

Consider a macro economy was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy, graphically illustrate

Question Preview:

View Complete Question >>

Question Preview:

Consider a macro economy was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy, graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy: 2. Collect an article from an Australian newspaper that relates to the current Australian macroeconomy. In a paragraph indicate which section of the course it applies to, why you selected the article and provide a brief summary of what the article is about (1 mark) 3. Many people find the current unemployment figures for Australia a bit unbelievable. Why is this? Why might the official statistics be inaccurate (1 mark) 4. Using the simple Keynesian (J-W) model to assess the implications for equilibrium GDP and the level of savings of an increase in the savings function. What happens to the level of savings? What would happen to equilibrium income if there is a sustained rise in private investment spending? (2 Marks) . State the difference between: Money multiplier and income expenditure multiplier. Between the interest rate and the exchange rate Between the balance of payments deficit and the budget deficit Between the trade deficit and net foreign debt (2 marks) 6. Assuming that the money market is initially in equilibrium, trace through the effects of a rise in the money supply on the money market on the interest rate and also on output, employment and the price level. (2 marks) 7. Distinguish between ongoing demand pull and ongoing cost push inflation. Carefully draw them. Why might it be difficult to establish the extent to which a given rate of inflation is either demand pull or cost push? (2 marks) 8. Using the AD-AS model show how the Australian economy has continued to expand year after year since 1991. What are the macroeconomic dangers facing Australia? When commentators suggest that the Australian economy is a two speed economy what are they referring to? (2 marks) 9. The central bank (the Reserve Bank of Australia) decided to implement an expansionary policy action. What would you expect to happen to the nominal interest rate, the real interest rate and the money supply? Under what economic circumstances IS this type of policy action be appropriate? What dangers might ensue from it(2 marks) 10. Why has the Australian dollar soared over the last five years? What are the domestic economic implications for producers and for consumers? (3 marks)

View Less >>

Solution Preview

(a) The Central Bank within the economy reduces interest rates.

In case the Central Bank increases the interest rate, it will result into tightening of the providing credit. All of it will cause increase in the cost of capital and there will be reduction in the money supply. This condition will force the aggregate demand curve to move shift leftwards. If the interest rate is increased, the banks will be encouraged to lend money. But, because of the reduction in demand there will be a fall in supply.

(b) There is an increase in private domestic investment spending.

In case the private domestic investing increases, the demand for the goods will increase which means that the aggregate demand curve will shift rightward, thus causing an increase in the equilibrium price.

As per the law of demand and supply, if there is an increase in oil price, it should result into a fall in the demand for oil. But, this law does not work as is in the case of oil because it is a necessary product and the people will buy it even if there is an increase in its price. In this case,

question Get solution

$22

Orginal Price : $28.60

Pay Now

Upload Assignments

Get Your Assignment

Don’t delay more, place your order now. Quick assignment help will be offered to you.

Order Now

CUSTOMER REVIEWS

Excellent

Based on 702 reviews See all reviews here

One of the Best Service

I trust LiveWebTutors for my assignments because of their ability to deliver the perfect assignments time and again. Only a few of my assignments required minor revisions. The rest assured it is the best assignment writing service in the market.

Elizabeth
Sydney

Great Service and on time

I felt so exhausted and burdened with the large number of assignments I had to write and desperately needed someone to help me with all the writing and there was LiveWebTutors company on the internet. They finished my assignments before the due date and also offered me a first-timer discount.

Christina
Perth

One of the Best Assignment Provider

I ordered my Mathematics and Marketing assignments from them last month. I received the content on the set date. Most importantly, the assignments were well-written and plagiarism free. I scored a top grade for the assignment written by them. They are a reliable company.

Oli
Brisbane

Very Helpful Customer Service

I was quite unsure about getting my assignment written online but after coming across LiveWebTutors.com, all my worries have vanished. The quality of the assignments written by their writers is just invincible. Their customer support is very polite and helpful. You should try their service at least once

Kabir
Adelaide

shopping cart 0

Amount Payable : $0

World's Leading Assignment Library

Choose Your Topic