QUESTION 4 Directions: Use the given scenarios and the information you have learned about Fiscal and Monetary policy to complete the questions that follow The economy of Northhurst is currently experiencing GDP growth of over 7% with inflation rates of 4% and unemployment of 1% Jaelyn finds that everything she wants to buy costs m ore money, but her wages haven't increased. She is worried about being able to afford everything she needs. The Results As the money supply (increases/decreases) , businesses will get (more/less) | (increases/decreases) When that happens Jaelyn will see prices (rise/fall) as the economy (expands/contracts) money and eventually unemployment

Your company has been trying to grow since its creation in the year 2000, and the board of directors is dissatisfied that your department’s advertising budget has increased 40% since the year 2000 but that little growth has occurred as a result. What argument might you make in your defense? Select one: a. While the nominal value of the budget has grown 40%, the real value (adjusted for inflation) has dropped sharply, so we have been lucky to even stay in business over these years. b. While the real value of the budget has grown 40%, the output of the national economy (as indicated by the mild growth of the GDP deflator) has been stagnant, so our lack of company growth is no surprise. c. While the nominal value of the budget has increased 40%, the real value has increased even greater than that, so the lack of growth has to be attributable to another department of the company. d. While the nominal value of the budget has grown 40%, the real value (adjusted for…

SECTION B: MACROECONOMICS QUESTION 3 The mandate of the South African Reserve Bank (SARB) is to target inflation and keep it within the band of 3% - 6%. The bank does this through adjusting the repo-rates. Discuss three channels of the money transmission mechanism emanating from fluctuations of the interest rates.

For the following problems, choose from these formulas: Formula 1 A = P +Prt Formula 3 A = P(1 + APR)" P = Formula 2 P A 1+rt Formula 4 A APR (ny) n (1 +³ In your answer, describe whether you used formula 1, formula 2, formula 3, or formula 4. Show supporting work, round your answer to the nearest cent, and include units with your answer. (a) If you want an account balance of $10,000 after 5 years, what amount do you need to invest initially into an account that earns an APR of 3% with quarterly compounding? (b) If you invest $10,000 in an account that earns an APR of 5% with monthly compounding, what will be the account balance after 10 years? (c) If you invest $10,000 in an account that earns an APR of 5% simple interest, what will be the account balance after 10 years?