Font size
WorksheetsCircular Flow Report Draft 1 Feedback
Total questions: 11
Worksheet time: 7mins
The Reserve Bank has now gone a full six years longer than the previous longest stretch it went without raising rates.
If using this idea from Greg Jericho's 2021 article "The RBA has not raised interest rates for 130 months – and history suggests low rates are here to stay" as part of your introduction...
It does not require an in-text reference
It will require an in-text reference e.g. (Jericho, 2021).
Identify the THREE injections in the Circular Flow Model (CFM).
Savings
Investment
Government Spending
Export Receipts
All of the following are leakages or withdrawals from the CFM, except for?
Savings
Import payments
Government Spending
Taxation
Select the money flows from the CFM that make up the formula for Aggregate Demand (AD).
C
S
I
G
X-M
Identify THREE causes of an increase in AD.
Increase in C
Increase in G
Decrease in X
Decrease in M
Definition 1: total value of all goods and services produced in an economy in a year
Definition 2: total expenditure on the goods and services produced in an economy in a given period of time.
1: Gross Domestic Product & 2. Aggregate Supply
1: Gross Domestic Product & 2. Aggregate Demand
1: Circular Flow Model & 2. Aggregate Demand
1: Circular Flow Model & 2. Gross Domestic Product
Identify the impact on the economy if there is an increase in AD.
Real GDP increases
Real GDP decreases
Identify the cause of the increase in AD shown.
Increase in C
Increase in S
Increase in M
Increase in T
The cash rate set by the RBA affects interest rates in the economy. Identify THREE impacts of a decrease in the cash rate.
Lower interest rates makes savings less attractive
Lower interest rates makes borrowing cheaper both households and businesses
Overall households will spend less and save more
Overall businesses will be more willing to invest in order to expand their operations
Identify the correct statement regarding a decrease in the RBA cash rate.
Aims to increase AD and therefore increase GDP
Aims to decrease AD and therefore decrease GDP.
Given the economic indicators shown is the RBA in a position to increase the cash rate in order to lower inflation back to the 2-3% target?
Yes the economy has recovered sufficiently from the pandemic and the cash rate should increase above 0.1%
No the economy still requires further recovery from the pandemic and the cash rate should stay at 0.1%
