Reference no: EM133012396
Assignment Macroeconomics
Question 1
Assume that an economy is initially operating at the natural rate of output (full employment output). Use the AD-AS model to illustrate graphically the effects on price and output of an increase in government spending and a decrease in the cash rate. Explain your assumptions with respect to the range of aggregate supply of your analysis.
Question 2
a) Give the definition of GDP and explain what items are not included in its calculation?
b) How is GDP calculated using the expenditure approach?
c) How is GDP calculated using the income approach?
d) Explain the problem of "double-counting" and how it can be avoided in calculating GDP
Question 3
Using the World Bank's World Development Indicators database
a) Complete the following table.
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2000
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2006
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2012
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2018
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GDP per capita (current)
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Australia
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China
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India
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U.S.
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GDP growth rate
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Australia
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China
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India
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U.S.
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Inflation rate
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Australia
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China
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India
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U.S.
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b) Produce a plot for each variable (GDP, gdp growth, inflation) comparing the four countries.
c) What can be inferred with respect to economic growth and price control in each of these economies?
Question 4
Explain in detail the process of Monetary Policy transmission of a decrease in the cash interest rate. Use relevant graphs to describe how a Central Bank's action on the interest cash rate ripple through the economy and lead to the target policy goal.
Three connected diagrams should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD diagram. Interest rates is the variable that connects the first and second diagram.
Assumption:
The provided answer needs to make an explicit assumption about the range of the aggregate supply curve (horizontal, price sensitive or vertical)
Attachment:- Macroeconomics.rar