Graded Homework 20 marks Y12 - Economics Name: 1. Decide whether the following statements are true or false and explain why. (6 marks) a) A deflationary fiscal policy measure is designed to reduce aggregate supply Inspired by perfection b) A recession will cause a structural budget deficit. c) Supply-side policy measures never seek to reduce aggregate supply, 2. Using the information in Table 2, answer the following questions: (4 marks) 1 The budget position for each country. 2 Which countries had a budget surplus. 3 a Which country had the largest absolute budget deficit. b Which country had the largest budget deficit as a percentage of its real GDP. Country Tax revenue (US$bn) Government expenditure (USSbn) Real GDP (USSon) (PPP) Argentina 130.1 145.5 E Botswana 50 495 China 2.070.0 2.510.8 13,370 Egypt 45.68 80 50 350 PER Nigeria 23.8 31 51 480 Pakistan 29.7 48 02 574 Saudi Arabia 302 6 2602 Table 2 Tax revenue, government expenditure and GDP for selected countries 3. Draw the aggregate demand and supply diagrams to illustrate following changes, state the macroeconomic policy name and whether it is contractionary or expansionary: (10 marks) a. Increase in exchange rate b. Decrease in size of labor force