BUECO5903
Assessment Task 3
Assignment - Macroeconomics
Instructions: This assignment contains four questions. You are required to
answer all four questions.
This is an individual piece of assessment. Make sure your submission is an original
submission, this means it must be the creation of the person submitting it.
You are required to explain your reasoning and use diagrams where appropriate.
Assessment weight: This assessment task constitutes 10 percent of the total assessment
for this course.
Due date: Your instructor will advise you of the submission date of this assessment task.
Assignment to be submitted electronically in the drop box in your Moodle shell.
Question 1
a) Give the definition of GDP and explain what items are not included in its calculation?
) How is GDP calculated using the expenditure approach?
c) How is GDP calculated using the income approach?
d) Research the concept of measuring GDP using the value added approach and provide a
working definition?
e) Explain the problem of "double-counting" and how it can be avoided in calculating GDP.
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
eduction in government spending. 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 action on the interest cash
ate 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.
XXXXXXXXXX
GDP per capita (cu
ent)
Australia
China
India
U.S.
GDP growth rate
Australia
China
India
U.S.
Inflation rate
Australia
China
India
U.S.
) Produce a plot for each variable (GDP, gdp growth, inflation) comparing the four
countries.
https:
databank.worldbank.org/home.aspx
c) What can be infe
ed with respect to economic growth and price control in each of
these economies?