Please answer all parts of the question. Diagrams are provided. You must select and refer to...
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Please answer all parts of the question. Diagrams are provided. You must select and refer to that graph number (as appropriate) in your answer. Please be sure to discuss fully any graphs or diagrams that your refer to. In Australia at present, the level of unemployment is around 3.5%, a figure considered close to Tull employment. At the same time, Innation is to be above that which is considered sustainable. As such, the Reserve bank of Australa has embarked on a series of errorest rate rises as part of its monetary policy. a. Discuss why an unemployment rate of 35% would be considered as close to full employment. Your answer should focus on the types of unemployment that might exist in the context of this definition. (A marks) b. Using the AD-AS model (select from the options contained in this question), detail how a rise in interest rates would affect the level of aggregate demand in the economy and impact inflation. Be sure to discuss how it would influence the components of CDP. (8 marks) c Discuss the Umitations associated with Real GDP as a measure of aggregate welfare (3 marks) Diagrams used in b. Diagram 1: Price level (GDP deflator 2012/13=100) 112 105 LAS 1.3 1.5 AS ADO ADo-AE AD Real GDP, $2012/13 tn mar Diagram 2: Price level (GDP deflator 2012/13-100) LAS 112 105 1.3 1.5 AS AD AD+AE ADO Real GDP, $2012/13 tn Please answer all parts of the question. Diagrams are provided. You must select and refer to that graph number (as appropriate) in your answer. Please be sure to discuss fully any graphs or diagrams that your refer to. In Australia at present, the level of unemployment is around 3.5%, a figure considered close to Tull employment. At the same time, Innation is to be above that which is considered sustainable. As such, the Reserve bank of Australa has embarked on a series of errorest rate rises as part of its monetary policy. a. Discuss why an unemployment rate of 35% would be considered as close to full employment. Your answer should focus on the types of unemployment that might exist in the context of this definition. (A marks) b. Using the AD-AS model (select from the options contained in this question), detail how a rise in interest rates would affect the level of aggregate demand in the economy and impact inflation. Be sure to discuss how it would influence the components of CDP. (8 marks) c Discuss the Umitations associated with Real GDP as a measure of aggregate welfare (3 marks) Diagrams used in b. Diagram 1: Price level (GDP deflator 2012/13=100) 112 105 LAS 1.3 1.5 AS ADO ADo-AE AD Real GDP, $2012/13 tn mar Diagram 2: Price level (GDP deflator 2012/13-100) LAS 112 105 1.3 1.5 AS AD AD+AE ADO Real GDP, $2012/13 tn
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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