ECON1000 Introductory Economics

Overview

The assessment will be available from Saturday 25th May at 11am and is STRICTLY due on Saturday 8th June at 11pm.

Key assessment information:

. Part B of MRA isa downloadable ‘take-home’, ‘open book’ assessment where you can pace yourself to answer the questions. Refer to ‘ECON1000 S1 2024 MRA Hints and Tips’ recording/PDF (slides 2,4-6) for suggestions on how to dowell in Part B of MRA.

. The student, by yourself (please no Gen-AI LLMs or other agent assistance) has 14.5 days (348 hours) to complete Part B of MRA under normal circumstances.

Many thanks in advance for your cooperation, Brennan AI Tech Incorporated (BAT Inc.)

. Answer ALL short-answer style questions from the document file provided. Your answers need to be typed, but diagrams must be hand-drawn.

. Note, the word count is a suggested maximum. It is crucial that you specifically answer the questions and have sufficient explanations and refer to key sentences, ideas and data from   various articles* where relevant to support your analysis. (*):= the key articles are available for free online - but if not from Curtin’s Library databases.

When ready to submit, ONLY include answers and prepare your document as following: Full Name, Student ID and Tutor’s name as a title in the Word document (or PDF) to Turnitin by the due date (goto Assessmentstab on Bb, subfolder ‘PART B of MRA: SHORT ANSWERS’).

All the best with the assessment :-)

Part B. SHORT ANSWERS: Analysis and Application [36 marks]

[There are three (3) main questions to be answered with sufficient explanations and where relevant using well-labelled, hand-drawn diagrams with accuracy.]

Q1 - Responses to Higher Costs of Living and Inflation in Australia [12 marks]

Economic  life  has  become  more  expensive  of  late.  The  costs  of  living  in  Australia  have  gone  up dramatically over the past couple of years owing in part to the accumulated effect of past high inflation. Yet, it is difficult for policymakers to alleviate cost-of-living pressures alongside high interest rates, while inflation remains sticky. Read the following articles related to part 1aand part 1b, respectively:

For 1a,

1.    Verrender, Ian (2024) ‘Why further interest rate hikes by the Reserve Bank won’tfix Australia’sinflation problem’, ABC News, May 7th, available:https://www.abc.net.au/news/2024-05-07/interest-rate-hikes-wont-fix-our-inflation-problem/103809160

2.    RBA (2024) Statement on Monetary Policy - May 2024, available:https://www.rba.gov.au/publications/smp/2024/may/overview.html

3.    Martin, Peter (2024) ‘If the RBA’s right, interest rates may not fall for another year. Here’s why – and what it means for next week’s

budget’, The Conversation, May 7th, available:https://theconversation.com/if-the-rbas-right-interest-rates-may-not-fall-for-another- year-heres-why-and-what-it-means-for-next-weeks-budget-229376

For 1b,

4.    Crowley, Tom and Melissa Clarke (2024) ‘Most taxpayers to get $804, but high-end tax cut halved as government rewrites stage 3’, ABC

News, January 24th, available:https://www.abc.net.au/news/2024-01-24/government-rewrites-stage-three-tax-cuts/103383642 5.    Amin, Mridula and Alex Lim (2024) ‘This isn’t the 30s I was promised’, ABC News, March 28th, available:

https://www.abc.net.au/news/2024-03-28/data-on-30-year-old-australians-shows-financial-hardship/103528726

6.    Duffy, Connor (2024) ‘HECS indexation to be overhauled in budget with $3 billion in student debt ‘wiped out’’, ABC News, May 5th, available:https://www.abc.net.au/news/2024-05-05/help-hecs-debt-indexation-2024-cut-easier-to-pay-off/103800692

a)    Consider the stance of monetary policy to the recent positive shock and assume the RBA’s forecasts over the next 12 or so months are accurate [see source 2]. Use the multiplier AD model and Phillips curve diagram to illustrate and explain in detail how the aggregate demand function in the Australian economy is expected to shift if the RBA’s goal is to tame inflation expectations and have the unemployment rate of 4.3% in June 2025. Begin your economy in June 2023 with an unemployment rate of 3.5%.

[350 or so words should be sufficient for Q1a]

6 marks for quality of analysis, including linked diagrams

b)   Consider Australians in their early to mid-30s and assume the following about these younger generation: they are millennials working fulltime on a steady annual salary of $110,000 (before tax), with a $500,000 housing loan and a $30,000 university loan. Use a figure with income and consumption on the vertical axis and time on the horizontal axis to illustrate and discuss the way in which these millennials would typically respond to the upcoming tax cuts and HECS debt relief. In your answer, elaborate on the disadvantages faced by these millennials over older generations of Australians (late 50s) who have paid off their mortgage.

[350 or so words should be sufficient for Q1b]

6 marks for quality of analysis including figure

Apply key economic concepts taught in Modules L7, L8, L3, L4 in ECON1000 S1 2024, and refer to key sentences and ideas from the salient articles where relevant to support your analysis.