Help with question (1 Viewer)

[christopher8827]

Can someone explain how to do this question?

http://db.tt/wawccH7u

 

[osak23]

k=1/0.2
k=5

the change in AD is 50 BN ( which is the increase in gov't spending of 50BN),
therefore 50 x 5 =250

so the change in income is +250

you add that on to the original income of 200
so 200+250 =450

 

[christopher8827]

Ok. Thanks for help...

Also, can you explain the 2010 HSC multiple choice question 16? Why is there two answers?

 

[saints123]

because in a recession you want lower interest rates thats why A is right but d as you would fix the rate lower in a boom due to adverse effects of high Australian dollar as shown today where import competing industries are suffering