Question 3 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 according to the latest government's release. 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, SASand/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]. (Type the 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 Account balance or the Capital and Financial Account balance and the Australian Dollar (AUD).

Q4c (i) Australian imports more cars from Germany. (1 mark or 0 mark) Q4c (ii) Australian exports more wheats to China. (1 mark or 0 mark) Q4c (iii) An US farmer purchases an Australian farm. (1 mark or 0 mark) Q4c (iv) An Australian company purchases a gold mine in Brazil. (1 mark or 0 mark) Q4c (v) Australia donates $8 million to Cambodia due to the recent disaster. (1 mark or 0 mark)

[Answer here]

Q4c i)

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

Q4c ii)

(Current Account or Capital Account); (AUD would appreciate or depreciate) [Type the correct answer

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

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

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

Question 4) (15 Marks) Consider the information below for Country G and answer the questions:

Country G		2025	2026
Consumption Spending		91	79
Fixed Investment spending		28	20
Government spending		31	35
Government investment		3	6
Export		20	21
Import		21	19
Depreciation expenditures		5	6
Saving		4	4
Transfer payments		65	72
Tax receipt		105	99

Q4 a) Calculate the GDP for the year 2025 and 2026. (3 mark)

Q4 b) Calculate the government budget for the year 2025 and 2026. (3 mark)

Q4 c) What are the key economic problems Country G faces in 2026? (4 marks) List and report on the Key Macroeconomic variablesperformance. If so, what type of discretionary fiscal policy would Country Gundertake?

Q4 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 LAScurve in the AD/AS Model.

[Answer and show workings here]

Q4 a)

GDP for 2025 =

GDP for 2026 =

Q4 b)

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

Q4 c)

-The key economic problem for Country G is: =

-List & report on the Key economic variables' performance: List & report on Key economic variables:

-Types of fiscal policy: [Expansionary or Contractionary] (Type the correct answer )

Answer Q4 d)

-Which Components of AD affected 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 ]