3) Consider the information below for Country G and answer the questions:

Country G		2025	2026
Consumption Spending		91.97	79.28
Fixed Investment spending		28.28	20.07
Government spending		31.35	35.25
Government investment		3.20	6.00
Export		20.39	21.30
Import		21.08	19.48
Depreciation expenditures		5.72	6.14
Saving		4.60	4.02
Transfer payments		65.00	72.00
Tax receipt		105.00	99.00

Q3 a)Calculate the GDP for the year 2025 and 2026. (3 mark)

Q3 b)Calculate the government budget for the year 2025 and 2026. (3 mark)

Q3 c)What are the key economic problems Country G faces in 2026? (4 marks) List and report on the Key Macroeconomic variables performance. If so, what type of discretionary fiscal policy would Country G undertake?

Q3. d)How does fiscal policy affect the components of aggregate demand? (5 marks) Refer to Q3 c):How could the policy affect the AD or SAS or LAS curve in the AD/AS Model.

[Answer and show workings here]

Q3 a)

GDP for 2025=

GDP for 2026 =

Q3 b)

Balanced Budget in 2025: Budget = [surplus or deficit] (Type the correct answer

)

Q3 c)

-The key economic problem for Country G is: =

-List & report on theKey economic variables' performance: List & report onKey economic variables:

-Types offiscal policy: [Expansionary or Contractionary] (Typethe correct answer )

Answer Q3 d)

-Components of ADaffected by fiscal policy?

[AD Components: ]

Refer to Q 3c): How could the policy affect the AD or SAS or LAS curve in the AD/AS Model.

AD curve: (shift left / remain unchanged / right) [Type the correct answer ]

SAS curve: (shift left / remain unchanged / right) [Type the correct answer ] LAS curve: (shift left / remain unchanged / right) [Type the correct answer ]

Question 4 (15 marks)

Question 4 a)What is the desirable level of GDP growth, inflation rate and unemployment rate for Australia? Furthermore, what is the actual level of the current GDP growth, inflation rate and unemployment rate.Fill in the blanks. (3 marks)

[Answer here]

	Desirable level	Current Actual level
GDP annual Growth rate (%)
Unemployment rate (%)
Inflation rate (%)

Question 4 b)What is the key economic problem Australia is currently facing and how does/did RBA response to it (i.e. what type of macroeconomic policy?). How does this policy affect the Aggregate Demand (AD) components and affect the AD, SAS and/or LAS curve in the AD/AS Model? (7 marks)

[Answer here]

Q 4 b)

Key economic problem is:

RBA policy response (what type of policy): [Monetary or Fiscal Policy; Expansionary or contractionary policy]. (Typethe correct answer )

Monetary policy affects the following AD components:

AD curve: (shift left / remain unchanged / right) [Type the correct answer ]

SAS curve: (shift left / remain unchanged / right) [Type the correct answer ]

LAS curve: (shift left / remain unchanged / right) [Type the correct answer ]

Question 4. c)How does each of the following transactions affect the Current Accountbalance orthe Capital and Financial Account balance and the Australian Dollar (AUD).

Q4c (i)Australian exports more iron ore to India. (1 mark or 0 mark) Q4c (ii)Australian importers purchase less computers from Malaysia. (1 mark or 0 mark) Q4c (iii)An UK fund manager purchases Australian buildings and farms. (1 mark or 0 mark) Q4c (iv)An Australian company purchases a software company in the US. (1 mark or 0 mark) Q4c (v)Australia donates $5 million to Fiji due to the recent disaster.(1 mark or 0 mark)

[Answer here]

Q4c i)

(Current Account or Capital Account); (AUD would appreciate or depreciate)[Typethe correct answer ]

Q4c ii)

(Current Account or Capital Account); (AUD would appreciate or depreciate) [Typethe correct answer ]

Q4c iii) (Current Account or Capital Account); (AUD would appreciate or depreciate) [Typethe correct answer ]

Q4c iv) (Current Account or Capital Account); (AUD would appreciate or depreciate) [Typethe correct answer ]

Q4c v) (Current Account or Capital Account); (AUD would appreciate or depreciate) [Typethe correct answer ]