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- The outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on the macroeconomy mainly come from (i) the reduction in consumption and investment appetite, while others believe that the impacts mainly come from (ii) the immediate destruction of the supply-chain and production. Suppose two quarters since the outbreak of the COVID-19, changes in selected macroeconomic data of Country X can be summarized as below: Last Year This Year Annualized economic growth rate 4% -6% Unemployment rate 5% 8% Inflation rate 2% 5% Assume that argument (ii) is true, briefly discuss one plausible short-run dilemma facing the central bank of Country X.The outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on the macroeconomy mainly come from (i) the reduction in consumption and investment appetite, while others believe that the impacts mainly come from (ii) the immediate destruction of the supply-chain and production.Suppose two quarters since the outbreak of the COVID-19, changes in selected macroeconomic data of Country X can be summarized as below: Last Year This Year Annualized economic growth rate 4% -6% Unemployment rate 5% 8% Inflation rate 2% 5% Using an AD-AS model, explain whether argument (i) or (ii) above fits better to the case of Country X.Which of the following is not a doctrine of modern macroeconomics? A. Spending drives prices, production, income and employment in the short run B. Lower interest rates are required to increase investment spending during recession C. Depressions occur because prices adjust too rapidly to change in supply and demand D. Economic activity can be described in terms of mechanical interaction among aggregates like consumption, investment and GDP
- A key insight in modern macroeconomics is to understand that: a. all the above are correct b. Government has a duty to stabilize an unstable economy c. prices are sticky in the short run d. there are many equilibrium possible in the economyUsing the model of business fluctuations, show the effect of the COVID-19. Recall that COVID-19 shut down production in a series of important U.S. industries and caused considerable job losses. Fear of the virus caused Americans to travel less, buy fewer personal services, and consume fewer restaurant meals. (b) The Fed responded to the economic effects of COVID-19 by cutting interest rates while Congress passed a large relief package (i.e., an increase in government spending). Show each of these effects on a separate diagram.A firm's health generally depends heavily on how well the economy is ding as a whole. The success of private businesses is largely influenced by an expanding economy and favorable macro trends. Give two instances of macroeconomics trends and how they might impact hiring, sales and profits for a company.
- Consumption $550 Investment $200 Exports $60 Imports $90 Government Spending $100 Taxes $70 Potential Real Output (Long run Real Output) $800 The above macroeconomic data are from the economy in 2019. Dollar values are measured in billions of 2019 dollars. (a) Is the economy facing a recessionary gap, an inflationary gap, or neither? Explain using numbers. (b) Based on your answer to part (a), how will the economy adjust in the long run in the absence of any government policy action? Explain.8, Q1) Hey, need help with the following multi-part macroeconomics problem. Thank you in Advance! Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Recently, the rate paid by banks on savings accounts was 0.1 percent. However, at the same time, inflation was around 1.5 percent. What was the saver’s real rate of interest on his or her savings? Banks expect that the inflation rate in the long run will be 2 percent. They want a real return of 1 percent on their mortgage loans. What nominal rate should they charge home buyers looking for a mortgage? Explain using the Fisher equation.At the macroeconomic equilibrium, the economy has _______ gap, so to return to full employment _________. A. an inflationary; the money wage rate rises and aggregate supply increases B. a recessionary; the money wage rate falls and aggregate supply increases C. an inflationary; the money wage rate rises and aggregate supply decreases D. a recessionary; the money wage rate rises and aggregate supply decreases
- Due to the severity of COVID 19 on households, the government of Australia announced Job Keeper Allowances to be given to the labour force that had lost employment. (a). Examine the impact of Job Keeper Allowances during the COVID 19 recession on Australia's economy.Economists forecast future economic conditions by studying variables that tend to fluctuate in advance of the overall economy. The most significant of these variables are known as leading indicators, and they compose the index of leading economic indicators. Which of the following variables are measured as part of this index? Check all that apply. Supplier deliveries The ratio of elderly to nonelderly workers New orders for consumer goods Stock prices The money supply True or False: Businesses and government care only about long-run economic forecasts, because they cannot adapt policy or output to accommodate short-run fluctuations. False True Suppose the most recent data show that the average initial weekly claims for unemployment insurance have recently decreased. This change suggests ____ period in the coming months.Figure 1: Hayek’s (Classical) AD-AS Model Economics Online. (n.d.). Aggregate Demand. Retrieved from http://economicsonline.co.uk/Managing_the_economy/Aggregate_demand.html Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not? Figure 2: Keynes’s AD-AS Model Economics Online. (n.d.). Aggregate supply. Retrieved from http://www.economicsonline.co.uk/Managing_the_economy/Aggregate+supply.html 2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to AD1? What is the difference between demand pull inflation, cost push inflation and recession? 2.2. In macroeconomics, the immediate short run is known as a length…