Question 4 on Topics 6 & 8 (15 marks)

(a)Inflation in Symposia is currently below the target range of its central bank. What does this tell you regarding Symposia's likely output gap? Illustrate it using an AS-AD diagram, and briefly explain your diagram (5 marks)

(b)Your mother states that the RBA printing money will lead to inflation. Do you agree or disagree with her statement both in the current economic situation and in times when the economy is at potential GDP? Justify your answer. (5 marks)

(c)Is nominal GDP targeting a better tool for central banks to use in the highly recessionary COVID-19 period where inflation has essentially disappeared as a policy issue? Briefly explain your reasoning. (5 marks)

(d)The standard of living in Nigeria is higher than the standard of living in New Zealand as the size of Nigeria's nominal GDP (using current USD) in 2019 was estimated at $0.448 trillion as opposed to New Zealand's $0.206 trillion in the same period (figures from the World Development Index Database). Do you agree or disagree with this statement? Explain your answer and provide real world evidence to justify your answer. (4 marks)