1303AFE - AFE133 - Economics for Decision Making - Economics Assignment Help

Assignment Task

Question 1

The following set of information refer to economic activities undertaken in the country of Ploteca in 2020:

*The total value of consumption was $4 billion, a quarter of which were of goods initially produced in 2019. As well, $0.8 billion of the total $4 billion were bought by foreigners living in Ploteca.

*$1 billion worth of housing stock was sold, 20% of which was made up of existing housing stock.

*Wages totalled $0.1 billion.

$0.3 billion was spent by firms on new machinery.

*The government also transferred $0.1 billion to various charities as a gesture of goodwill. It paid out $0.02 billion in agent fees to ensure the money went to the proper recipients.

*Ploteca is a closed economy.

*Use the expenditure method only when answering the questions below.

What was the value of consumption in Ploteca is 2020? Explain how you obtained this value (i.e. what did you count, and what did you exclude).

What was the value of investment in Ploteca in 2020? Explain how you obtained this value (i.e. what did you count, and what did you exclude).

What was the value of government expenditure in Ploteca in 2020? Explain how you obtained this value (i.e. what did you count, and what did you exclude).

Calculate Ploteca’s GDP in 2020 using the expenditure method.

The standard of living in Luxembourg is higher than the standard of living in Iceland as the size of Luxembourg’s nominal GDP (using current USD) in 2019 was estimated at $71.1 billion as opposed to Iceland’s $24.2 billion in the same period (figures from the World Development Index Database).

Do you agree or disagree with this statement? Explain your answer and provide real world evidence to justify your answer.

Question 2

The typical citizen of Pasifika keeps $6 out of every $100 they have, with the rest deposited into their respective bank accounts. The Reserve Bank of Pasifika recommends that commercial banks maintain 4% of all bank deposits as reserves.

What is the value of the simple money multiplier? Show all workings.

Assume that the typical citizen deposits $3,000 into their bank accounts. Based on the simple money multiplier calculated in part (i), calculate the total amount which the money

supply in the banking system will eventually increase to.

What do you expect will happen to the total amount of Australian dollar securities (i.e. government securities) held by the Reserve Bank of Australia in the next few years? Justify your answer.

Question 3

The economy is growing well and is threatening to overheat and grow too quickly. The finance ministry has advised the government to strengthen the currency in order to slowdown exports and thus help the economy slowdown to a more manageable level. As well, the finance ministry wants the government to raise income taxes as this will also slowdown the economy. The prime minister has asked you, as her chief economic advisor, for your views. In particular, she wishes to know the following:

Would a stronger currency really decrease net exports, and why? Your advise on this is ____________________ (provide your answer and justification. Feel free to use external resources to assist you in your answer if you prefer).

What would be the potential upside (i.e. advantage) of raising income taxes, with respect to government finances, and is that going to negatively or positively impact on future economic growth?

Your advise on this is ____________________ (provide your answer and justification. Feel free to use external resources to assist you in your answer if you prefer).(5 marks)

Demonstrate numerically (and briefly explain your answer with words) how raising government debt could actually potentially end up lowering the debt-to-GDP ratio?(5 marks)

Question 4

Inflation is below the target range set by the Central Bank of Artica, and is of concern to its board, who feel compelled to act.

What does this tell you regarding the likely output gap? Illustrate it using an AS-AD diagram, and briefly explain your diagram.

Explain the process of what happens to the economy in the long-run if the central bank does not intervene (assume also that the government does not intervene). Amend the AS-AD diagram drawn in part (i) to illustrate your answer.

(b)The RBA printing money will lead to inflation. Do you agree or disagree with this statement both when the economy is facing a severe recession (as during the initial COVID-19 lockdown) and in times when the economy is at potential GDP? Justify your answer(s).

This Economics Assignment has been solved by our Economics experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.