this essay proves that activity with no market price does not count as part of GDP.Your assignment must be typed in a word document in .doc or .docx format – no pdf or .pages. Assignments submitted in any format other than word will not be marked.
Your assignment must be typed in a word document in .doc or .docx format – no pdf or .pages. Assignments submitted in any format other than word will not be marked.
· For calculation questions, you are required to display all workings.
· If you are drawing diagrams, then you must draw your diagrams by hand; then scan (or take a picture) and insert your drawings into your word document. Note, there is no need to draw diagrams for this assignment, but you can always choose to do so to further explain your answer. So it is not necessary to do so.
In preparing for this assignment I fully expect that you have gone through the lecture slides and listened to the lecture recordings, have gone through the workshop questions, done the practice questions and have read the extra notes provided as a MINIMUM REQUIREMENT.
Question 1 on Topic 3 (15 marks)
a. Briefly discuss why an activity with no market price does not count as part of GDP? Provide an example of such a situation (5 marks)
b. In the country of Symposia, we have the following information for the year 2019:
*Consumption stood at $1 billion dollars worth of goods and services, 10% of which were produced and initially sold in 2018.
*Labour wage income was $100 million.
*Businesses invested $200 million dollars in new capital (i.e. machinery) stock.
*Businesses also bought $150 million dollars worth of company stocks.
*Foreigners with working visas living in foreign-only households bought $100 million worth of locally made goods and services.
*The government of Symposia bought $200 million worth of new cars for members of parliament to use.
*Citizens of Symposia living overseas bought $100 million worth of Symposia goods.
(i) Calculate and explain how you obtained the figure (i.e. what did you count, and what did you exclude) for Symposia’s consumption in 2019 (2 marks)
(ii) Calculate and explain how you obtained the figure (i.e. what did you count, and what did you exclude) for Symposia’s investment in 2019 (2 marks)
c. Brazil’s real GDP in 2018 (using 2010 constant prices) was USD2,309,659.39 million as opposed to Brunei’s USD13,485.22 million. Brazil’s real GDP per person using purchasing power parity (2011 figures) in 2018 is USD14,283 as opposed to Brunei’s USD71,802 (figures from the World Development Index Database).
Which set of figures would give you a better measure of each country’s respective standard of living? Justify your answer. (4 marks)
Question 2 on Topic 4
a. An office building is value at $2 million in 2020, which is 30% greater than its value in 2010. Using prices in 2010 as the base year, know that prices in the economy have grown on average by 1.35 times between 2010 and 2020.
(i) If the value of the office building had risen at the same rate as average prices between 2010 and 2020, what would it be worth in 2020? Briefly explain your answer. (2 marks)
(ii) Without doing any calculations, but simply based on information in the question and your response in (i), would you be better off having bought this office building in 2010 or 2020? Briefly justify your answer.
b. Assume wage negotiations are did and agreed base on the CPI. Briefly explain what happens to employers and employees when the CPI is downwardly biase (i.e. the CPI is estimates to be lower than what it should be). (4 marks)
Question 3 on Topic 5 (15 marks)
a) Why is the number of unemployer lower than the number of people available to work? (4 marks)
b) The current unemployment rate is 7% and the number of people in the labour force is 250,000. Use this information to find the following.
(ii) If the working age population is 480,000, what is the labour force participation rate? (4 marks)
(iii) Anna, who lives in Adelaide is trained in car assembly and has 30 years worth of experience working in car manufacturing plants. Recently, however all car manufacturing ceased in Australia and Anna was made redundant. She has continued looking for work but remains unsuccessful, and she has taken on no new training or skills. What does Anna’s situation tell you about Australia’s output gap at present, and what does this indicate with respect to the relationship between the actual unemployment rate and the full-employment rate? (3 marks)