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QUESTION ONE: Supply-side policies and price stability
COVID-19 is still affecting the New Zealand economy. ...
Explain how demand and supply changes caused by the COVID-19 pandemic have led to rising inflation. Refer to Graph One in your answer.
Rising inflation conflicts with the Government’s goal of price stability. ...
...
On Graph Two above, show the impact of resource management reform.
On Graph Three above, show the impact of research and development tax credits.
Explain how each of resource management reform and research and development tax credits would impact New Zealand’s aggregate demand and aggregate supply. Refer to the resource material, Graph Two, and Graph Three in your answer.
Compare and contrast the effectiveness of the resource management reform and the research and development tax credits in achieving price stability in the short term and the long term. Refer to the resource material, Graph Two, and Graph Three in your answer.
QUESTION TWO: International trade and economic growth
In October 2021, New Zealand and the United Kingdom agreed in principle ...
A free trade agreement with the United Kingdom could be positive for New Zealand’s economic growth and trade balance.
On Graph Four above, show how a free trade agreement with the United Kingdom could boost New Zealand’s GDP.
Explain how the free trade agreement will affect economic growth. Refer to Graph Four and the resource material in your answer.
The pandemic is in its third year, ...
Discuss the effectiveness of the free trade agreement with the United Kingdom in achieving a balanced current account when there is a global pandemic.
Explain why the current account deficit has increased because of the global pandemic. Refer to the resource material in your answer.
Explain whether a free trade agreement with the United Kingdom is likely to be less effective in achieving a balanced current account than it is in increasing economic growth. Refer to the resource material in your answer.
QUESTION THREE: Macro-economic influences and employment
The loss of international tourism ...
A decline in one sector can have multiplied effects on the economy leading to a much larger fall in real GDP than the initial decline.
Explain how a decline in tourism can lead to an overall decline in real GDP. Refer to Model One and the concept of the multiplier in your answer, and include a definition of the marginal propensity to consume and the marginal propensity to save.
Despite the continued loss of international tourists, ...
Explain how a rise in domestic spending will affect the marginal propensity to save and therefore the effect of the multiplier. Refer to Model One in your answer.
Despite the economic concerns, ...
Explain how a fall in international tourism could affect employment. Refer to Model One in your answer.
Business confidence ...
Explain why the continued slide in business confidence is likely to have a greater impact on employment than the decline in international tourism. Refer to Model One in your answer.