The Australian economy is "weak", with households weighed down by slow wages growth and higher taxes, the OECD has declared in a report that backs lower interest rates, calls for more government spending and paves the way for unconventional monetary policies. In its six-monthly review of the global economy, the Paris-based think tank has sharply downgraded its expectations for Australia while raising serious concerns about the level of debt being carried by households. The Morrison government this week announced $3.8 billion of infrastructure projects would be pulled forward or given additional funding over the next four years. The decision followed calls from the Reserve Bank of Australia (RBA), which has sliced official interest rates to a record low 0.75 per cent, for a lift in public spending plus productivity-enhancing structural reforms. But economists have warned the new spending will equate to less than 0.1 per cent of gross domestic product (GDP), arguing much more needs to be done to get the economy growing fast enough to bring down the national unemployment rate. The Organisation for Economic Co-operation and Development (OECD), which noted the global economy was now growing at its slowest rate since the global financial crisis, said it expected Australian GDP to expand by 2.3 per cent this year and next, well short of the federal government's forecast. It also expects private consumption, which accounts for about 60 per cent of total economic activity, to barely grow faster than inflation over the next two years. In March, the OECD was expecting unemployment to start edging down. It has now lifted its forecasts, tipping unemployment to average 5.3 per cent in 2020. 3 ECON 1007 Macroeconomics Assignment SP2 2020 "Economic activity has been weak," the OECD said about Australia. "Private consumption spending has been sluggish, weighed down by slow wage growth and an increase in taxes paid by households." While the government has argued its recent tax cuts will help households offset slow wages growth, the OECD and other organisations such as the RBA have noted overall tax levels are increasing as the budget returns to surplus. Research this week from National Australia Bank found Australian household debt was now at a record high of 202 per cent of annual income. The OECD said high household indebtedness could "exacerbate" any economic shock that hit Australia. It said with the RBA likely to cut interest rates further, which in turn could feed into a lift in house prices, lending standards might have to be tightened to protect households. "High household indebtedness means that the authorities should stand ready to tighten macroprudential policy settings if lower interest rates fuel house price inflation through a sharp pickup in credit," the OECD found. While expecting further rate cuts, the organisation said the Morrison government should "loosen fiscal policy" to help get the economy growing faster. "Fiscal policy is expected to provide little support to economic growth, in accordance with the federal government's commitment to future budget surpluses," it said. "A more expansionary fiscal stance may be warranted given that the economy is growing well below its potential and the relatively low public debt burden. "At the same time, growth-enhancing tax reforms should be prioritised. These include shifting the tax mix away from direct taxes and inefficient taxes like real estate stamp duty to the GST and land taxation." Treasurer Josh Frydenberg said the nation's economic fundamentals remained sound, with the country now in its 29th consecutive year of growth. He said there were "headwinds", particularly due to trade policy tensions that have hit confidence and business investment globally since May, but "the government's focus on productivity-enhancing reform will ensure our economy remains resilient". "The international challenges are a stark reminder of why we must stick to our economic plan which has delivered lower taxes so you can keep more of what you earn, more infrastructure to boost productivity and which will return the budget back to surplus so we can meet the challenges that lie ahead," he said.

Consider the following statement “The Australian economy is "weak", with households weighed down by slow wages growth and higher taxes, the OECD has declared in a report that backs lower interest rates, calls for more government spending…” Use the dynamic AD-AS model to describe a longer run scenario where the government is trying to pursue higher economic growth using higher government spending, but were incorrect in their estimation of the major parameters governing long run full employment equilibrium. In your analysis discuss the implications of an incorrect scenario predicted by the government when effecting their stimulus policy on equilibrium output and (un)employment. Make sure to outline the assumptions you have made to reach your conclusion.

Tommy, a former student in Dr. Smith from Economy class, opened an account at First National Bank on July 1, 2008 and made an initial deposit of $500. She then made 8 additional yearly deposits beginning with July 1, 2009. The first additional deposit was $1,000 and this decreased by $100 per deposit after that. The bank paid a nominal interest rate of 4% compounded quarterly through July 1, 2014. After July 1, 2014 it changed the nominal rate to 3.0% compounded monthly.

Immediately after making the last deposit (total 9 deposits), Sally decided to close out his account on July 1, 2016. Using Excel functions, determine how much money Sally received when she closed out the account.

1. (a) Assume that the exchange rate between the U.S. dollar ($) and the Mexican peso (P) is pegged at ER=$1/P4. Assume that, initially, this exchange rate corresponds to equilibrium in the foreign exchange market. Illustrate the initial situation in the market for peso-denominated deposits using demand and supply curves.

(b) The United States now undertakes an economic policy that puts upward pressure on the interest rate on dollar-denominated deposits (i). Mexico follows an economic policy that puts downward pressure on the interest rate on peso-denominated deposits (i*). Explain and illustrate effects of the two countries’ policies in the foreign exchange market in the graph you draw in (a). If the exchange rate between the dollar and the peso had been flexible rather than fixed, what would happen?

(c) If Mexico maintains its commitment to hold the exchange rate at $1/P4, what actions must the Mexican central bank take? Explain.

(d) If the United States and Mexico continue to follow the economic policies outlined in part (b) above, what will happen if the Mexican central bank continues to take the action described in part (c)?

(e) Suppose you are a participant in the foreign exchange market. Given your answer to (d), how might you adjust your expectation of the future dollar price of the peso ( )? What effect would this have on the foreign exchange market? Would it make the Mexican central bank’s job easier or more difficult? Why?

1.Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). What is the output gap as a percentage?

2.Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). What could be the unemployment rate if the natural rate of unemployment is 4%?

3. Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). Assume that the present status of the economy is the result of a demand shock. What should be the original price level when the economy was in equilibrium?

4.Aggregate demand curve of an economy is given by AD = 51 - 0.2P, the long-run aggregate supply, LRAS, is 30 and the short-run aggregate supply is given by SRAS = 0.3 P (all output measures are in US$ billions and the price level is given as an index number). Assume that the present status of the economy is the result of a demand shock. What should be the price level when the labor market adjusts and the economy will be in an equilibrium?

Question:Consider the following statement “The Australian economy is "weak", with households weighed down by slow wages growth and higher taxes, the OECD has declared in a report that backs lower interest rates, calls for more government spending and paves the way for unconventional monetary policies.” Use the dynamic AD-AS model to describe a longer run scenario where the government is trying to pursue higher economic growth using higher government spending, but were incorrect in their estimation of the major parameters governing long run full employment equilibrium. In your analysis discuss the implications of an incorrect scenario predicted by the government when effecting their stimulus policy on equilibrium output and (un)employment. Make sure to outline the assumptions you have made to reach your conclusion.

1)Discuss Pertussis vaccine or Human papillomavirus vaccine as either a private or public healthcare good. 2)Explain the extent to which you think this example is a private good or a public good. Ground your analysis in the concepts like the presence or absence of externalities. 3)Discuss why this distinction is important. What are the economic or financial implications if this good is considered private vs. public?

1. Describe the structure of the Federal Reserve System and why it is so important for the stability of the United States’ economy.
   
   

2. What is the difference between a commercial and an investment bank?
   
   

3. List and briefly explain the 3 functions of the Federal Reserve System.
   
   

4. How does the Fed perform its functions? (i.e. what are the three policy tools that the Fed uses?) Explain each briefly.
   
   

5. If the Fed would like to LOWER the interest rate, what three actions could they take?
   
   If the Fed would like to RAISE the interest rate, what three actions could they take?
   

6. Draw a correctly labeled money market graph and show what happens (a shift) when the Federal Reserve decides that they would like to LOWER the interest rate and stimulate spending.
   
   

List the 4 factors that shift the Money Demand curve. (just list - but please review what shifts the curve either way).

Oligopoly is the market structure of big business in America. Develop and discuss with examples (choose an oligopoly industry to focus on here) where appropriate the various aspects that make up Michael Porter's structural analysis of an oligopoly for your selected industry.

1. Calculate the rate of return for an investment with the following characteristics.

Develop a discussion of the general mechanics of how a market (As an example for your discussion use the market for generic Red Delicious apples) works using supply and demand.