Question 6

1. Your friend is very unhappy because his real wage has decreased unexpectedly. Explain, using the concepts of real income, and nominal income, anticipated and unanticipated inflation rate, how is this possible.2 Marks

1. Assume a newspaper article stated, "The rise in the consumer price index of 2.2 percent has increased the cost of living of an average Australian by 2.2 percent".Is this an accurate conclusion?Explain.2 Marks

Question 7

1. Explain the main reasons people demand money.1 Mark

1. Graph and explain money market equilibrium.1 Mark

1. Using appropriate terminologies and a flow chart, explain how contractionary monetary policy can affect an economy.2 Marks

Question 8

1. Explain how automatic stabilisers can automatically slow down the economy from overheating.2 Marks

1. Highlight two (2) discretionary measures the federal government introduced in the 2021 budget.Explain the intention of the measures.1 Mark