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- ANSWER THE FOLLOWING QUESTIONS: (Detailed responses (4-5 paragraphs for each question. No short answers please 1. Why did the unemployment rate increase in the year 2020? 2. How has the pandemic impacted inflation? 3. How did Covid-19 effect the stock market? 4. What was the potential impact of Covid-19 on GDP (gross domestic product) and trade? A. Provide an introduction and the background of your study, and clearly state what your research question or objective is. What real world issue are you going to research; ie your research idea or objective: III. Briefly explain how the economic theory is related to your real world topic Recent Trends of Real-World Evidence Report: Produce a report of facts/information to educate us about your chosen real world application. Find news items/articles that provide verifiable facts/data related to your topic of interest (views and opinions expressed via social media are not credible since they are not facts)). These should report recent…11.(a) Find an expression for the IS curve of the domestic economy. There is no need to show mathematical derivations. a. Y = (08)DD - (0.5) i b. Y = (12-0)DD - (1250) i 0 L * c. Y Y = (0.146 )DD - (0.840) i 5-)i + (² 5-) Y² B 0.8+0 0.8+0 0 0.5 d. Y = ( 1¹0 )DD − ( 145 )i + (14)Y* - 0 1+0 1+0 e. None of the above4. Discerning the future direction of the economy Where is the Economy Going? Knowing how well the economy is doing and where it is going next is critical to positioning both you and your investments appropriately. This means that knowing what economic indicators are and how to interpret them is critical to achieving your long-term financial goals and objectives. What is an economic indicator, and what does it do? An economic indicator is i that: serves to indicate the total amount of goods and services produced within an economy during a given period of time. suggests the current and future condition and the future direction of an economy. Which of the following are examples of economic indicators? Check all that apply. The economy's gross domestic product The economy's unemployment rate The economy's personal finance index Economic indicators can vary depending on the frequency of their reporting-such as monthly, quarterly, or annually-and their relationship with the economy. What…
- 21. Assume that we are at the natural rate of GDP, meaning we do not have a recession or an expansion, and then the Central Bank raises interest rates, how can this create a recession (A) our business investments will increase and our exports will decrease (B) our business investments will decrease and our exports will increase C) our business investments will decrease and our exports will decrease (D) our business investments will increase and our imports will increase(27) What are the effects of capital destruction on other macro variables, including con- sumption (C), saving (S), investment (I), net exports (NX), loanable funds (L), real balance (m= M/P), real interest rate (r), nominal interest rate (R), real rental (rk), and nominal rental (R)? Please "circle" the effects on these variables on a table of the following form for the short run and the long run separately. macro variable consumption (C) saving (S) investment (I) net exports (NX) loanable funds (L) real balance (m= M/P) real interest rate (r) nominal interest rate (R) real rental (r) nominal rental (R₂) (a) (b) (c) (d) rise fall constant ambiguous ambiguous rise fall constant rise fall constant rise fall constant rise fall constant rise fall constant rise fall constant rise fall constant rise fall constant ambiguous rise fall constant ambiguous ambiguous ambiguous ambiguous ambiguous ambiguous ambiguous your answer3 Suppose that the nominal interest rate is 6 per cent a year in Australia and 4 per cent per year in New Zealand. Suppose that the savers in both countries have free access to the global financial market with pays 1 per cent real rate of return from holding financial assets of any type and that purchasing power parity holds. (Calculation process) A. Using the Fisher equation, what can you infer about expected inflation in New Zealand and Australia?
- (a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending…44. An increase in the general price level in the economy a) Will increase the purchasing power of consumers' wealth and decrease consumption spending. b) Will increase demand for, and decrease supply of loanable funds, causing the interest rate to increase which in turn will cause investment spending to fall. c) Makes domestic goods more expensive than foreign goods than before which will tend to decrease exports and increase imports, thus lowering net exports. d) All the above e) Only (b) and (c) are true11. The U.S. economy slowed significantly in early 2008, and policy makers were extremely concerned about growth. To boost the economy, Congress passed several relief packages (the Economic Stimulus Act of Act of 2009) that combined would deliver about $700 2008 and the American Recovery and Reinvestment billion in government spending. Assume, for the sake of argument, that this spending was in the form of payments made directly to consumers. The objective was to boost the economy by increasing the disposable income of American consumers. a. Calculate the initial change in aggregate consumer spending as a consequence of this policy measure if MPC in the United States is 0.5. Then calculate the resulting change in real GDP arising from the $700 billion in payments. 76177 b. Illustrate the effect on real GDP with the use of a graph depicting the income-expenditure equilib- rium. Label the vertical axis “Planned aggregate spending, AE Planned" and the horizontal axis "Real GDP." Draw two…
- 20. When foreign real interest rates rise, the domestic currency ________.a) appreciatesb) depreciatesc) appreciates or depreciates depending on the change in nominal interest ratesd) does not changeQuestion 1 (a) Using the appropriate graphs, consider the short run impact of a natural disaster that causes a sudden drop in the capital stock using a real intertemporal model with investment (i.e., the simple intertemporal model without money). Explain the impact on wages, interest rates and investment. Does the model provide an unambiguous prediction for the impact of the disaster on hours worked and short-term output? Why or why not? (b) Suppose we add a money market to this model. Is it possible to know the impact of the loss of capital following the natural disaster on the price level? Why or why not? (c) Assume that the economy's production function is Cobb Douglas so per-capita output is y = k", where k is per-capita capital. Using the Solow growth model, explain the impact of the loss of capital on the growth rate of per-capita output in the years following the disaster. (d) Given your answers to (a) and (b), are wars and natural disasters something we should welcome because…6. What is role of the government and economic policy during recessions according to Classical economists? According to Keynesian economists? (