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Diagrams are expected in Q 1 and Q 2.For the other questions except Question1and 2 reasonable lengths to the answer are expected and references should be cited.

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1. Consider the Australianeconomy is initially at equilibrium. Using an aggregate demand and aggregate supply diagram model of the economy, graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy:

(a) The imposition of a carbon tax upon local big polluting companies.

(b) An appreciation in the foreign exchange rate value of the Australian dollar.

(c)The Chinese economy falls into recession

(d)The country’s main exports fall in price while the goods the country imports from abroad rise in price.(4 marks)

2. Australia’s interest rates are at an all time low. What are the driving forces behind this trend? (4 marks).

3. Using the Australian Bureau of Statistics website and perhaps the Reserve Bank of Australia website answer the following questions: What are the current levels of the following economic indicators in the Australian economy? (Remember these should be expressed in annual terms):

Unemployment rate

Economic growth rate

Debt/GDP

The size of the current account deficit/GDP

The cash rate

The Australian dollar exchange rate

The current budget deficit figure/GDP

The inflation rate

(4 marks)

4. What is the difference between a cyclical deficit and a structural deficit Does Australia currently has a structural budget deficit problem? How did this problem arise?How can this problem be addressed? (4 marks)

5. Australia has had no recession in nearly 25 years. What are the major economic issues confronting the Australian economy?(4 marks)

Word limit: 1100.

Deadline: 23/09/2016.

Reference Style: APA.

Attachments:

731355.docx