MAE312 National Economic Policy Assignment Help

Assignment (Due: 17 May 2019; Friday)

This assignment is worth 20% of your overall assessment in this unit.

MAE312 National Economic Policy

Submission: Before commencing the assignment, you must read the following notes and those at the end of this assignment (page 3).

You must submit an electronic copy on
No referencing is required for citation from the
Answer all three of the following
You must not scan diagram from the textbook or any printed source, or copy from any electronic source. You must draw it. You can scan your own drawing, if
1500 word limit is not Please note that a long answer is not always a good answer; a good answer is concise and to the point.

MAE312, economics, economic policy, MAE312 assignment

You must also read the following sections in the Unit Outline:

Using the IS-LM model, explain how an expansionary fiscal policy would affect real output and the interest rate in a closed economy. Explain and show in your diagram how the Central Bank would react to this policy change if it wanted to keep the interest rate unchanged. You need to discuss detailed adjustment processes and the effects on the interest rate and real output in both [6 marks]

In the short-run, the effect of an expansionary monetary policy on the output level is very large when money demand is relatively insensitive to the changes in the interest rate. Do you agree or disagree with this statement? Explain your answer using appropriate diagram(s).
Suppose real output is initially at its full employment level. Using Aggregate Demand (AD)—Aggregate Supply (AS) framework, discuss the short-run and long-run effects of a decrease in government expenditure on the price level, real output, nominal wage rate and real wage rate under the following three alternative assumptions:
1. nominal wages are fully flexible,
2. nominal wages are relatively slow to adjust