Economy in Equilibrium - Keynesian Response - GDP - Aggregate Consumption - Economics Assignment Help

Assignment Task:

Economy in Equilibrium Assignment Help

Question 1
Given the diagram below representing an economy in equilibrium:
a)    Identify the most pressing economic problem with the economy. 
b)    What would be a Keynesian response to this problem?

 

Question 2
Using the AD-AS model of the Australian economy as your guide to short-run effects, state (i) whether the general level of prices would rise or fall, and (ii) whether real GDP would rise or fall, in each of the following scenarios (ceteris paribus).
a)    The Reserve Bank raises the official cash rate.
b)    The government embarks on a major infrastructure spending programme.
c)    The Chinese economy falls into a recession.
d)    Business confidence in future profitability increases significantly.
e)    World oil prices rise

Question 3
Atlantis is a closed economy: there is no foreign trade and no foreign investment. Its government collects a fixed amount of tax, $5 billion, and spends a fixed amount, $25 billion, on public goods. The households of Atlantis spend, in aggregate, $34 billion on consumption goods/services independent of their disposable income, and their marginal propensity to consume is 0.6. The businesses of Atlantis spend a total of $24 billion on planned investment. Fill the empty cells in the table below (all numbers are in billions of dollars): 

Question 4
Is increasing GDP per capita a good indicator of increasing wellbeing of a society?

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