Mae120

Unit Code: MAE120 Money, Growth and the Economy, T1, 2024
EoUA Assessment Answer Sheet Document

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Type your Student ID here: 224452042

Insert all your responses to the EoUA assessment task questions in this document
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Question 1
a)
National Conumption Planned Government Net Planned Unplanned
income investment purchases Exports aggregate change in
and real expenditur inventories
GDP e
8000 5300 1000 1300 500 8100 -100
9000 6200 1000 1300 500 9000 0
10000 7100 1000 1300 500 9900 100
11000 8000 1000 1300 500 10800 200
12000 8900 1000 1300 500 11700 300
13000 9800 1000 1300 500 12600 400
An equilibrium GDP has an equal value aggregate exposure, Y = AE,
a GDP of 9000 = an aggregate expenditure of 9,000.
The GDP equilibrium is 9,000.
b) To achieve an Equilibrum GDP at $11000, Government spending would have to

increase to 1500 from 1300.
Government spending at 1300, = 8000 + 1000 + 1300 + 500 = $10800
Government spending at 1500, = 8000 + 1000 + 1500 + 500 = $11000
Page 1 of 5
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Question 2
A)
An unexpected increase in tax on imported final goods:
Short run:
In the short run an increase in Tax on imported

finished goods will lead to an increase in Selling price
of products, As a result buyers who cannot afford this
new price will no longer purchase it, this will cause a
leftward shift in demand as less buyers want the
product.
This causes a change in the equilibrium (A To B ), as

well as a reduction in GDP as less products are sold.
And the price level to increase as a result of the new
tax.
Long run:
In the long run the suppliers will adjust their

production rates and wages to suit the new tax prices
so they can reduce their price but maintain profit
margins, this causes a rightward shift for aggregate
supply (SRAS 2 to SRAS 3)
As the price is reduced demand will increase and shift

leftward, as more people can afford to purchase the
product.
The Equilibrium will shift (B TO C) and will have a

higher GDP and lower price level.
Page 2 of 5
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An unexpected increase in tax on imported intermediate goods:
Short run:
In the short run there Is a decrease in production due

to increased production costs as a result of the
increased tax. This causes the short run aggregate
supply to shift leftward (SRAS 1 move left to SRAS 2).
This also causes a new equilibrium wich means a

decrease in the Real GDP as a result of less product
being produced and sold.
Long run:
As a result of the new Tax , prices will increase and as

a result supply will adjust production costs and
wages. This will result in a rightward shift of supply,
but not to the same level as before.
With an increase in poduct cost, demand will reduce

as not everyone can afford the new price, this will
cause a leftward reduction of demand, (AD1 To AD2).
This changes will cause the new equilibrium to move

from B to A, In the long run this has caused a
decrease in the Real GDP.
Page 3 of 5
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B)
2010 real gdp: 2020 Reald GDP: Real GDP: 2021
(3x12) + ( 2x20) + (5x25) (3x14) + (2x30) + (5x30) (3x15) + (2x40) + (5x25)

= 42 + 60 + 150 = 252
= 36 + 40 + 125 = 201 = 45 + 80 + 125 = 250
Economic Growth rate 2020 to 2021:
2020 Real GDP: 252
2021 Real GDP: 250
= Real GDP Current year - Real GDP Previous Year X 100

Real GDP Previous year
= ((250 – 252) / 252) X 100
= (-2 / 252) X 100
= -0.007936 X 100
= -0.7936
Inflation rate from 2020 to 2021:
2010: 2020: 2021:
3x12 = 36 4x12 = 48 5x12 = 60

2x20 = 40 3x20 = 60 4x20 = 80
5x25 = 125 8x25 = 200 10x25 = 250
20x10 = 200 25x10 = 250 28x10 = 280
= 401 = 558 = 670
2020 CPI: (558 / 401) x 100 = 139.15
2021 CPI: (670 / 401) x 100 = 167.08
Inflation rate from 2020 to 2021: ((167.08 – 139.15) / 167.08) x 100 = 16.716%
Page 4 of 5
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Question 3
Both of Australias and New Zealands Interest rates increased in 2023, Australias 3.35% to
4.35%. New Zealands 4.47% to 5.55%.
However Australias GDP had a growth rate of 2%, whereas New Zealands was only 1.3%.
Short Run:
As New Zealand had a higher interest rate they attracted
more international investors(Increase in Aggregate
Demand For New Zealand Dollar, AD1 to AD2)
This caused the New Zealand dollar to increase its own
value (Shown by movement of Equilibrium from A to B)
against the Australian dollar.
However this would of caused a decrease in the exchange
rate between the two currencys.
Long Run:
As a result of this increased desire for the higher

interest rates of the New Zealand dollar there was an
increase in cost of New zealand Exports, This resulted
in a reduction in the amount of exports demanded
The higher interest rates also caused higher
borrowing costs which caused a decrease in
investment and consumption in New Zealand. This
caused a leftward shift in the aggregate demand.
(Aggregate Demand reduced, AD2 to AD3)
This caused a Move in the Equilibrium (B to C) and a
decrease in New Zealands real GDP and the value of
their Dollar.
END OF ASSESSMENT TASK
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Unit Code: MAE120 Money, Growth and the Economy, T1, 2024

EoUA Assessment Answer Sheet Document

Type your Student ID here: 224452042

An equilibrium GDP has an equal value aggregate exposure, Y = AE,

a GDP of 9000 = an aggregate expenditure of 9,000.

The GDP equilibrium is 9,000.

b) To achieve an Equilibrum GDP at $11000, Government spending would have to

An unexpected increase in tax on imported final goods:

In the short run an increase in Tax on imported

This causes a change in the equilibrium (A To B ), as

In the long run the suppliers will adjust their

As the price is reduced demand will increase and shift

The Equilibrium will shift (B TO C) and will have a

An unexpected increase in tax on imported intermediate goods:

In the short run there Is a decrease in production due

This also causes a new equilibrium wich means a

As a result of the new Tax , prices will increase and as

With an increase in poduct cost, demand will reduce

This changes will cause the new equilibrium to move

2010 real gdp: 2020 Reald GDP: Real GDP: 2021

(3x12) + ( 2x20) + (5x25) (3x14) + (2x30) + (5x30) (3x15) + (2x40) + (5x25)

Economic Growth rate 2020 to 2021:

2020 Real GDP: 252

2021 Real GDP: 250

= Real GDP Current year - Real GDP Previous Year X 100

= ((250 – 252) / 252) X 100

= (-2 / 252) X 100

Inflation rate from 2020 to 2021:

2010: 2020: 2021:

3x12 = 36 4x12 = 48 5x12 = 60

2020 CPI: (558 / 401) x 100 = 139.15

2021 CPI: (670 / 401) x 100 = 167.08

As a result of this increased desire for the higher

END OF ASSESSMENT TASK

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