Macroeconomics

QUESTION 1 REFERS TO TABLE 1. Table 1: Changes In the Repo Rate and Reserve Requirement Ratio after Could-19 cases In Trinidad and Tobago Policy Instruments Rate before COVlD-19 Rate after COVlD-19 m Using the data from Table 1 above assess the effect of the change in the repo rate and Ill. iv. reserve requirement ratio on the money supply. (6 marks) Using the monetary transmission mechanismI graphically illustrate and explain the impacts of such polices on aggregate demand. (7 marks) Discuss two problems associated with the policy changes identied in Table 1. (6 marks) Discuss the feasibility of two scal policies tools that the government can use to bring about similar changes to aggregate demand. (6 marks) QUESTION 2 REFERS TO TABLE 2 Table 2- Selected Economic Indicators for Trinidad and Tobago Indicators 2017 2018 2019 Revenue ($BN) 36. 18 43.17 46.56 Expenditure ($BN) 49.71 48.87 50.5 Oil Production (bbl/d) 72, 190 66,980 58,470 Oil Prices (US$/bb!) 50.84 64.90 57.05 i. Using the data from Table 2, calculate T&T's budget balance for each of the three years (2017, 2018, 2019) and identify whether the values were a budget surplus or deficit. (6 marks) ii. Using the responses from (i) above, list and explain two fiscal policies that the government can implement to rectify the budget balance. (6 marks) Page 2 of 3 iii. In the past T&T had a comparative advantage in the production of oil. Explain what is meant by comparative advantage. (4 marks) iv . T&T is a price-taker in the oil industry. What does this mean for the country and briefly discuss the trend in T&T's oil production and oil prices between the period = 2018-2019 (Table 2). (4 marks) V. Trinidad and Tobago is a small open economy. Given the decline of the oil sector, evaluate, with the use of examples, two polices that the government can implement to protect any new and emerging industries. (4 marks)