Effective Application of Appropriate Macroeconomic Theory Economics Assignment Help

Assignment Task

Goal:
To apply knowledge of economic theory and concepts to economic problems demonstrating ability to structure sound economic reasoning.
Format:
This assessment task will be made up of short answer questions and may cover all parts of the course.
Further details are provided in the assessment area on Blackboard
Criteria:

• Effective application of appropriate macroeconomic theory
• Correctness of analysis and accuracy of solutions.

Instructions
Remember to correctly cite and reference any sources that you use although researched answers are not required and it is preferable to write from your understanding of the course material as you would have to do in a traditional exam. Upload your response as a single PDF file.You may use the draft submission area to check your work for plagiarism but please remember to upload the final version in the correct place.A very poor country would have a relatively low amount of capital per worker compared to a very rich country.The Solow model predicts that both a poor country and a rich country will in the long run converge to the same growth rate of per capita income. Use the Solow model to explain why this is so.  Discuss some factors which might prevent the prediction in (a) happenin.(a) Show that the value of the multiplier XE “multiplier” in the three-sector version of the Keynesian model XE “Keynesian model” as set out in the following equations is: 11-c+ct.  AE = C + I + G (income accounting identity) C = C*+ c(Y-tY) (behavioural relation XE “behavioural relation” for consumption XE “consumption” ) where c is the marginal propensity to consume XE “marginal propensity to consume” and t is the tax rate I =I* (behavioural relation XE “behavioural relation” for investment XE “investment” ) G = G* (behavioural relation XE “behavioural relation” for government purchases) In equilibrium, Y= AE(b) Using the IS-LM model XE “IS-LM model” , trace through what happens to the interest rate and output if the following policy changes are made: monetary policy XE “monetary policy” is tightened and the government expands its spending. (a) Suppose that an economy is operating with 25% inflation XE “inflation” and 3% unemployment XE “unemployment” (which we will assume is consistent with full-employment output) and that the monetary authorities decide to act to get inflation under control. Outline what will happen if we assume an expectations XE “expectations” -augmented Phillips XE “Phillips” curve XE “Phillips curve” in unemployment XE “unemployment” -inflation XE “inflation” space.