Assignment

QUESTION 1

1. Using the concept of game theory, explain how firms make decisions when they behave collusively and non-collusively. Your explanation must be supported by a game theory matrix.

2. In your everyday life, you make strategic decisions. Using the game theory concept, explain one of these decisions.

QUESTION 2

1. In the economy, when decisions are made, one of the key variable that is considered is the anticipated rate of inflation. Explain, using the concepts of real and nominal income and interest rate how unanticipated inflation will impact on the labour and financial market.

2. Reflect on an occasion where you or someone you know has been affected by unanticipated inflation.

QUESTION 3

1. A friend tells you that the GDP of China is seven times the GDP of Australia. Does this mean that China's economic welfare is better than Australia? Explain. (Hint: Answer this questions by addressing the problems associated with the GDP measure).

2. In a conversation, someone mentioned that "Australia's economic grew because the market value of total production in 2016 was 1.1 trillion and in 2017 it was 1.35 trillion". Upon checking you found that in these two years Australia's GDP price deflator increased from 104.1 to 104.6. Explain if the statement is factually accurate.

3. All Australian are affected by changes in economic growth. Since 2017, Australia has enjoyed 26 years of uninterrupted economic growth. How has this impacted you or the Australian society in a positive and negative manner? Provide an example of each.