(a) AS(P100) (b) AS (P125) (c) AS(P75) P Q P Q P Q 125 $ 560 125 $ 500 125 $ 620 100 500 100 440 100 560 75 440 75 380 75 500 Suppose the full employment level of real output (Q) for a hypothetical economy is $500, the price level (P) initially is 125, and both prices and wages are flexible upward and downward in the long run. Refer to the accompanying short-run aggregate supply schedules. If the price level unexpectedly decreases from 125 to 100, the level of real output in the long-run will

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f) NC (V) FINANCE ECONOMICS AND ACCOUNTING LEVEL 2 2020 e) Assuming the inflation-rate rises, give one implication that this increased inflation rate would have on the import cost of creative stamps and craft pens from China. Toust 1010 Find out the current interest rate as Wendy is considering applying for a loan, Give the g) Conclude the investigation by providing an opinion as to whether this business idea is viable or not and provide three reasons to substantiate your answer. date that the interest rate was obtained. Time and mark allocation Sub-task Mark Time Assessment tools Activity 1 allocation allocation 2.1 2.2 Journals and ledger Complete receipts and a deposit slip 30 Marking guideline 60 90 40 Marking guideline 3 Business case Balance sheet and loan application 60 35 Marking guideline Marking guideline/ 30 (Research and prepare a typed report) 180 Checklist TOTAL 390 minutes all time is supervised by a lecturer to ensure that students produce their own work, including…

Interest rate (%) MS3 Ms₁ MS2 Interest rate 100 200 300 Dm Amount of money demanded and supplied ($) (A) 70 120 170 Investment ($) (B) Investment demand Price Level P2 P₁ AS AD3 AD₂ AD₁ GDP GDP2 GDP3 Real Domestic Output (C) (a) Look at graph A and suppose the supply of money increases from 100 to 200. What will be the equilibrium rate of interest? Number (b) Look at graph B which shows an investment-demand curve for this economy. Given the answer to part (a) above, how much will investors plan to spend on capital goods? Number (c) What will happen to aggregate demand? List (d) Trace what will happen in parts (a)-(c) if the money supply increases to $300: The equilibrium rate of interest is Number %. Investment is Number Aggregate demand will Click for List