Question 3 Explain in detail the process of Monetary Policy transmission of an increase in the cash interest rate. Use relevant graphs to describe how a Central Bank's action on the interest cash rate ripple through the economy and lead to the target policy goal. (Three connected diagrams should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD diagram. Interest rates is the variable that connects the first and second diagram)
Question 3 Explain in detail the process of Monetary Policy transmission of an increase in the cash interest rate. Use relevant graphs to describe how a Central Bank's action on the interest cash rate ripple through the economy and lead to the target policy goal. (Three connected diagrams should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD diagram. Interest rates is the variable that connects the first and second diagram)
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Economic Fluctuations, Unemployment, And Inflation
Section: Chapter Questions
Problem 14CQ
Related questions
Question
![11:33
K
2 of 3
• moodle.federation.edu.au
Question 1
a) Give the definition of GDP and explain what items are not included in its calculation?
What is the current environment in the USA and Australia?
b) Define unemployment and its measurement. What is the current environment in the
USA and Australia?
c) Define inflation and its measurement. What is the current environment in the USA
and Australia?
Question 2
Assume that an economy is initially operating at the natural rate of output (full employment
output). Use the AD-AS model to illustrate graphically the effects on price and output of a
increase in government spending and an increase in the cash rate. Explain your assumptions
with respect to the range of aggregate supply of your analysis.
Question 3
Explain in detail the process of Monetary Policy transmission of an increase in the cash
interest rate. Use relevant graphs to describe how a Central Bank's action on the interest cash
rate ripple through the economy and lead to the target policy goal. (Three connected diagrams
should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD
diagram. Interest rates is the variable that connects the first and second diagram)
Question 4
Using the World Bank's World Development Indicators database,
https://databank.worldbank.org/home.aspx,
a) Complete the following table.
GDP per capita (current)
Australia
China
India
U.S.
GDP growth rate
Australia
China
India
U.S.
Inflation rate
Australia
China
India
U.S.
2005 2007 2010 2015 2019
b) Produce a plot for each variable (GDP, gdp growth, inflation) comparing the four
countries.
Jerich
86
+
4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F15c747a6-b5c8-43d5-bb56-a19653743278%2F24a0be79-a4e1-483d-82bf-d888c5b4efa5%2Fn6g674m_processed.png&w=3840&q=75)
Transcribed Image Text:11:33
K
2 of 3
• moodle.federation.edu.au
Question 1
a) Give the definition of GDP and explain what items are not included in its calculation?
What is the current environment in the USA and Australia?
b) Define unemployment and its measurement. What is the current environment in the
USA and Australia?
c) Define inflation and its measurement. What is the current environment in the USA
and Australia?
Question 2
Assume that an economy is initially operating at the natural rate of output (full employment
output). Use the AD-AS model to illustrate graphically the effects on price and output of a
increase in government spending and an increase in the cash rate. Explain your assumptions
with respect to the range of aggregate supply of your analysis.
Question 3
Explain in detail the process of Monetary Policy transmission of an increase in the cash
interest rate. Use relevant graphs to describe how a Central Bank's action on the interest cash
rate ripple through the economy and lead to the target policy goal. (Three connected diagrams
should be used: (1) money supply and demand (2) investment demand schedule (3) AS/AD
diagram. Interest rates is the variable that connects the first and second diagram)
Question 4
Using the World Bank's World Development Indicators database,
https://databank.worldbank.org/home.aspx,
a) Complete the following table.
GDP per capita (current)
Australia
China
India
U.S.
GDP growth rate
Australia
China
India
U.S.
Inflation rate
Australia
China
India
U.S.
2005 2007 2010 2015 2019
b) Produce a plot for each variable (GDP, gdp growth, inflation) comparing the four
countries.
Jerich
86
+
4
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