Consider the

following Taylor rule for Country Z.

 r = 0.01 +

0.5((y-y*)/y*) + 0.5π

Where r

is

the real interest rate,

Assume that

interest rates follow the Taylor rule. Calculate the value of

(Use

the inflation rate in decimal form in the Taylor rule. Note that the interest

rate in the Taylor rule is expressed in decimal form, multiply it by 100 to get

it to a percentage.)

Shi buys a two year government bond on 1 February 2020 with a principal of $1,000 and an annual coupon payment of $50. The market interest rate on 1 February is 5% per annum. On 2 February 2020 the RBA cuts interest rates. Interest rates fall to 2% per annum. What has happened to the price of this this two year bond as a result of interest rates falling? Round your answer to the nearest dollar.

If the central bank of Gorgonzola sets the real interest rate equal to 0.05, what is short-run equilibrium output?

Assume that Country X is in the long term equilibrium at the end of 2015.

The initial long term equilibrium is represented by AD₁

and AS

In 2016, Country X is experiencing a decline in the exogenous component of consumption.

Find the most correct answer.

The Japanese economy has experienced deflation (falls in the price level) for a number of years. Given this, which of the following statements is TRUE.

To answer this question, use

the

The

diagram below

illustrates the relationship between demand for money and

Which diagram below shows what will happen to the money demand when there is an increase in output (Y)?

1. 

2. 

3. 

4. 

Assume that Country X is in the long term equilibrium at the end of 2011.

The initial long term equilibrium is represented by AD₁ and AS₁.

In 2012, Country X is experiencing an temporary unfavourable shock to the AS due to increasing oil prices. Such that,

Assuming that no other change or policy takes place, which point or points on the diagram below could be the new long term equilibrium in Country X? 

Find the most correct answer.

The following are National Accounts data for a particular year. 

Assuming that this country has a floating exchange rate, the level of net capital inflow is:

In the above economy the balanced-budget multiplier equals:

Assume that Country X is in the long term equilibrium at the end of 2015.

The initial long term equilibrium is represented by AD₁

and AS

In 2016, Country X is experiencing an increase in planned investment.

Find the most correct answer.