Short Answers for Macroeconomic questions

Note:

– Answer all four (4) questions. Maximum of 500 words for each question. Use diagrams where appropriate to enhance and explain your response. Provide supporting evidence and references where appropriate to justify your arguments.

– References using APA 6th.

– Applies correct economic principles; analysis is substantiated with workings, and calculations in order to arrive at the right answer. There are negligible errors/no errors in calculations.

– Diagrams created by students are correctly and precisely labelled, relevant to the specific question, and used appropriately to demonstrate their high level understanding of all key economic concepts and principles.

– Principles of economics are applied in the appropriate manner to arrive at the correct answer. Written work shows analysis in order to interpret and make highly complex recommendations relating to economic principles covered in.

this subject.

1.Using data from the Australian Bureau of Statistics (ABS) http://www.abs.gov.au/ collect information on Australian household consumption expenditure and household disposable income over the period 2000 to 2017 inclusive. Employ annual figures. Be explicit and define and provide sources for the data obtained, cite the ABS catalogue and table numbers.

Plot the relation between consumption expenditure and disposable income to identify the household consumption function. Using annual changes determine the marginal propensity to consume (MPC) over this period. Explain what the MPC measures and reasons for its behaviour overtime.

Study Tips

The relevant data can be found in: Table 36, Household Income Account, ABS Australia System of National Accounts, Cat no. 5204.0. You will need to understand what MPC is and how it can be calculated by looking at changes between two time periods.

2. In the 2018-2019 Federal Budget, the Government seeks to pursue ‘stronger growth to create more jobs’. In part, the policies designed for improving economic growth consists of a focus on the following elements:

•  lower taxes to support growth
•  building a smart economy by investing in science and technology
•  delivering major transport infrastructure
•  a world health industry leader
•  securing access to export markets
•  backing our farmershttps://www.budget.gov.au/2018-19/content/jobs.htm… (accessed 18/09/18)Discuss and evaluate this government’s focus on how it wishes to promote growth in the context of the typical determinants of economic growth. That is, compare and contrast the standard economic determinants of economic growth with these articulated policies in the 2018-19 Federal Government Budget.Study TipsYou need to demonstrate what economic growth means and how it is measured. Also a discussion of what determines economic growth needs to be demonstrated and you can use the subject material for this. Then it is a matter of going through each of the six elements to discuss whether and how each of these individual these elements relate to the textbook determinants of economic growth.3. Define the concept of the underemployment rate and contrast it to the concept of the unemployment rate. Using data from the Australian Bureau of Statistics (ABS)http://www.abs.gov.au/ collect information on both underemployment and unemployment rates for the period 2000 to 2017 inclusive. Employ annual figures. Be explicit and define and provide sources for the data obtained, cite the ABS catalogue and table numbers.Plot the underemployment and unemployment rates over-time and provide an explanation of any time-series patterns.

Study Tips

You need to demonstrate an understanding of the two terms of unemployment and underemployment. For the ABS data you can source that from: Table 22, Underutilised Persons, ABS, Labour Force, Cat no. 6202.0.

4. Employ the aggregate demand and supply model for the Australian economy, to analyse the consequences for real GDP and the general price level of the following scenarios. Assume that the economy operates in the intermediate range of the aggregate supply curve. In your response clearly state your assumptions and illustrate your answers with diagrams.

(a) the price of electricity increases substantially,
(b) the United States imposes some tariffs on Australian exports to the United states, (c) the government reduces personal income tax rates,
(d) house prices fall substantially.

Study Tips

This question tests your understanding of the AD/AS model. In each case ask yourself does the scenario shift the AS or AD curve or both or neither. This requires you to understand what shifts the AD and AS curves and then apply these principles to the given situations. Don’t forget only apply the analysis to the upward sloping part of the AS curve.