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ECON10003 - Macroeconomics - Assignment

   

Added on  2020-02-24

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Economics
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Running head: MACROECONOMICS MacroeconomicsName of the StudentName of the UniversityAuthor note
ECON10003 - Macroeconomics - Assignment_1

1MACROECONOMICS Answer 1- Australia and the Long BoomThe reason behind the affect of demand on the Australian resources was mainly theincrease in the demand from china. This has a direct impact on the total export of Australianeconomy. With an increase in export of the economy, price remaining constant, the aggregatedemand curve shifts rightward from the equilibrium demand curve. This increases the real GDPof the economy and causes an inflationary gap (Carvalho, and Rezai 2015). This in turn increasesthe total expenditure as the country reaches to its full employment level. Thus, the income of thepeople increases which leads to an increase in the purchasing power. However, due to thisvarious components of expenditure is affected.Figure 1: affect of increase in export on AD curve and real GDPSources: (Bayoumi, and Eichengreen 2017)From the above figure, it can be seen that with an increase in the export of the country theaggregate demand curve shifts from AD1 to AD2, which causes a rise in the rate of real GDP inthe country. Various components of expenditure is affected due to increase in the real GDP and
ECON10003 - Macroeconomics - Assignment_2

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