Crowdly

Question 16

Part a) Explain if there is any unemployment in the economy when there is no output gap (actual output= potential output)? (5 marks)

Part b) Explain why the aggregate demand curve is downward sloping? (5 marks)

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Which of the following do not affect the aggregate supply?

Which of the following is most likely to increase a country's potential output?

Increased government transfer payments

Lower labour productivity

Lower interest rates

Increased infrastructure spending

The neutral interest rate is the rate at which

inflation rate is equal to the target inflation rate

real interest rates equal nominal interest rates

real GDP is equal to the potential GDP

the inflation rate is zero.

inflation rate is equal to the target inflation rate and real GDP is equal to the potential GDP

The presence of discouraged workers:

reduces the size of the labour force, and cause the official unemployment rate to overstate the amount of unemployment.

reduces the size of the labour force, and cause the official unemployment rate to understate the amount of unemployment.

increases the size of the labour force, and cause the official unemployment rate to understate the amount of unemployment.

increases the size of the labour force, but does not affect the unemployment rate.

Starting from long-term equilibrium, a fall in price level may be the result of any of the following EXCEPT:

monetary easing (expansionary monetary policy).

a decrease in government purchases

a favourable inflation shock

increase in productivity.

Shoe-leather costs of inflation refer to the:

difficulty of interpreting the price signals in an inflationary environment.

costs of economising on holding cash.

arbitrary redistribution of wealth from one group to another

unintended changes in taxes caused by inflation

The components of the expenditure method to measure GDP include all of the following EXCEPT:

transfers.

changes in the stocks of inventories

government purchases of goods and services

net exports

Foreign investors buy Australian bonds worth $100 (Australian dollars) and receive a dividend worth $10 (Australian dollar). In Australia's balance of payments,

purchase of bonds will be recorded in the current account and dividends will be recorded in the capital/financial account

purchase of bonds will be recorded in the current account and dividends will be recorded in the current account

purchase of bonds will be recorded in the capital/financial account and dividends will be recorded in the current account

purchase of bonds will be recorded in the capital account and dividends will be recorded in the capital/financial account