general economics
This curve slopes downwards
Demand
What does the I component of AD stand for
Investment
Increase in income for Kiwis
Increase in AD
(causes increase in Consumption)
Consumption is a component of AD
How would an increase in the price of paper impact the Aggregate Supply curve
It would likely not. Paper is not a key enough component that it's change in price would impact the costs of production across the entire nz economy
Why might "National Output" or "Employment" be occasionally used interchangeably with Real GDP
Because an increase in one of these results in an increase in the others
This curve slopes upwards
Supply
What are the labels on the AD/AS axes?
Price Level on Y
Real GDP on X axis
Increase in productivity in New Zealand
Increase in AS
How would country wide power outages that lasted all year impact the AS curve
Decrease AS
What is the impact of an increase in the interest rate on both AD and AS
AD decreases because fall in C I X
AS increases because of fall in imported materials cost
The point that supply and demand intersect
equilibrium
Why would it be useful to create a hypothetical AD/AS model for before and after a big government project?
AD/AS model can show the changes in the economy and can be read to show the expected changes to price level and real GDP
Increase in investment in NZ
AD increases
perhaps AS increases in long run if the investments increase productivity
How would an Australian economic disaster likely impact the NZ economy
AD=C+I+G+(X-M)
X would decrease
AD decreases
How would an increase in government spending impact the unemployment rate in nz
AD increase
real gdp increase
employment increase
Unemployment rate decreases
What is Gross Domestic Product?
The final value of all goods and services produced in a country in a year.
(in a simplified idea it can be seen as equal to expenditure and income)
Is tourism and export or import?
Export.
When Americans buy tourism from nz it falls into the X category
Firms across new Zealand have a decrease in their costs of production
AS increases
(Supply increases when costs decrease)
How would NZ cutting off the rest of the world from trade impact the AD
If Net exports is positive it would decrease AD
If Net exports is negative it would increase AD
The government decides to build a massive train network that would connect the entire country perfectly.
Increase in AD because of G^
Increase in AS because of productivity and low transport costs
What is minimum wage
The smallest amount you can pay a worker on a per hour basis to provide labour
If a trend causes nz exports to increase at the same time that an increase in imports, what will be the change in AD.
Impossible to know without knowing the magnitude of either change.
If exports triple and imports only increase by 0.1% then AD increases for example.
would an increase in minimum wage impact the AS curve
Yes.
An increase in Min wage would likely decrease the AS curve because costs have increased. Not many workers in the economy relatively are receiving min wage so likely not a massive shift.
Firms become more confident than ever about the success of 2024
AD increases
(I increases)
So in theory confidence about economic growth actually causes economic growth... woah
How might a government decision to set the minimum wage to 50$ per hour impact employment in NZ
This will increase the costs firms incur
this will shift the AS curve left
Causing Real GDP to fall
Causing Employment to fall
(potential to argue that there will be offsetting increase in consumption, but both are increasing in PL)