ECON1000 FO S2 2015, Quiz 2 – Short Answer

ECON1000 FO S2 2015, Quiz 2Page 1 of 1ECON1000 FO S2 2015, Quiz 2 – Short AnswerOpens/Available on Bb: Monday, October 26th, 9:00pm. So, dearest onlinestudent, you have four (4) full days to complete the ‘take home’ Quiz 2 (worth5%). This quiz should be useful for your final examination preparation.STRICT DUE DATE – upload to Bb: Friday, October 30th, 11:55pm(end of week 11)INSTRUCTIONS:? Answer both quiz activities on your own – 5 marks for each question are indicated. Totalmark is converted to an appropriate percentage value, rounded to the nearest half?mark.? For question 1a, the AD/AS diagram can be hand drawn (if preferred) and then scanned intoan editable text, Word Document.? Please include your Full Name and Student ID as a title in the Word Documentand for the file name when submitting your work.? Upload to Turnitin by the due date – link available under the Assessments tab in Bb.QUIZ ACTIVITY 1a: application of monetary policy in the basic AD/AS modelYou are the Treasurer of the Australian economy and are reviewing thefollowing economic data in 2016-2017: Real GDP growth rate per capita: 0.5% Unemployment rate: 7.0% Inflation rate: 1.0%Determine what phase of the business cycle the Australian economy is likely to beexperiencing. Provide specific reasons for your answer. Use the AD/AS model to showthe position of this economy. Explain whether the Australian government should useexpansionary or contractionary monetary policy to move the economy back to the longrun, full-employment GDP equilibrium. [write total answer in 280 words or less] [5 marks]QUIZ ACTIVITY 1b: effectiveness of monetary policy in stimulating aggregate demand (AD)Is the relationship between interest rates and the components of AD (C, I, G, X – M)known with any accuracy? How effective are interest rate reductions during severerecessions? [write total answer in 380 words or less] [5 marks]