Exam 5 2018, questions PDF

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BSB113 sample end of semester exam paper

BSB113

SAMPLE END OF SEMESTER EXAM PAPER ABOUT THIS SAMPLE PAPER

SELECTED QUESTIONS FOR THIS SAMPLE PAPER HAVE BEEN TAKEN OR ADAPTED FROM THE BSB113 CONNECTING SERIES, TUTORIAL SHEETS, PRACTICE AND REVIEW QUZZES (MEL) AND STUDY PLAN (MEL) WEEKS 9-13. ANSWERS CAN BE FOUND AS INDICATED ON THE ANSWER SHEET. THIS IS A SAMPLE PAPER. THE FINAL EXAM PAPER WILL HAVE DIFFERENT QUESTIONS.

YOU ARE STRONGLY ADVISED TO REVISE ALL THE MATERIAL FROM LECTURES WEEKS 8-13 FOR THE FINAL EXAM AND TUTORIAL AND RELATED MATERIAL 9-13 ABOUT THE END OF SEMESTER EXAM   

Duration of examination: 2 hours 10 minutes The end of semester exam contributes 40% to your final grade The exam is divided in to two sections (Section A and Section 2)

Section A

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Section A consists of 10 multiple choice questions that cover all five macro topics. Each question is worth 1 mark and every question should be attempted.

Section B

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Section B is worth a total of 30 marks. Section B consists of 5 parts (1-5). Each part covers one of the five macroeconomic topics. Each Part is worth 10 marks and consist of three questions (marks are as indicated on the paper). Only three (3) Parts are to be attempted. Attempt all three questions in each of the chosen Parts. If more than three (3) Parts are attempted, indicate clearly which Parts are to be marked, otherwise only the first three (3) Parts will be marked.

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BSB113 sample end of semester exam paper

SECTION A Part 1 consists of 10 multiple choice questions that cover all five macro topics. It is strongly recommend that you undertake the formative activities in MyEconLab (which includes MCQs) in preparation for the end of semester exam.

END OF SECTION A

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BSB113 sample end of semester exam paper

SECTION B PART 1 GDP, income and economic growth QUESTION 1.1 Suppose that a simple economy produces only the following four goods and services: textbooks, hamburgers, shirts and cotton. Assume all of the cotton is used in the production of shirts. Use the information in the following table to calculate. PRODUCT Textbooks Hamburgers Shirts Cotton

2016 STATISTICS QUANTITY 100 100 50 800

PRICE 60.00 2.00 25.00 0.60

Use the information in the table to calculate nominal GDP for 2016. Explain all assumption behind your calculations. (2 marks)

Part 1 continued overleaf

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BSB113 sample end of semester exam paper

QUESTION 1.2 Each year the United Nations publishes the Human Development Report, which provides information on the standard of living in nearly every country in the world. The report includes data on real GDP per person, but also contains a broader measure of the standard of living called the Human Development Index (HDI). The HDI combines data on real GDP per person with data on life expectancy at birth, adult literacy and school enrolment. The following table shows values for real GDP per person and the HDI for several countries. (All values in the table are for the year 2012 expressed in 2005 US dollar terms.) COUNTRY

REAL GDP PER PERSON

Australia Brazil China Germany Greece India Norway Singapore South Africa United Arab Emirates UK USA

7 945

3 285 9 594

HDI 0.938 0.730 0.699 0.920 0.860 0.554 0.955 0.895 0.629 0.818 0.875 0.937

Prepare one list ranking countries from highest real GDP per person to lowest, and another list ranking countries from highest HDI to lowest. Discuss possible reasons for any differences in the rankings of countries in your two lists. (4 marks)

Part 1 continued overleaf

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BSB113 sample end of semester exam paper

QUESTION 1.3 As an economic advisor to the government you have been asked to comment on policies to achieve economic growth.

Figure 1. Per worker production function The ministry has asked you to evaluate two potential polices to promote economy growth (i) increasing capital per hour worked and (ii) promoting an “ideas boom”. Explain how each policy will affect economic growth, with reference to the per worker production function (Figure 1). (4 marks)

END OF PART 1

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BSB113 sample end of semester exam paper

PART 2 Unemployment and inflation QUESTION 2.1 As chief economist you are responsible for the publication of the labour market statistics. Assume that you follow the same methodology as the Australian Bureau of Statistics for collecting and reporting on labour statistics. Category Working age population Employed Unemployed Unemployment rate Labour force Labour force participation rate

Value (in millions) 10 million 4.5% 64%

Calculate the missing values in the table of data collected in the labour force survey. Show your workings. (2 marks)

Part 2 continued overleaf 6

BSB113 sample end of semester exam paper

QUESTION 2.2 What are the costs to individuals of being unemployed? Is the cost to society of unemployment equal to the sum of the costs to the individuals? Explain why or why not. (4 marks)

Part 2 continued overleaf 7

BSB113 sample end of semester exam paper

QUESTION 2.3 The table below shows the average percentage rises in full-time adult ordinary time earnings during the years 2015 and 2016, and also shows the CPI during these years. Use these data to discuss what happened to wages negotiations and wages growth over the period 2015 to 2016. ANNUAL WAGE RISE % All sectors Private sector Public sector CPI

2015

2016

5.4% 5.1% 5.8% 167.0%

4.4% 4.0% 5.9% 172.1%

(4 marks)

END OF PART B

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BSB113 sample end of semester exam paper

PART 3 Monetary Policy QUESTION 3.1 The newly appointed Treasurer of a small economy has responsibility for macroeconomic policy. As a new intern in the Treasury, it was noted that you had studied economics as part of your degree. You have been asked to advise the Treasurer on the workings of the monetary system. They have presented you with the following questions and require detailed answers. Discuss the main difference between the M1 and broader definitions of the money supply? (2 marks)

Part 3 continued overleaf 9

BSB113 sample end of semester exam paper

QUESTION 3.2 Discuss the actions the RBA should take if it believes the economy is about to fall into recession (4 marks)

Part 3 continued overleaf

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BSB113 sample end of semester exam paper

QUESTION 3.3 Explain the arguments economists make in support for and against the independence of the RBA. (4 marks)

END OF PART 3

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BSB113 sample end of semester exam paper

PART 4 Fiscal Policy QUESTION 4.1 (a) Identify each of the following as (i) part of an expansionary, fiscal policy, (ii) part of a contractionary fiscal policy, or (iii) not part of fiscal policy. i. The company income tax rate is increased. ii. Families are allowed to deduct all their expenses for child care from their taxable income. iii. The personal income tax rate is decreased. iv. The state of New South Wales builds a new highway in an attempt to expand employment in the state. (2 marks)

Part 4 continued overleaf 12

BSB113 sample end of semester exam paper

QUESTION 4.2 (a) Some economists argue that because increases in government spending crowd out private spending, increased government spending will reduce the long run growth rate of real GDP. Is this most likely to happen if the private spending being crowded out is consumption spending, investment spending or net exports? Explain your answer. (4 marks)

Part 4 continued overleaf 13

BSB113 sample end of semester exam paper

QUESTION 4.3 In terms of its effect on the long run growth rate of real GDP, would it matter if the additional government spending involves (i) increase spending on highways and bridges or (ii) increased spending on national parks? Explain your answer. (4 marks)

END OF PART 4

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BSB113 sample end of semester exam paper

PART 5 International trade QUESTION 5.1 Explain the difference between absolute advantage and comparative advantage. Will a country always be an exporter of a good in which it has an absolute advantage in production? (2 marks)

Part 5 continued overleaf 15

BSB113 sample end of semester exam paper

QUESTION 5.2 Australia currently grows cherries and imports them. Assume that the Australian government then decides to restrict international trade in cherries by imposing a quota that allows imports of only 600 000 tonnes of cherries into Australia each year. Figure 2 shows the results of imposing the quota.

G

Figure 2. Welfare gains and losses after of an import quota Analyse the economic effects of the quota by completing the Table below. Discuss the net economic effect of the quota from your analysis. Comment on any addition economic costs and benefits that may not be captured by this analysis. (4 marks) WITHOUT QUOTA World price of cherries Australian price of cherries Quantity supplied by Australian firms Quantity demanded Quantity imported Area of consumer surplus Area of domestic producer surplus Area of deadweight loss

Part 5 continued overleaf 16

WITH QUOTA

BSB113 sample end of semester exam paper

QUESTION 5.3 Identify and discuss the main arguments people use to justify protectionism? (4 marks)

END OF PART 5 END OF SECTION B END OF EXAM PAPER 17

BSB113 sample end of semester exam paper

Additional Answers Page MUST be kept attached to the examination paper. If answers are placed in this section, please number them according to the question.

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