Question 1 Total 5 marks
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.
Question 2 Total 5 marks
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 farmers
https://www.budget.gov.au/2018-19/content/jobs.html (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.
Question 3 Total 5 marks
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.
Question 4 Total 5 marks
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.