Assignment
1. Currently it costs NZD5.00 to produce a kilogram of milk solids in New Zealand and AUD4.50 in Australia
a. the exchange rate is currently 0.92 (0.92AUD purchases 1NZD). what will be the direction of trade in milk powder (i.e. which country will export milk powder and which country will import milk powder)?
b,suppose that the NZD depreciates to 0.5. will this depreciation of the NZD have any impact on the direction of trade?
c. how could you answer to (b) change if the depreciation of the NZD coincided with a 40% increase in the price level in New Zealand?
2. Assume that, in the population, 95 million people worded for pay last week, 5 million people did not word for pay but had been seeking a job, 5 million people did not work for pay and had not been seeking a job for the past several months, and 45 million were under age 16. the unemplyment rate, given these numbers is?
3. If the nominal interest rate on a savings account is 2% and the inflation rate is 3%, the real interest rate is?
4. The world trade organisation (WTO) is founded on the principles of national treatment and non-discrimination. explain briefly what is meant by national treatment and non-discrimination suppose that New Zealand wishes to sign a trade agreement with Chile. the result of the agreement would be that New Zealand would import 100 apples a year from Chile, and that these would take theplace of 100 apples that are currently being imported from Australia. New Zealan, Chile and Australia are all WTO members. how would you expect the WTO to respond to this agreement? would it make a difference if New Zealand was expected to import 150 apples a year form Chile?
5. An economy is currently in a recessionary gap. draw a diagram showing the economy in a recessionary gap. what these fiscal policies could the government use to restore full, long-run employment? in each case name the strategy and explain how it would help to restore full employment. theoretically, which stategy is the most effective? what monetary strategies could the central bank use to restore full, long-run employment?
6. Use either the AD/AS model or the liquidity preference theory to explain why money is neutral in the long-run? your explaination should include appropriate diagrams.
7. Suggest two regulations that the Reserve Bank of New Zealand could introduce to reduce the risk of asset price bubbles in the future.
8. Write a note on the prospects for economic growth in New Zealand for the next twenty years. be sure to highlight the main policy choices that the government faces in encourging higher rates of growth, including any trade-offs.
9. Explain the role of the Reserve Bank as a lender of last resort. under what circumstances will the Reserve Bank not land to a bank (e.e. when does the lender of last resort mandate not apply)?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.