Assume the PAE 3-sector model you learned in class. You are given the following information:

Given this information, the equilibrium output is given by Y1.

Suppose the government decided to decrease its spending by 10.  After the decrease in the government spending, the equilibrium output is given by Y2.

What is Y2?

Faradia is a closed economy who’s national saving (NS) and investment (I) are given by the following equations:

where r is the real interest rate.

Suppose the government of Faradia increases the budget surplus by 5. Which of the following effects will occur? 

Find the value of X.

Find the value of X.

The table below is from the Australian Bureau of Statistics, release titled "Australian National Accounts: National Income, Expenditure and Product; Quarterly estimates of key economic flows in Australia, including gross domestic product (GDP), consumption, investment, income and saving".

GDP per capita is measured by GDP/Population. What could explain the changes in GDP per capita presented in the table below? 

The table below is from the Australian Bureau of Statistics, release titled "Australian National Accounts: National Income, Expenditure and Product; Quarterly estimates of key economic flows in Australia, including gross domestic product (GDP), consumption, investment, income and saving".

According to this table, in what quarter the Australian economy was in a recession? Choose the most correct answer.

Recall the PAE model you studied in class, where 

The unlabelled diagram below presents the initial equilibrium in Country X. Initially, government budget is at balance.

Assume that the government of Country X has increased its expenditures (G) but did not change the taxes (T0), such that the government budget is now in a deficit. Which diagram below is the best representation of this change?

1. 

2.

3.

4. 

5. 

The diagram above shows how exchange rates and relative price levels evolved over time.

Evaluate the following statements:

1. Between 1985 and 1990, nominal exchange rate of C$ against US$ appreciated
2. Between 1963 and 1965, nominal exchange rate of C$ against US$ depreciated
3. Between 1975 and 1980, nominal exchange rate of C$ against US$ appreciated
4. Between 1963 and 1965, real exchange rate of C$ against US$ depreciated
5. Between 1980 and 1990, nominal exchange rate of C$ against US$ appreciated

From the answers below, choose which statement/statements is/are correct:

A bank in country X can lend $10,000 for a year. The bank operates in a competitive environment and the bank owner wants to earn a real interest rate of at least 5%.

What will be the nominal interest rate the bank will charge if the expected inflation for the next year is -6% ?

In the figure above:

1.       

2.       

3.       

4.