Recall the PAE model, where 

PAE = C + I^P + G; 

C = C₀ + c(Y-T) ;   I^P = I₀ ;   G= G₀;   T = T₀ + tY.

Which of the following best describes the menu costs of inflation?

Assume that the RBA has a cash rate target of 2%. Which of the following statement is TRUE about the market for exchange settlement account funds?

Consider the following economy depicted graphically below, where Y* is potential output in this economy. To bring output to potential:

The White Witch is the somewhat unscrupulous leader of Narnia. In order to convince people that her economic policies are working, she provides the following GDP data:

Being a well-educated citizen of Narnia, Tumnus realizes something is amiss with the data, because the base year would normally not change. Searching his data tables, he finds that the GDP deflator (multiplied by 100) for 2014 using a base year of 1980 was 900. Given this information, which of the following statements is FALSE?

Consider an economy with three companies – Cotton Inc, Yarnie Co, and Shirts & Pants Co. Cotton Inc processes raw cotton and sells all of its output to Yarnie Co for $1,000. Yarnie Co then turns cotton into thread, and sells all of their balls of thread to Shirts & Pants Co for $10 each. Shirts & Pants Co can use 1 ball of thread to make 1 shirt and that shirt can then be sold for $15, or they can use 2 balls of thread to make 1 pair of pants, and that pair of pants can then be sold for $30. Suppose that Shirts & Pants Co sells 200 pairs of pants and 200 shirts. Given this information and holding everything else constant, what is the value added by each firm?

The demand and supply for Fijian dollars in the foreign exchange market is:

Demand = 30,000 – 8,000e

Supply = 25,000 + 12,000e

where e is the nominal exchange rate expressed as Australian dollars per Fijian dollar. The Fijian dollar is fixed at 0.2 Australian dollars. What operation do Fijian authorities have to undertake to maintain this fixed exchange rate?

The following unlabelled diagram represents an AD-AS model. Suppose the economy starts at point A and moves to point B. Which of the following things could have caused this move:

Consider a Cobb-Douglas production function with constant returns to scale where the share of capital income (α) is 1/3 and L=K=100. In addition, A=1. Keeping technology and capital stock unchanged, an increase in labour input by 6% leads to approximately which of the following?

The Morrison household has two children in childcare and they own a house and shares in the stock market. In 2020 they had a gross income of $195,000 and paid income taxes of $40,000. They received $15,000 in cash from the government to help with childcare costs (assume they pay no tax on this $15,000). Their consumption was $90,000. During 2020 the market value of the Morrison’s house increased from $1,980,000 to $2,100,000. The value of their share portfolio fell from $10,000 to $9,900. Which of the following figures is the best measure of the change in wealth of the Morrison household during the year?