B2. Using the Aggregate Expenditure (AE) model to explain the effect of slowdown in Chinese economic...

B2. Using the Aggregate Expenditure (AE) model to explain the effect of slowdown in Chinese economic growth rates on Australian equilibrium output and employment.
B3. Use the foreign exchange model to explain the impact of an increase in US interest rates

on the Australian dollar?
B4. Use the per worker production function to explain why additional capital per worker

cannot be a source of long run economic growth in an economy

Solutions

Expert Solution

Note: These three questions are totally different from each other. They are not the sub-part of each other. So, i can solve only one of them. So, i solving first question (i.e B2).

(B2.)

The effect of slowdown in Chinese economic growth rates on Australian equilibrium output and employment.

As shown in above diagram, slowdown in Chinese economic growth rates cause reduction in exports from Australia to china, from X₁ to X₂. Because, Australia is major exporter of goods and service to china. Australian exports to china accounts nearly one third (1/3) of total exports of Australia. so, its very clear that, slowdown in Chinese economic growth rates negatively affect Australia exports to china.

The equilibrium point shift from E₁ to E₂. At new equilibrium point (E₂ ) output and employment decline from Y₁ to Y₂.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

In the expenditure–output or Keynesian cross model, the equilibrium occurs where the aggregate expenditure line (AE...

In the expenditure–output or Keynesian cross model, the equilibrium occurs where the aggregate expenditure line (AE line) crosses the 45° line. Given algebraic equations for two lines, the point where they cross can be calculated easily. Imagine an economy with the following characteristics. Y = Real GDP or national income C = Consumption = 50 + 0.8Y I = Investment = 200 G = Government spending = 100 Calculate the equilibrium level of income (Y) Suppose G increases to 125...

True/False. Explain. a. In the aggregate expenditure model, the reason an economic can enter a recession...

True/False. Explain. a. In the aggregate expenditure model, the reason an economic can enter a recession is that spending falls. b. The classical assumption that labor markets clear makes it difficult for that model to explain recessions.

Explain the effect of the government’s increased expenditure on infrastructure on U.S. aggregate demand and aggregate...

Explain the effect of the government’s increased expenditure on infrastructure on U.S. aggregate demand and aggregate supply. The government’s increased expenditure on infrastructure _________ in the short run and _________ in the long run.

Aggregate Expenditure Practice Problem #1 Consider the following AE model: C=.75Yd+ 300 Yd = Y –...

Aggregate Expenditure Practice Problem #1 Consider the following AE model: C=.75Yd+ 300 Yd = Y – T I=100 G=50 T=40 M=50 X=65 1. Find the following: Y* = MPC = MPS = Budget Deficit = Trade Surplus = Autonomous C = At Y*, C = At Y*, I = At Y*, G = At Y*, T = At Y*, net exports = At Y*, Savings = Leakages = Injections = 2. Using the ∆RGDP equation, compute the new Y* if...

Let AE =C+I+G+NX where AE is the aggregate expenditure, C is the consumption function, I is...

Let AE =C+I+G+NX where AE is the aggregate expenditure, C is the consumption function, I is investment, G is government expenditure and NX is the net export. Given C = 100 + 0.65Y where Y is the national income and I = 100, G = 100+0.10Y, NX = 0 (a) Graph the consumption function with Y on the horizontal axis and C on the vertical axis. (b) Graph the aggregate expenditure function with Y on the horizontal axis and AE...

(a) What is the equation for the aggregate expenditure function (AE)? (b) Determine the Equilibrium level...

(a) What is the equation for the aggregate expenditure function (AE)? (b) Determine the Equilibrium level of Output (Income) for this economy (c) If Investment (I) increases by $200 million, determine the new equilibrium level of Output (Income). Please show your work.

Consider an open economy where aggregate expenditure is AE = C + I + G +...

Consider an open economy where aggregate expenditure is AE = C + I + G + NX. Investment (I), government purchases (G), and net export (NX) are constants, which do not vary with output level (Y). Only consumption (C) is an increasing function of Y; in particular, C is a linear function of Y: C = a + b(Y –T +TR), where T is tax and TR is transfer payment. 1. Recall that the equilibrium condition is Y = AE....

Aggregate Expenditure Consider the following AE model: C=.80Yd+ 200 Yd = Y – T I=125 G=200...

Aggregate Expenditure Consider the following AE model: C=.80Yd+ 200 Yd = Y – T I=125 G=200 T=150 M=100 X=50 1. Find the following: Y* = MPC = MPS = Budget Deficit = Trade Surplus = Autonomous C = At Y*, C = At Y*, I = At Y*, G = At Y*, T = At Y*, net exports = At Y*, Savings = Leakages = Injections = 2. Using the ∆RGDP equation, compute the new Y* if autonomous consumption is...

Consider a closed economy where aggregate expenditure is AE = C + I + G. Government...

Consider a closed economy where aggregate expenditure is AE = C + I + G. Government purchases (G) is a constant, which do not vary with output level (Y). Consumption (C) is an increasing function of disposable income YD: C = a + bYD. In this economy, we have lump sum tax only; YD = Y –T. Investment is an increasing function of Y: I = k + iY. 1. The equilibrium condition is Y = AE. Solve for the...

Explain in your own word why the stigma effect may be heightened during an economic slowdown....

Explain in your own word why the stigma effect may be heightened during an economic slowdown. 300 words

Subjects