University of Sydney Macroeconomic Management Questions
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11223 Final Assignment
Instructions
Answer all questions in this assignment
Prepare your answers with a word-processing software and submit a .doc file to Canvas.
A plagiarism check will be performed.
For the numerical questions, you can either type in your workings / equations or paste a
clear image of your hand-written work. All narratives must be typed in.
Please show enough details of your calculations, as partial marks will be given in case your
answers are not fully correct.
You can either draw your diagrams within the word-processing software or paste a clear
image of your diagrams in your answer. Direct copying of diagrams from textbooks or
other sources is not allowed.
For questions requiring the use of Australian data, please quote the source of your data. It
is also a good idea to include graphs to help describe trends and movements of the data
series.
Question 1
a) As estimated by the RBA, the natural rate of unemployment of Australia is around 5%.
Basing on Australian data, explain whether the Australian economy has experienced any
significant output gaps before and after the arrival of the COVID19 pandemic. (8 marks,
word limit = 300) Note: you must include the source of your data in the answer.
b) Discuss the changes in the Australian general price level and real GDP between June
2019 and June 2020. With an appropriate AD-AS diagram, explain whether such a
phenomenon was caused by a shift in aggregate demand or aggregate supply. (8 marks,
word limit = 300)
c) Suppose the RBA counteracted the above-mentioned economic downturn by an
appropriate monetary policy. With diagram(s), discuss the effect of such a policy on the
short-run equilibrium output (8 marks, word limit = 300)
d) Without the policy in part (c), explain with an appropriate diagram why the economy can
automatically return to full employment in the long-run. (8 marks, word limit = 300)
Question 2
Suppose that this years money supply is $500 billion, nominal GDP is $10,000 billion and
real GDP is $5,000 billion. The velocity of money is constant and real GDP always equals to
the full employment output level. The full employment output rises by 5% each year. Answer
the following questions with the quantity theory of money.
a) What is this years price level? (2 marks)
b) What is the velocity of money? (2 marks)
c) What will happen to nominal GDP and the price level next year if the central bank keeps
the money supply constant? (2 marks)
d) What is the level of money supply next year if the central bank wants to keep the price
level stable? (2 marks)
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Explanation & Answer:
2 Questions
Tags:
GDP
macroeconomic management
downturns of an economy
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