1. Does a market-based economic system need to be monitored
or is a market system basically self-stabilising? (10 marks)
2. Currently Australian consumers are paying off their debts
and not spending. Using the simple Keynesian model to assess the implications
for equilibrium GDP and the level of savings of an increase in the savings
function (8 marks).Conversely what would happen to equilibrium income if there
is a sustained rise in private investment spending? (2 marks)
3. Assuming that the money market is initially in
equilibrium, trace through the effects of a rise in the money supply on the
money market on the interest rate and also on output, employment and the price
level. (10 marks)
4. Why is a depreciation of a country currency not
necessarily a bad thing?
(5 marks).Why is a country’s appreciation of its currency
not necessarily a good thing? (5 marks)
5. The Australian dollar has depreciated markedly recently,
what has caused the depreciation? (8 marks)Why does the Reserve Bank of
Australia want it to depreciate even further? (2 marks)
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