Student Number: (enter on the line below) Student Name: (enter on the line below) HC1072 Economics and International Trade final assessmeNt Trimester 3, 2021 Assessment Weight: 50 total marks...

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Student Number: (enter on the line below)










Student Name: (enter on the line below)








HC1072
Economics and International Trade
final assessmeNt


Trimester 3, 2021








Assessment Weight:
50 total marks






Instructions:


·
All questions
must be answered by using the answer boxes provided in this paper.


·
Completed answers must be submitted to Blackboard by the published due date and time.





Please ensure you follow the submission instructions at the end of this paper.






Purpose:

This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.



















Question 1 (8 marks)


Define, discuss and provide examples for each of the following:


a) Substitutes and complements.
(2 marks)



ANSWER a): ** Answer b
ox will enlarge as you type








b) Inferior and normal goods.
(2 marks)



ANSWER b):








c) Microeconomics and macroeconomics.
(2 marks)



ANSWER c):








d) Elastic and Inelastic Demand.
(2 marks)



ANSWER:















Question 2 (10 marks)


“A key role of central banks is to conduct monetary policy to achieve price stability (low and stable inflation) and to help manage economic fluctuations.”


a) Discuss this statement by defining monetary policy.
(3 marks)



ANSWER a):








b) Identify the tools used to implement monetary policy.
(3 marks)



ANSWER b):








c) State and explain at least 2 limitations when the central bank implements monetary policy.
(4 marks)



ANSWER c):

















Question 3 (7 marks)


The table below shows economic information for a hypothetical economy with a flexible


exchange rate.














































2017



2018



CPI



100



115



Labour force (’000)



11000



11360



Full-time employed (’000)



7250



7920



Part-time employed (’000)



3200



3400



Net foreign debt ($ billion)



900



1000



Net foreign liabilities ($ billion)



1050



1053





a) With reference to the table, calculate the unemployment rate in 2017 and 2018. Show all working.
(1.5 marks x 2 = 3 marks)



ANSWER a):








b) Explain 2 types of unemployment that we discussed in class.
(2 x 2 marks = 4 marks)



ANSWER b):

















Question 4 (7 marks)


A CNBC new story published 14 December 2021 reports, “OPEC and non-OPEC oil producers, an influential group known as OPEC+, decided on Thursday to stick to a previously agreed upon plan of hiking output by 400,000 barrels per day in January 2022.


However the alliance said in a statement that “the meeting remains in session,” meaning they can “make immediate adjustments” should the current market conditions shift.


In what was a hotly anticipated meeting, the energy alliance convened via videoconference to determine whether to stick with its plan to release more oil into the market or to restrain supply amidfears over the omicron Covid-19 variant. Other issues on the table included aU.S.-led release of strategic reservesfrom crude-importing nations andIran’s possible re-entry into oil markets.”


a) Identify the market structure where OPEC operates.
(2 marks)



ANSWER a):









b) Discuss extensively 2 features of that market structure.
(2.5 x 2 = 5 marks)



ANSWER b):













Question 5 (11 marks)


Using the data in the table below, to complete the tasks for this question.



















































Data for 2019 (Base Year)



Data for 2020






Quantity



Price



Quantity



Price



Potato



600



2.50



680



3.00



Rice



840



2.00



800



2.80



Computers



500



850



450



950



Cars



300



15,000



200



18,000







a) Calculate Nominal GDP for 2019 and 2020.
(2 marks)
Show your workings.



ANSWER a):








b) Calculate Real GDP for 2019 and 2020.
(2 marks)
Show your workings.



ANSWER b):








c) Calculate the GDP Deflator.
(2 marks)
Show your workings.



ANSWER c):








d) Identify 2 possible exclusions to GDP and discuss why they have to be excluded.


(2.5 x 2 = 5 marks)



ANSWER:










Question 6 (7 marks)


a) Discuss the role of foreign exchange in international trade.
(3 marks)



ANSWER a):









b) “Foreign exchange is determined based on demand and supply for a specific currency.” Explain and discuss this statement based on the economic principles learned in class.


(4 marks)



ANSWER b):















END OF FINAL ASSESSMENT






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EMV22500 HC1072


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.


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Answered Same DayFeb 23, 2022

Answer To: Student Number: (enter on the line below) Student Name: (enter on the line below) HC1072 Economics...

Sandeep answered on Feb 24 2022
101 Votes
FINAL ASSESSMENT

Student Number: (enter on the line below)
Student Name: (enter on the line below)

HC1072
Economics and International Trade
final assessmeNt
Trimester 3, 2021
Assessment Weight:     50 total marks
Instructions:
· All questions must be answered by using the answer boxes provided in this paper.
· Completed answers must be submitted to Blackboard by the published due date and time.
Please ensure you follow the submission instructions at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.
            
        
HC1072 Final As
sessment T3 2021
Question 1        (8 marks)
Define, discuss and provide examples for each of the following:
a) Substitutes and complements. (2 marks)
ANSWER a): ** Answer box will enlarge as you type
Substitutes –
In simple words subsituttes goods are defined as those goods which can be used in place of another product which has exactly perfectly similar charactersticks if the price, availability or quantity of preferred product changes unfavourably . A substitute product may be perfect or imperfect in nature . While a perfect substitute is just identical or strinkingly resembles in properties to preferred one .But imperfect substitute is one which looks similar but noticeably different from original . Eg of perfect subsitutue are Tea and Coffee, Physical books and Ebooks, sandal and flip flops, HD TV and Ultra HD TV .Hence demand for goods is directly affected by the availability and change in the price of Substitute goods.Implying increase in price of Coffee will lead to increase in demand for substitute good as Tea become comparatively cheaper.
Complement Goods –
These goods are so defined because of their nature of joint demand. Complimentary goods are defined as those goods which are used together in combination to satisfy the demand or specific want. However if they are consumed in exclusion to one another they will not provide same degree of satisafaction or have no value at all. Two goods are termed complement of one another if the consumption of item X will lead to increase consumption of item Y involuntarily (everything else remaining same). For Eg , Tea and Sugar, DVD player and DVD disc, Petrol and Car, Coca Cola and Cheeseburger, Colour Printer and InkCartridges. We see that if the demand for Colour printer is complimented by demand for ink cartridge meaning they complement one another and have direct relationship. So if price of Colour printer falls leading to increase sale/demand for printer , it will automatically lead to increase demand/consumption of complimentary good(i.e ink cartridges) whether cartridge price have changed also.Similarly when price of sugar (complimentary good) increases, then demand for given commodity (tea) will fall as it becomes relatively costly to consume.
b) Inferior and normal goods. (2 marks)
ANSWER b):
Inferior goods-
These are those good or commodities whose consumption or demand declines when the consumer income increases or the price of such commodity declines, such that consumer begins consuming more costly subsitutes instead (other things remaining constant) and vice-versa. In other words consumer demand less of these goods when their income level rises. So Inferior goods indicate negative or inverse relationship between ioncome and demand. The reason behind being socio-economic status changing .Such goods generally are essential of life like bread, cereal, butter, macaroni , noodles .Giffen good are also kind of inferior goods which don’t have ready substitute. However demand for giffin goods will not change much even when their price rise .For eg: Bread, rice, salt, medicine and potato.
Normal goods –
These are those commodities whose consumption or demand increases when the consumer income level increase (i.e wage level increases and other things remaining constant)and vice-versa. So there is perfectly elastic relationship between inciome and demand for such good.Some eg: TV, Branded clothes, Household appliances and expense house etc.Income effect is observed to be positive for such goods.
c) Microeconomics and macroeconomics. (2 marks)
ANSWER c):
Microeconomics-
It is defined as that branch of economics which deals with the evaluation of behaviour and resultant economic actions of small and individual units of the economy. Micro word is defined to mean Branch, firm, company level, laws framed for different states of nation individually, small group of separate unit etc.It’s basically involves the study of determination of price in market.Hence referred to as “Price Theory” .Microeconomics study assumes all other factors or macro variable as constant.It focuses on determining the commodity pricing and pricing of factor4 of production.It is concerned with the structure of aggregates and working of individual components.It’s components include “Theory of Consumer behaviour”, “Price Theory”.
Macroeconomics –
It is defined as branch of economics theory which evaluates the behaviour of aggregates of the economy as a whole at national level . It deals with the national economy as whole like National income, aggregate consumption, inflation, unemployment, poverty etc. Its concerned with exploring of aggregate output and general price level at macro level to determine inflation and GDP . M,acroeconomics assumes that all micro variales remain constant. It’s components are “Theory related to Equlibrium”, Theory related to Inflationary and deflationary gap in economy”, “Monetary policy, Fiscal policy and Exchange rate policy”.
d) Elastic and Inelastic Demand. (2 marks)
ANSWER:
Elastic demand –
Elasticity of demand is concept which indicate the % age change in the demand for certain goods with respect to % age in any of the factos or criteria affecting demand for that product. This law of demand indicates direction of change in demand , elasticity reflect the magnitude/degree of change in demand due to change in other economic factors affecting demand. It measure the degree to which the demand reacts to the change in other variables which affect demand (i.e price, income level or availability of substitute and complimentary goods etc). It’s components are Price Elasticity of demand, Income elasticity of Demand and Cross elasticity of demand. Some eg :Luxury goods, food and beverage items. It is represented as
Elasticity of Demand = % age in Demand for product A
% age in a factor affecting the demand for Product B            
Inelastic demand-
It’s defined as situation in which % age change in the quantity demanded doesn not change much or change at all with respect to any changes in the price. For eg:...
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