mc stuuff (1 Viewer)

[ExtremelyBoredUser]

theres no answers so just wanna double check my answers lol

 

[Flise]

For Q19) I believe Banks have less of an incentive to leave money in their ESAs based on a similar variation to the question in 2014



The answer to this question was A (expansionary monetary -> incentivises, hence contractionary should do the opposite)
In terms of the theory, I have no clue unfortunately.

For Q20 I think its b. It could also be d but depending on what 'unemployment expenditure' refers to. If it refers to welfare payments that's just fiscal policy but if it was training programs to assist the unemployed then that's labour/micro.

 

[fuzi]

19) A - Think of the policy interest rate corridor diagram as the cash rate increases from C1 to C2. An increase in the target will lower ES supply as banks are less incentivised to keep their money in ES accounts.
20) B - Discretionary reform policies are changes made deliberately by the Aus government to the structural components of the economy. A would not be considered expansionary and C is a red herring (in general terms, decreased competition means higher prices in the domestic market and therefore less AD, which is contractionary). Not D as it is cyclical and non-discretionary.View attachment 36064

I think your answer to 19 might be correct but I'm not sure about your reasoning as you refer to an increase in the cash rate target whereas the question is asking about a widening of the corridor itself? So it's not that there is an increase in the cash rate per se or the cash rate target but rather a lower deposit rate the disincentives larger ES balances as opposed to a change in the quantity of cash in the overnight money market.

Thoughts?