MAE203 – The Global Economy Assignment

Assignment Task 

Purpose

After completing the assignment, you will learn how to interpret macroeconomic data with the concepts covered in this unit which are often used in real-world policy-making decisions. Also, you will apply the analytical knowledge in answering the questions which will reveal your understanding of the subject materials.

Questions 

1. What evidence do the data provide of the countries experiencing economic downturn during the COVID-19 pandemic, and of the recovery process in the following years?

2. Based on the data presented, what similarities and differences are there in the performance of the economies?

3. One important aspect of the recent global downturn related to the COVID-19 pandemic was the sharp increase in household saving rates in many advanced economies. Using a 450-line diagram, explain how an increase in the marginal propensity to save may affect the output level in the short run?

4. Consider a small developing economy with a low level of savings and capital-to-labor ratio. It has a free-market economy, and its political system is stable. The government does a good job protecting property rights. Assess this country's prospects for growth and recommend two things that would enhance the country's growth?

5. Using a static AD-AS model and associated diagram, show and explain how the situation described by the RBA Governor led to high inflation in Australia?

6. Using the static AD-AS model discussed in the unit, show and explain how the decision to increase the interest rates would have achieved the goal of controlling inflation for the RBA?

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