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Tutorial 4_2011_answers for students_

Tutorial 4_2011_answers for students_ - ECON1002...

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ECON1002 Introductory Macroeconomics, S1 2011 Tutorial Tasks 1 Reading Guide : Review Chapters 7 of BOF as preparation for this tutorial. You should also look over your lectures notes for Week 4. Key Concepts: Aggregate expenditure; the consumption function; short-run macroeconomic equilibrium; the 45-degree diagram; the multiplier, fiscal policy 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. Obtain or construct the data representing the (real) aggregate expenditures in Australia since 2000: one place to look is http://www.rba.gov.au/statistics/tables/index.html#output_labour . Plot the data with the date on the horizontal axis. What has been the recent trend in Australia’s aggregate expenditure? 2. What is the Keynesian view of consumption? Any limitations in his view? 3. What do you understand by the equilibrium in the Keynesian model? What is the role of the 45-degree line or diagram? 4. What do you understand by the output gap and the multiplier? 5. Define the planned aggregate expenditures and list its components. P ROBLEMS N OTE : S TUDENTS ARE REQUIRED TO SUBMIT WRITTEN ANSWERS TO P ROBLEM (S) MARKED WITH ASTERISKS (*) IN THEIR DESIGNATED TUTORIAL CLASSES .
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