Short Answer Questions:
Question 1. Compute various indicators of the state of the labour market using the following information. Please show all of your working. If you do not, you will receive zero marks for the question(s).
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Demographic Group
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Number of Residents
|
|
Full-time workers
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7,000 |
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Part-time workers
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2,000 |
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Unemployed and looking for work
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600 |
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Unemployed and not looking for work due to discouragement over job prospects
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500 |
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Not working due to disability
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300 |
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Not working due to retirement
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900 |
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Under the age of 15
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3,000 |
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Total Population
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14,300 |
a) What is the size of the labour force in this economy?
b) Calculate the Labour Force Participation Rate for this economy. Report as a percentage to two decimal places.
c) Calculate the Unemployment Rate for this economy. Report as a percentage to two decimal places.
d) Suppose that the natural rate of unemployment is considered to be 5%. What is the rate of cyclical unemployment? Report as a percentage to two decimal places.
Question 2. Analyse the effects of the following events using the loanable fund market diagram where we have (real) interest rate on the vertical axis and the quantity of loanable fund on the horizontal axis. Please ensure to explain what happens to saving, investment and (real) interest rate.
a) Consumers decide to save more to prepare themselves for the future (at any given interest rate). Assume the government budget balance is zero.
b) A reduction of income tax rate by noting that the source of the supply of loanable funds coming from both private as well as public saving
Question 3. Watch the 10 minute video at www.gapminder.org/videos/what-stops-population-growth
Summarize the video in minimum of 5 sentences (Not in the bullet points, please!). What were the most interesting or surprising facts you learned?
Question 4. Over the next 100 years real GDP per capita in Neverland is expected to grow at an average annual rate of 2.0%. Gotham (yes, where Batman lives!) is expected to growth at an average annual rate of 1.5%. If both have a real GDP per capita today of $20,000, compare their real GDP per-capita in 100 years. Please show all of your working. If you do not, you will receive zero marks for the question(s).
Question 5. The level of government debt is a growing concern for the current Australian Treasurer who has the responsibility of managing the government budget. Summarise the key arguments on the debate around Australian government debt and deficit for the Turnbull government.
Your summary must address the following; what is the major concern of running government deficits, what is the economic reasoning to have a balanced budget and when might a budget deficit/surplus be ok? Conclude by briefly discussing what policies you would suggest to Scott Morrison implementsin order to balance the budget and why. The summary should be at least half a page in length(again,please do not write in the form of the bullet points).No need to list the reference, but please do not copy and paste from whatever you found on the web. We can easily detect this in our system!
b) A reduction of income tax rate by noting that the source of the supply of loanable funds coming from both private as well as public saving