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Econ 101 Assessment 2 - Macroeconomic Essentials for Business

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Subject: Economics
Due on: 04/30/2015
Posted On: 04/30/2015 06:58 AM

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Autumn Session 2015

Econ101 Macroeconomic Essentials for Business

Assessment 2: In Class Essay

Instructions.

Go to the subject Moodle site. In the very top left hand corner of the screen, click on ‘My Library’,

then click on ‘Econ101 Subject Readings’. The reading that is relevant to this essay is titled ‘Falling A$

brings back businesses’. In your responses to the questions below, you should refer to information

from this reading to clarify your discussion as necessary.

Essay Questions.


1. The reading suggests that the appreciating A$ of the last decade has had a substantial

negative impact on Australian manufacturing firms. Explain, using a demand/supply diagram

to clarify your explanation, how the Australian mining boom contributed to a significant

appreciation of the $A over the currencies of its major trading partners. (4 marks)

2. Explain the likely impact of this $A appreciation on non-mining sectors of the Australian

economy such as manufacturing and agriculture. As part of your explanation, include a

numerical example by assuming that a Japanese car imported into Australia has a constant

landed price of two million yen. Assume an initial exchange rate of A$1=Yen100, and then

show numerically how a strengthening $A (assume the exchange rate becomes A$1 = Yen

200), other things equal, is bad for Australian car manufacturing firms. (4 marks)

3. Discuss two likely reasons why in the last 12-18 months the $A has depreciated significantly,

and show the effects of these changes in the demand/supply diagram you used in your

response to part 1 above. Explain the likely impacts of this recent depreciation on the nonmining

sectors of the economy. (6 marks)

4. Explain the likely impact, other things equal, of the mining boom of the 2005 -2012 period,

and the current decline in mining activity, on Australia’s Balance of Payments. (6 marks)

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Econ 101 Assessment 2 - Macroeconomic Essentials for Business

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Preview: of xxxxx changes xx the demand/supply xxxxxxx you used xx your xxxxxxxx xx part x above Explain xxx likely impacts xx this xxxxxx xxxxxxxxxxxx on xxx non- mining xxxxxxx of the xxxxxxx (6 xxxxxx xxxxxx – xx the last xxxxx months, the xx has xxxxxxxxxxx xxx to xxx stronger-than-expected US xxxx figures and xxxxxxxxx terms xx xxxxx The xxxxxxxx showed a xxxxxxx value in xxxxx of xxx xx dollars xxx it has xxxxxxx a multi-year xxx value xx xx 77 xxx which has xxxxxx down from xxxxxx in xxxxxxxx xx is xxx to the xxxx in the xxxx rate xx xxx central xxxx It resulted xxxx rise in xxx unemployment xx xxx economy xx the non-mining xxxxxxx because mining xxxxxxx are xxxxxxx xxx to xxxxxx foreign demand xx also resulted xxxx higher xxxxxx xxxxxxx and xxxx in the xxxxxxxx investment Rise xx the xxxxxxxx xxxxxxxx rates xxxx Australian currencies xxxx attractive for xxx investors xxxxx xxx Fed xxx also ended xxx bond buying xxxxxxxx The xxxxx xx trade xxx expected to xxxx by 3 x per xxxx xxx to xxxxxxxx depreciation However, xxxxx is immense xxxx to xxxxxxx xx the xxxxxx if it xx to provide.....
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