TEXTBOOK:

Introductory Macroeconomics, 1st Edition

Joseph E. Stiglitz
online:https://ebookcentral-proquest-com.ezproxy.une.edu.au/lib/une/detail.action?docID=5051418USE EXCEL FOR GRAPHS
Q2) 3 DIAGRAMS general equilibrium modelpg 87-89 textbook
Q3) income-expenditure model pg 157-158,169-170 textbook
- Use AE model + demonstrate theoritical changes would suffice
- 2marks2 references per questonQ4) diagram ADI-IA model pg 192-193,189,248/-250
- pg163 mpc 1/(1-(1-t)MPC)
-increase in wealth
-a shift in ADI curve? or IA curve?
-rightward or leftward shift?
-upward or downward shift?


Econ102 ASSIGNEMENT Discuss the problem of using the unemployment rate as the sole indicator to infer the performance of the labour market. What other useful labour market indicators can be used to supplement your assessment of the health of the labour market? · In common parlance anybody which is not gainfully employed in any productive activity is called unemployed. However, it can be of two kinds: 1. Volunteer unemployed 2. Involuntary unemployed. Here we are concerned with the second category of unemployed persons. Hence, unemployment can be defined as a situation when persons able and willing to work are seeking jobs at the prevailing wage level but they are unable to get the same. Unemployment in developing economics like India is not the result of deficiency of effective demand in the Keynesian sense, but a consequence of shortage of capital equipment of other complementary resources. In India unemployment is structural in nature due to lack of productive capacity and resources. So, in this above manner the problem of using the unemployment rate as the sole indicator to infer the performance of the labour market are: The actual employment numbers speak directly to the strength of the labor market. If demand for labor is increasing, more workers will be working. A better economy should be employing more people, but when we look at changes in employment rather than changes in unemployment, we again see much less evidence of strength in the labor market Policy makers are desperately searching for the best methods of measuring the health and strength of the labor market because different data points from month to month is flashing confusing signals. One fact everyone should be able to agree on is that the official unemployment rate does not even attempt to measure the strength or health of the labor market 1. The official unemployment rate (technically between 1993-94 & 2004-05) simply the result of the 61stround of NSSO survey employment and unemployment are based on a sample size which is neither large nor small by standards of previous NSSO rounds. 2. The unemployment rate based on current daily status in 2004-05 for males was 8.0 % (up from 7.2% in 1993-94) in rural areas and at 7.5% (up from 7.3% in 1993-94) in urban areas. 3. The corresponding figure for females was 8.7% (up from 7.0% in 1993-94) in rural areas and 11.6% (up form 9.4% in 1993-94) in urban areas. · Useful indicators are: 1. Growth rate of total population and working-age population 2. Current age structure (visualized e.g. by a population pyramid) · Age-based dependency ratio: This ratio informs you about the number of people each working age person has to support. A high dependency ratio (many children and/or elderly in need for support by the working-age population) entails a low per capita income. The difference between the age-based dependency ratio and the actual dependency ratio (i.e. ratio between the non-labour force part of the population and the labour force) gives an indication of the scope for improving (here: reducing) the dependency ratio by increasing labour force participation. The Australian government promised to increase national infrastructure spending in the 2018 federal budget (for more information, go to https://www.budget.gov.au/2018-19/content/overview.html and click on Building Australia in the right panel). What is the likely long-run effect on the level of productivity in Australia?  Use the general equilibrium model to illustrate and explain the long-run effects of this national infrastructure plan on the labour, product and capital markets. For ease of exposition, assume that the Australian economy is at full employment and faces a downward-sloping labour demand curve, a vertical labour supply curve and a perfectly inelastic savings curve.  The focal point of this budget is expanded framework spending (as of now put at $24.5 billion over 10 years), diminishmentsin both individual and friends assess and the Baby Boomer bundle (meant to permit benefits matured occupants to finance their retirement in their own homes). Additionally, focus is on an expense to GDP proportion of 23.9% (liable to be activated by around 2021/22). The last is to a great extent political yet likely implies that without critical spending restriction (impossible in our view) future surpluses will be peripheral. Subsequently there is little to no space for the Budget to adjust to any financial downturn while holding the anticipated surplus ‐ and in reality little arge scale arrangement adaptability. On framework a not insignificant rundown of activities including: a half offer in a Western Sydney Airport rail connect,Melbourne airplane terminal rail, Monash Rail connection and completing the Melbourne ring street, Metronet in Perth, Queensland streets and Adelaide street and rail spending and a clog store to address problem areas. A lot of this is back finished and a few may not proceed (e.g. the Victorian Government has not focused on coordinating subsidizing of the $5 billion Melbourne to air terminal rail connect). On individual tax breaks, not surprisingly the cuts start humbly and are gone for the lower pay levels. At first this sees another assessment counterbalance at $530 (around $10 every week for bring down pay workers). Stage two ‐ in 2023/24 ‐ seesthe base two duty sections expanded to $41,000 (was $37,000) and $120,000 (was $87,000) and the old assessment counterbalance expanded by $200. Stage 3 ‐ in 2024/25‐ sees the best section expanded to $200,000 and the old 37% section abrogated. All things considered the 2018/19 measures are probably not going to add much to development. Anyway dropping the Medicare demand increment to finance NDIS is more considerable and should help utilization development from mid‐2019 (but that has as of now been prepared into our gauges). Subsequently we have not changed our utilization and GDP figures out to 2019/20. The Government keeps on attempting to pass the organization tax reductions for firms with more than $50 million turnoverfor every annum. Obviously whether this gets past is another matter ‐ with the governmental issues not looking ideal. Somewhere else the Government is spending substantially more on a crackdown on the dark economy (counting banning money exchanges above $10,000), air terminal security, the PBS and has expanded the prompt resource discount for independent ventures of under $20,000. The administration has presented its projection of an arrival to surplus in 2019/20 (extremely a level result given the vulnerabilities) and a little surplus in 2020/21. At this stage we remain to some degree incredulous about the projections ‐if nothing else there is obviously a "race cycle of guarantees" still to go. In the "Medium Term Economic Outlook" our see is that the Budget infers a further slightdebilitating of the current basic fixing in the following couple of years .Put contrastingly income keeps on being the fundamental driver of the Budget and the medium term surpluses depend on more strict consumption control than anything we have seen as of late. Augmentation of the moment resource discount conspire: A further year expansion until 30 June 2019 of the $20,000moment resource write‐off for organizations with collected yearlyturnover under $10 million. This permits little organizations to quickly deduct buys of under $20,000. A continuation of the 10‐year Enterprise Tax Plan: The 27.5% expense rate, which connected to organizations with turnover up to $10 million in the 2017‐18 Budget has been extended to cover organizations with a yearly turnover of up to $50 million. Further, the unincorporated independent venture charge markdown rate has been expanded from 5% to 8% (up to a top of $1,000). This rate will expand further to 16% by 2026‐27. Simultaneously, the turnover edge has additionally been raised from $2 million to $10 million. Handling the Black Economy: The Government will address fake invoicing, sham contracting and non‐ agreeable installment deductibility, and huge money installments. • Fraudulent Invoicing: The Government will extend Taxable Payments Reporting System (TPRS) to incorporate parts for example, security and examination administrations, street cargo and PC framework plan and related administrations. As of now the TPRS just applies to the building and development industry, and from July 2018 cleaning and messengers. • Sham Contracting and non‐compliantinstallments: Businesses will never again have the capacity to assert impose reasonings in the event that they have not withheld Pay As You Go (PAYG) despite thefact that PAYG necessities exist. • Economy wide money installment constrain: From 1 July 2019, the Government will present a point of confinement of $10,000 where money is utilized for products or administrations. • Tobacco extract avoidance: the Government expects extra income of $3.6 billion over the forward appraisals by combatting sneaking, distribution center spillage and household creation. Changes to R&D Tax Incentives: There are noteworthy changes to the R&D charge motivation (R&DTI). From 1 July 2018 the Government will present for organizations with a turnover of under $20 million, a refundable R&D balance premium of 13.5 rate focuses over the organization's duty rate, with the balance topped at $4 million for every annum.For organizations with turnover of more than $20 million, the legislature will present a R&D premium that ties the impose counterbalance to the power of R&D consumption. Less complex BAS and Business Registration: GST revealing has been streamlined for independent companies The administration has rearranged Business Activity Statements by decreasing the 20‐question prerequisite down to three inquiries. It's evaluated to spare independent companies a normal of $590 every year. Besides, $92.4 million will be given in 2018‐ 19 to subsidize the following phases of the Commonwealth advanced ID arrangement (GovPass). As a component of the financing, roughly 100,000 duty record number applications will be finished on the web. More Protection for Businesses: The Government will execute new measures to counter unlawful phoenixing ‐ i.e. where another organization is made to proceed with the matter of an organization that has been intentionally sold to abstain from paying its debts. For instance, organization executives will be kept from inappropriately antedating renunciations to dodge risk or arraignment and leaving when this would leave the organization without any chiefs. Extra security has been given to SMEs by broadening uncalled for contract term insurances. What's more, the new Australian Financial Complaints Authority will help give all the more independent companies access to brisk and shabbydebate determination forms. Up‐skilling Australians: $250 million (distributed in a year ago's Budget) to be given to the Skilling Australians Fund. The Government will likewise give $189.7million more than five years to help develop age specialists that are enlistedwith a JobActive supplier and $19.3 million more than three years to help specialists matured 45– 70 to change into new parts. Vitality Policies: The Budget has put aside $41.5 million to actualize its vitality approaches, including the National Vitality Guarantee and exceptional measures from the Finkel survey of vitality security. The accessibility of vitality information will encourage Australian purchasers and organizations search around and show signs of improvement bargain from their capacity provider. The budget envisions conceivable investment funds as much as $400 from a run of the mill family unit's capacity charge. Question 3 (625 words) The centrepiece of the 2018 federal budget is a personal tax cut for the low and middle income households (for more information, go to https://www.budget.gov.au/2018-19/content/overview.html and click on Overview in the