Jobs and Inflation

(c) Calculate the labour force. (2 marks) (d) Calculate the employment. (2 marks) In New South Wales in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in October 2015, the labour force was 3,803,200 and 200,500 people were unemployed. In November 2015, the labour force decreased by 300 and the number employed in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increased by 2,900. (e) Calculate the unemployment rate in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in November 2015. (2 marks) CPI and Inflation The Lucky Country reported the followin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing CPI data: June 2010 201.9 June 2011 207.2 June 2012 217.4 (f). Calculate the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inflation rates for the years ended June 2011 and June 2012. How did the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inflation rate change in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in 2012? (2 marks) (g). Why might these CPI numbers be biased? (2 marks) Question 2 – 20 marks Quantity Expansion (QE) of Money in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the European Union (EU) On March 9 2015, the European Union (EU) commenced quantity expansion of money, Euro (€). The European Central Bank (ECB) has in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increased the quantity of money by 60 billion euro every month in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the open market in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in an attempt to support the economy of EU countries. The large in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the quantity of money is expected to have significant impacts on a range of economic sectors in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the EU and global fin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inancial markets. (a) Analyse how the quantity expansion of euro money is likely to affect money supply, in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate, in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">investment and consumption, and economic growth in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the EU. Draw relevant graph(s) for your analysis. (5 marks) (b) Discuss how the quantity expansion of euro money would change the value of euro, exchange rate (depreciation or appreciation) again" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inst other currencies, and exports and imports in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the EU. How would this contribute to EU’s current account balance and would this improve the competitiveness of the EU economy in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the global market? (5 marks) The United States is likely to Raise Interest Rate soon The U.S. Federal Reserve chairman, Dr Janet Yellen, has signalled that the United States is likely to raise its in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate as US economic in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">indicators has improved. On the other side of the world, however, the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rates in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in many other countries in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">includin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing the EU and Australia are on hold at their lowest level ever. (c) Explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in, in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the short run, how and why an in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in US in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate is likely to change the flow of funds between the United States and Australia. (2 marks) (d) Usin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing a graph, explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in how an in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in US in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate is likely to affect loanable funds supply and in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in Australia. Also, analyse how the change in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in loanable funds supply and home loan in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate are likely to in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">influence housin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing demand, house prices, and household debt burden in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in Australia. (5 marks) (e) Discuss how and why an in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in US in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate is likely to affect the value of Australian dollar and exchange rate (depreciation or appreciation) again" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inst the US dollar. Also, discuss how the change in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in exchange rate is expected to in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">influence Australia’s exports, imports and the current account balance (improve or worsen). (3 marks) Question 3 – 20 marks Exchange Rate and Balance of Payments In October 2012, the exchange rate was 82 Japanese yen per US dollar. As a result of Abenomics in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in Japan sin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ince late 2012 and economic recovery in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the US, the exchange rate rose to 114 Japanese yen per US dollar in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in March 2016. (a) Draw a graph and explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in what would have happened to the quantity of US dollar supplied and the US exchange rate? What would have happened to the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the United States? Would people now plan to buy or sell US dollar in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the foreign exchange market? (4 marks) (b) What would have happened to the quantity of Japanese yen supplied? Would people now plan to buy or sell Japanese yen in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the foreign exchange market? (2 marks) In July 2015, Australian dollar is tradin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing at US$0.75 per Australian dollar and the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in Australia is currently 2 per cent a year. It is forecast that the US will in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase its in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate some time later this year. (c) If the in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">interest rate in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in the US in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increases to 3 per cent a year, how is it likely to affect the flow of funds between Australia and the United States and the exchange rate of US dollar again" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inst Australian dollar (depreciation or appreciation)? What is likely to happen to the current account balance of the United States? (6 marks) Balance of Payments The table gives some in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">information about the US in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">international transactions in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in a year. (d) Explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in and calculate the current account balance. (2 marks) (e) Explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in and calculate the capital account balance. (2 marks) (f) Did the US official reserves in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">increase or decrease? Explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in. (2 marks) (g) Was the US a net borrower or a net lender in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in this year? Explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in your answer. (2 marks) Question 4 – 15 marks (MICROECONOMICS): Part A: Answer the followin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing questions. Korea imports a large quantity of beef. With no beef trade, Korea’s equilibrium price for beef was $8 million per kilo tonne and equilibrium quantity was 375 kilo tonne. If Korea opens its beef market to trade with no tariff, domestic demand would be 625 kilo tonne and domestic supply would be 125 kilo tonne at the world price of $4 million per kilo tonne. However, Korea currently imposes 40 per cent tariff rate on all imported beef. With 40 per cent tariff, Korea’s domestic supply and domestic demand were 250 kilo tonne and 500 kilo tonne respectively in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in 2013. Assume that in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">intercept of supply curve is $2 million and demand curve is $15 million per kilo tonne. (a) Analyse the effects of 40 per cent tariff rate on the price of beef in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in Korea and Korea’s beef imports in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in comparison with no tariff case. Provide numeric details. (2 marks) (b) Draw a graph and clearly show how the areas of gain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ins and losses from the trade with 40 per cent tariff rate would change before and after the tariff with brief explanation. Then, calculate the actual value of change in" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in consumer surplus, producer surplus, tariff revenue and the amount of deadweight loss. Show your calculation. (8 marks) Part B: Answer the followin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">ing question. (c) ProPain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inters hires students at $250 a week to pain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">int houses. It leases equipment at $500 a week. The table sets out its total product schedule. Calculate and construct ProPain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inters’ cost schedules – that is, total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and margin" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inal cost (MC) per house pain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">inted. Briefly explain" rel="nofollow">in" rel="nofollow">in" rel="nofollow">in how you calculate each cost schedule and show your calculation. (5 marks)