Final Exam 2019, questions PDF

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Practice Qs for Final Exam – 1303AFE (Economics for Decision Making One) The following topics are examined in the final exam: Topic 7: AD-AS Topic 8: Fiscal Policy Topic 9: Monetary Policy Topic 10: Productivity and Growth Topic 11: International Trade and Exchange Rate

Format of Exam: SECTION A: 25 Multiple Choice Questions, 1 mark per question, 25 Marks (25%) SECTION B: 4 Short Answer Questions, 25 marks (25%). When required, you are to display the appropriate diagram/s to support your answers. In marking your answers, we seek for correctness, completeness and clarity of your answers.

Total: 50 marks (equivalent to 50% weight for this exam) Working time: 2hours + 10mins perusal Date /Time / Venue: As advised in your Griffith Exam Timetable Bring your student card, writing implements and calculator.

I suggest the following steps to prepare for the exam: 1) Focus on revising the lecture notes, workshop exercises and solutions. 2) Do this Practice Qs without referring to the solutions first. Then check your answers against the solutions. This way you would be able to identify your area of weakness. 3) Come to the Revision Lecture conducted in week 11. Please ensure that you have done your study and attempted this Practice Qs prior coming to the revision lecture to gain full benefit of the session. This session will be extremely useful to enhance and fine tune your understanding. 4) Extra consultation sessions (to be announced in our course site) will be conducted during the study week. Do not hesitate to come and see us for one to one extra help. WISH YOU ALL THE BEST. I am sure that all in all you would prepare well and do well in this exam.

The practice questions below are designed to give you a concise yet useful revision for the final exam. They however should not be used as the only resource to prepare 1

for the final exam. Students are expected to revise again the lecture notes, and workshop exercises for topics 7 to 11 to better prepare for the final. All the best!!

TOPIC 7 – AD-AS QUESTION 1

Explain whether each of the following events would affect the AD curve or the AS curve of Australia. Then explain whether it would cause a shift to the right or to the left on the relevant curve. a) Australia increases its exports to its trading partners. b) Oil price decreases. c) As a result of the new enterprise bargaining, there has been an increase in wage rate for workers at all levels. d) Government announces a decrease in income tax rate. e) RBA announces that cash rate would increase in the near future. f) Australian dollar depreciates by 20% against the currencies of Australia’s largest trading partners.

QUESTION 2

Suppose that Indonesia was initially at its full employment level. A recent visit by head of states from the European counties to Indonesia revealed that Indonesia would receive multi- billion dollar worth of investment from those countries. With the use of AD-AS model, explain the implications of the event for the Indonesian economy both in the immediate term and in the longer term. Draw the appropriate AD-AS diagram to support your answer.

TOPIC 8 – Fiscal Policy

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QUESTION 3

a) What is the difference between discretionary fiscal and automatic stabilizer fiscal? b) What is the difference between the Keynesian view and the mainstream view of the use of fiscal stimulus? c) List the various different actions which the government could implement to conduct an expansionary fiscal policy.

Question 4 Suppose that the Australian economy was initially at its full employment level. Being concerned with the high government debt which Australia has accumulated, the government decided to cut spending on education, health and military. Using AD-AS model, explain the implications of the decision for the economy. Draw the appropriate AD-AS diagram to support your answer.

TOPIC 9 – Monetary Policy

Question 5 The South Korean central bank would like to implement a monetary policy to increase the interest rates in the economy. What open market operation (OMO) action the central bank should adopt to implement the policy? Using MD-MS model, explain the process and the implications of the OMO action to the cash rate and the interest rates. Furthermore, explain the implications of the policy for the economy.

TOPIC 10 – Productivity and Growth

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Question 6

Refer to the long run production function. Then briefly discuss the various factors which contribute to the growth of GDP in the long run.

Question 7

Accumulation of capital by workers is subject to diminishing returns. Explain what is meant by that. Draw the appropriate diagram to support your explanation.

TOPIC 11 – International Trade and Exchange Rate Question 8

Compared to other countries, Australia has a lower opportunity cost to produce coal. With international trade, identify whether Australia will effectively become an exporter or an importer of coal. Using demand and supply model, explains the equilibrium price and quantity in the Australian coal market ( before and after trade).

Question 9

Explain how an appreciation of the Chinese Yuan would affect the net exports and the economy of China.

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