Macroeconomics Answers

a. Differentiate between monetary policy instruments and monetary policy tools
b.Describe the two key tools of monetary policy, and describe how they would be used by the Bank of Canada to implement a contractionary monetary policy.

an economy is experiencing demand pull inflation. its central bank is of the opinion that the economy is growing too rapidly and has decided to take action. outline the action it would take and describe with aid of diagram how it would help to slow down the overheated economy

what decision made by central bank. the action by bank ,money supply interest rate movement and the money multiplier.

describe how the Australian government can run a balanced budget and yet stimulate a weak economy. Explain if this is more effective compared to the Government running a budget deficit by cutting personal taxes

Acartel is often an unstable relationship as individual members both seek andseize the opportunity to cheat on the agreement and improve their own positionat the expense of others. Assume that the OPEC oil cartel becomes subject tothis tension or conflict such that the cartel gives way to a more competitiveoil market resulting in a dramatic decrease in the world oil price.

As aresult Australia experiences a significant decline in the rate of inflation


Using the aggregate demand - aggregatesupply framework, consider the likely response of the Australian economy interms of the rate of inflation, the level of real GDP and the unemployment ratein both the short run and the long run.


Your answer should be in two partsconsidering first, the outcomes without the lower inflation rate causing achange in potential output and then secondly, allowing for such a change inpotential output.

given that c=200+0.8(y-t).
a. what is the equilibrium level of national income?
b. derive the savings function and find the level of savings.

given that c= 1000+0.625yd, i=500, g= 500, x=375, im=750, t=200+0.2y, yd y-t
a. solve for equilibrium y and c
b. if I increased by 100, what happens to y
c. draw the old and new function (I=100) clearly labelling the gragh

A cartel is often an unstable relationship as individual members both seek and seize the opportunity to cheat on the agreement and improve their own position at the expense of others. Assume that the OPEC oil cartel becomes subject to this tension or conflict such that the cartel gives way to a more competitive oil market resulting in a dramatic decrease in the world oil price.
As a result Australia experiences a significant decline in the rate of inflation

Using the aggregate demand - aggregate supply framework, consider the likely response of the Australian economy in terms of the rate of inflation, the level of real GDP and the unemployment rate in both the short run and the long run.

Your answer should be in two parts considering first, the outcomes without the lower inflation rate causing a change in potential output and then secondly, allowing for such a change in potential output.

A cartel is often an unstable relationship as individual members both seek and seize the opportunity to cheat on the agreement and improve their own position at the expense of others. Assume that the OPEC oil cartel becomes subject to this tension or conflict such that the cartel gives way to a more competitive oil market resulting in a dramatic decrease in the world oil price.
As a result Australia experiences a significant decline in the rate of inflation

Using the aggregate demand - aggregate supply framework, consider the likely response of the Australian economy in terms of the rate of inflation, the level of real GDP and the unemployment rate in both the short run and the long run.

Your answer should be in two parts considering first, the outcomes without the lower inflation rate causing a change in potential output and then secondly, allowing for such a change in potential output.

For the following items, follow the directions, write the correct answer in the blank, or circle the correct answer.

Having applied for a job at the Commerce Department’s Bureau of Economic Analysis, you are given the following hypothetical data to study before your interview. Figures are total value in billions of dollars.

Household spending on:
Services = $3,008
Nondurable goods = $1,776
Durable goods = $706
Business spending on plant and equipment = $815
Wear and tear on factory equipment = $200
Inventory changes = $9
New homes constructed = $397
Existing homes which were destroyed = $123
State and Local Government spending on:
Consumption = $540
Investment = $113
Federal Government spending on:
Consumption = $691
Investment = $132
Depreciation of government assets = $245
Transfer Payment = $2,936
Imports = $855
Exports = $961


A. What is the total value of consumption spending in this economy? _______________________

B. What is the total value of private investment spending in this economy? __________________

C. What is the total value of government purchases in this economy? ______________________

D. What is the total value of net exports in this economy? _______________________________

E. Using the expenditure approach, what is GDP for this economy? _________________________

______________________________________________________________________________.

F. Which entries in the table are not counted as part of the economy’s GDP? _________________
______________________________________________________________________________.



ECON 201 – Macroeconomics
Measuring National Income - GDP

Name _____________________________
Billions of dollars
Exports $367
Dividends 60
Consumption of fixed capital 307
Corporate profits 203
Compensation of employees 1,722
Government purchases 577
Rents 33
Taxes on production and imports 255
Gross private domestic investment 437
Corporate income taxes 88
Transfer payments 320
Interest 201
Proprietors’ income 132
Personal consumption expenditures 1,810
Imports 338
Social Security contributions 148
Undistributed corporate profits 55
Personal taxes 372
Net foreign factor income 0
Statistical discrepancy 0

Expenditure Approach
Item Amount

_______________________ $________________
_______________________ $________________
_______________________ $________________
_______________________ $________________


Gross Domestic Product = ________________________________



Net Domestic Product = _________________________________



National Income = _____________________________________



Personal Income= _____________________________________



Disposable Income = __________________________________

1. Economic growth is defined and measured as the annual percentage increase in

___________________________________ over time.
2. In the long run, a key statistic for a nation’s standard of living is ____________________.
3. The most important source of U.S. economic growth is increases in ?
4. largest contributor to increases in U.S. labor productivity is?