Question

a) The business cycle model shows short-term fluctuations in the level of economic activity along a...

a) The business cycle model shows short-term fluctuations in the level of economic activity along a long-term trend. Examine the two business cycle phases that can occur in a nation. ANSWER: b) Suppose the Following information was published by Happy land Republic in 2017: Item Amount (AUD billion) Household consumption 1029.81 Government consumption 340.92 Exports 386.39 Gross private domestic investment 352.69 Imports 386.95 Government investment 88.19 Use the information to calculate Happy land Republic’s GDP in 2017.

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Answer #1

a) Business cycle phase that can occur in an economy is:

Peak: It occurs when economy is performing at its best, unemployment is at its lowest, GDP is rising.

Trough: It occurs when economy is at its lowest, unemployment at its peak and there is negligible GDP growth.

b) Aggregate demand = Consumption + Government Consumption + Government Investment + Private Investment + Exports - Imports

Aggregate demand = 1,029.81 + 340.92 + 88.19 + 352.69 + 386.39 + 386.95 = 2,584.95

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