Tutorial 7_2010 - ECON1002 Introductory Macroeconomics, S2...

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ECON1002 Introductory Macroeconomics, S2 2010 Tutorial Tasks 1 Reading Guide : Review Pages 287–291 and 300-329 of BOF as preparation for this tutorial. You should also look over your lectures notes for Week 7. Key Concepts: Policy Reaction Function; the Taylor Rule; Aggregate demand- aggregate supply diagram; sources of inflation; Disinflation. R EVIEW OF C ONCEPTUAL U NDERSTANDING These are to be attempted before the tutorial. They will not normally be covered in the tutorial, maybe, except for a quick review, time permitting. The answers are typically found in the textbook and lecture notes. 1. How has the way monetary policy is conducted in Australia evolved since 1990? Why? 2. What do you understand by the policy reaction function? 3. What do you understand by the concept of disinflation? How does a policy of disinflation affect the economy in the short run, and in the medium or long run? P
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