“c02DomesticMacroeconomicGoals_PrintPDF” — 2022/7/23 — 6:51 — page 219 — #119
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6. Distinguish cyclical unemployment from structural unemployment. (2 marks) 7. Explain how you would expect the general change in Australia’s terms of trade in the last two years to affect Australia’s domestic macroeconomic conditions. (4 marks) 8. Clearly explain how you would expect the recent trend in Australia’s unemployment rate to affect our general living standards. (3 marks) 9. Calculations (no calculators are to be used): a. Use the hypothetical data in table 2.7 to calculate the Terms of Trade Index (TOT) for 2022–23 and 2023–24. (1 mark) TABLE 2.7 Changes in a country’s export and import price indexes Import price index
Calculations for the TOT Index
2022–23
110
100
TOT Index = … … … points
2023–24
120
100
TOT Index = … … … points
O
Export price index
PR O
Year
b. Use the hypothetical data in the table 2.8 to calculate the real GDP for both 2022–23 and 2023–24. Show your basic formula and working. (1 mark) TABLE 2.8 Calculating a nation’s real GDP Price deflator index
2022–23
200
100
2023–24
220
110
Calculations for real value of GDP in 2022–23 and 2023–24
E
GDP at market prices
G
Answer = $ … … … Answer = $ … … …
PA
Year
U
N
CO RR EC
TE
D
10. Analyse the relationships that can exist between Australia’s rate of economic growth and the unemployment rate. (2 marks) 11. Recently, Australia has experienced significant infrastructure bottlenecks in several key areas of the economy such as power and transport. As an aggregate supply factor, explain how you would expect these to affect the achievement of the Australian government’s three key domestic macroeconomic goals and material living standards. (6 marks) 12. Examine figure 2.62 and answer the questions below. a. For the 12 months ended September 2021, identify the two main factors accelerating AD along with the main factor slowing AD and GDP growth. Quote some approximate statistical evidence from the chart (see part a). On this graph, private demand = C + I, public demand = G1 + G2 , and net export demand = X − M. (2 marks) b. During 2019–20 and 2020–21, evaluate the extent to which the government’s goal of strong and sustainable economic growth was achieved. Justify your answer. (2 marks) c. During 2020–22, economic activity picked up. Explain how you would expect this to affect the achievement of domestic macroeconomic goals and living standards. (4 marks) d. Quoting data from graph (b), contrast the level of business confidence in 2020 with that in early to mid-2021. (3 marks)
TOPIC 2 Domestic macroeconomic goals
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