1. Analysing economic data - is there any good news?

The following are economic data for New Zealand in 2016 and in 2017.

	2016	2017
Unemployment rate	4.6	4.7
Inflation rate	0.65	1.85
Economic growth rate	4.2	3.8

Source: Reserve Bank of New Zealand. 2021.https://www.stats.govt.nz/topics/economy

Consider the data for 2016 and 2017 shown in the table above. Use your knowledge of the short-run AD-AS model to graph the changes in output and inflation between 2016 and 2017. Should the Reserve Bank of New Zealand (RBNZ) consider lowering interest rate as its monetary-policy stance to address the economic problems shown in the table and graph? Explain your answer.

1. 1.

What are the tools by the use of which the Reserve Bank can conduct an expansionary monetary policy? Briefly explain your answer (with an appropriate reference wherever used).

(6 marks)

1. 2.

In the aftermath of the Global Financial Crisis, Don Brash (DB), a former governor of the Reserve Bank of New Zealand, suggested that they should only print money if the government simultaneously cut spending. Explain the likely impact of this policy suggestion and comment on the view on the state of the economy (i.e. whether he assumes NZ economy is at or below full employment).You should explain your answer with appropriate references and diagram, as learnt in lectures/workshops