MAE203: The Global Economy - Economics Assignment Help

Assignment Task:

PART A. MULTIPLE CHOICE QUESTIONS 

ANSWER ALL 20 QUESTIONS TOTAL 20 MARKS 

1. Table 1 below shows data from the country of Nothereica for 2017. Based on this data, Nothereica’s GDP for 2017 is ___________ billion. Table 1 Government spending $80 billion Consumption $200 billion Investment $96 billion Exports $50 billion Imports $55 billion Government transfers $10 billion Taxes $90 billion 

A. $581

B. $381

C. $371

D. $291 

2. ____________ gross domestic product (GDP) is the value of ____________ based on prices current at the time of measurement.

A. Real; total production

B. Real; production possibilities

C. Nominal; total production

D. Nominal; the consumer price index 

3. Which of the following is an example of the investment component of GDP?

A. You put money into your bank account

B. The Commonwealth Bank buys new auto teller machines for its branches

C. You purchase shares in the Commonwealth Bank

D. You buy an old house to do up and then sell 

4. If you have $1,000 in 2016 and the GDP deflator increases from 100 to 105 between 2016 and 2017, then in 2017:

A. The $1,000 will buy 5 per cent fewer goods and services

B. You will be able to buy fewer goods, but the real value of those goods will increase

C. The value of the $1,000 increases

D. The $1,000 will buy 5 percent more goods and services. 

5. If the nominal interest rate is 9 percent and the inflation rate is 6 percent, the real interest rate is

A. 15 percent

B. 3 percent

C. 1.5 percent

D. impossible to determine without knowing the value of the GDP deflator 

6. Consider Table 2 below, which represents the goods and services produced in a very simple closed economy in both 2015 and 2016. Using the information in the table, nominal GDP for the year 2016 is ___________ billion. Table 2 2015 (Base Year) 2016 Product Quantity Price Quantity Price Milk 100,000 litres $2 per litre 120,000 litres $2.10 per litre Bikes 250 $420 each 270 $430 each Concerts 100 $80 each 130 $95 each 

A. $327,000

B. $363,800

C. $313,000

D. $380,450 

7. Assume that banks are required to hold 5% of deposits as reserves. If $20,000 in cash is deposited at a bank, what is the maximum increase in loans that can be made as a result of this deposit?

A. $19,000

B. $20,000

C. $40,000

D. $400,000 

8. Suppose that real GDP for 2016 was $45,000 billion, and real GDP for 2017 was $52,000 billion. What is the rate of growth of real GDP?

A. Minus 13.5 percent

B. 13.5 percent

C. 15.6 per cent

D. $7,000 billion 

9. If the real interest rate is 8 per cent and the inflation rate is 4 per cent, and you were given the choice of receiving $100 now or $106 in one year, which would you choose?

A. $100 now

B. $106 in one year

C. You would be indifferent between these choices

D. You would refuse both choices 

10. Structural unemployment would increase when:

A. workers are replaced by machines and the workers do not have the skills to perform new jobs.

B. the number of individuals who quit their job to find another increase.

C. discouraged workers drop out of the work force.

D. the economy enters a recession. 

11. When a supermarket accepts your $10 note as payment for bread and milk, this illustrates that the $10 note is serving as a

A. Unit of account

B. Medium of exchange C. Store of value

D. Line of credit 

12. If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, approximately how long will it take GDP to reach $26 trillion?

A. About 15 years.

B. About 25 years.

C. About 30 years.

D. About 17 years. 

13. Autonomous expenditure is a type of expenditure that does not depend on:

A. wealth.

B. expectations.

C. interest rates.

D. income. 

14. If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP, then the multiplier is:

A. 1.0.

B. 100.

C. 10.

D. 0.1. 

15. An increase in the price level ________ real wealth, which causes consumption to ________.

A. lowers; increase

B. lowers; decrease

C. raises; increase

D. raises; decrease 

16. A deliberate policy change in taxes and government spending to influence the level of aggregate demand is called:

A. an automatic stabilizer.

B. discretionary fiscal policy.

C. a fiscal deficit.

D. a fiscal surplus. 

17. Which of the following is the main goal of monetary policy in Australia?

A. Lowering the rate of unemployment.

B. Increasing the value of the Australian dollar relative to other currencies.

C. Economic growth.

D. Price stability. 

18. Long-run macroeconomic equilibrium occurs when:

A. aggregate demand equals short-run aggregate supply.

B. aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve.

C. unemployment equals zero.

D. output is above potential GDP. 

19. Suppose that Australia's price level is 125, the British price level is 100, and the nominal exchange rate of pounds to the dollar is £0.60 = $1, then the real exchange rate of pounds to the dollar is:

A. 1.33.

B. 0.75.

C. 0.60.

D. 0.48. 

20. An excess supply of the dollar in exchange for yen will cause:

A. no change in the exchange rate of the yen to the dollar.

B. the dollar to appreciate relative to the yen.

C. the yen to depreciate against all major currencies. D. the dollar to decline in value relative to the yen. 

 

PART B. You are required to answer ALL THREE questions. 

Question 1 (this question has three parts, (a), (b), and (c)) 

(a) When economists talk about long run economic growth, are they referring to the business cycle? Explain. 

(b) What are the two sources of technological change, and how do these contribute to labour productivity and economic growth in the long run? 

(c) The economic growth model predicts that poor countries will grow faster than the rich countries. However, in reality we don't observe rapid growth in many poor countries. Discuss 4 factors that may prevent economic growth in poor countries. 

Question 2 (this question has two parts, (a) and (b)). 

(a) Use the aggregate expenditure model and associated 450 line diagram to explain how a reduction in the interest rate may increase the short-run equilibrium level of output. 

(b) In Japan from the 1990s to the late 2000s, the interest rates fell to very low levels. However, this failed to stimulate the economy. Use the aggregate expenditure model to explain what might have happened.  

Question 3 (this question has three parts, (a), (b), and (c)) 

(a) Explain, with an example, how an automatic stabiliser works. 

(b) Consider an economy suffering from recession (with its real GDP below the potential level). Using an aggregate demand — aggregate supply (AD- AS) diagram explain how the fiscal policy may help boost the economy during a recession. 

(c) Is the expansionary fiscal policy necessarily inflationary? Explain your answer using the AD-AS model. 

 

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