Macroeconomics 2 (ECON1042)

Analyse the effect on the product market of falling business and consumer confidence in the economy using the Aggregate Expenditure (AE) model; and demonstrate how changes in the product market transmit into the money market and the foreign exchange market – and in turn affect the product market, evidencing the continuous flows between markets

AE model analysis – remember to explain the transition to the new equilibrium – discuss and illustrate.

Demonstrate how changes in the domestic product market transmit into the money market and the foreign exchange market.

money market and exchange rate market analysis – remember to explain the transition to the new equilibrium – discuss and illustrate

Demonstrate and discuss how in turn the changes in the money market and the foreign exchange markets affect the product market, evidencing the continuous flows between markets.

draw the AD-AS paradigm follow the information below: the AD curve shifts to the left. This trend indicates a drop in consumer spending and company investment as consumers and businesses grow increasingly concerned about their economic outlook. The AD curve moves to the left and meets the AS curve at a new equilibrium point. This new equilibrium reflects changes in the economy as a result of the drop in confidence. Firms may drop their pricing to boost spending and retain sales when demand is low. As a result, the overall price level falls.

discuss and illustrate the aggregate expenditure when business and consumer confidence fall and draw a diagram of aggregate expenditure

Analyse the effect on the product market of falling business and consumer confidence in the economy using the Aggregate Expenditure (AE) model; and demonstrate how changes in the product market transmit into the money market and the foreign exchange market – and in turn affect the product market, evidencing the continuous flows between markets

AE model analysis – remember to explain the transition to the new equilibrium – discuss and illustrate.

Demonstrate how changes in the domestic product market transmit into the money market and the foreign exchange market.

money market and exchange rate market analysis – remember to explain the transition to the new equilibrium – discuss and illustrate

Demonstrate and discuss how in turn the changes in the money market and the foreign exchange markets affect the product market, evidencing the continuous flows between markets.

If the currency–deposit ratio is 16% and the reserve ratio is 15%, what is the size of the money multiplier?

Provide answer to 1 decimal point.

Assume that the level of autonomous consumption in an economy equals 600, the level of planned investment = 200.

Calculate the marginal propensity to consume, if the level of income equals 3,200?

Provide answer to one decimal point.