Part A
Question 1
If one will do a MBA or MPA at the University of Ballarat the costs would include the expenses in studying at the university, the cost of materials, transportation cost, cost of food and other important miscellaneous expense. When one attempts to do a MPA OR MBA at the university the risk would include the probable failures and problems that one would face.
Question 2
The universal economic problem involves the process of production and how the factors of production will be allocated when there is scarcity in a country or a business. It focuses on making sure that there is a correct creation and allocation of products whenever there is economic scarcity of goods or services. The main concern of microeconomics includes maintaining the balance of supply and demand, how decisions and behaviors affect the supply and demand for certain goods and services; and how prices, in turn, determine the supply and demand of goods and services.
Question 3
The definition as quantity demanded rises, price falls is correct but one must first make sure that all other economic factors are equal. As demand increases, the price of goods and services falls but there are other considerations before price will fall such as the rate of supply, the population size and other economic factors.
Question 4
As the salary of the waiter/waitress increases their performance improves thus the supply increase and the demand decreases. Behind the demand side of the restaurant industry the factors include the number of clients coming to the restaurant, the alternatives to the products of the restaurant, level of income and consumer behavior. Behind the supply side of the restaurant industry the factors include the personnel, the finances the firm has in making the product and the materials used in making the food products.
Question 5
As the price of public transportation increases the demand for it decreases. The supply of available public transport increases, the quantity of available public transports also increases.
As the demand for safety helmet increases; its supply decreases this leads to higher price. The quantity of safety helmet decreases due to the need for more safety helmet.
As the demand for materials in making bicycles decrease; its supply increases this leads to lower price. Due to newer technologies the quantity of bicycles and its materials decrease.
As the demand for bicycles decrease; its supply increases this leads to lower price. Due to the need for government registration the quantity of bicycles purchased decrease due to the fear of added expenses for registration and licensing.
Question 6
The rise in the use of public transportation can be attributed to the rising cost of oil or the concern of people towards the environment. Due to the high prices of oil products people would rather ride public transportation than use their car. Due to some people’s concern towards the pollution and other environmental problems they would rather ride public transportation than be the cost of pollution by riding their cars. The government on its part can make sure that there is enough supply of public transport for everyone. If there is a need the government must buy newer public transportation. The government should also make sure that people riding public transportation would have lesser worries on their safety and the safety of their belongings.
Question 7
In the situation of minimum wage, the winners are mostly the owners of companies because it reduces their expenses. At one point the employees are winners in a minimum wage because companies cannot give them salaries lower than the minimum wage. The main losers in the situation of minimum wage are the owners of business because they can’t give salaries that are too low. At one point the employees are also losers because there is no standard minimum wage in all countries thus the minimum wage in one country can be lower in another even if it is for the same job. The government can be a loser or a winner in this situation depending on the rates of minimum wage and the taxes they can collect on such wage.
Question 8
The pricing strategy of the rock band in Australia focused on making sure that the value of tickets for those in the front row can be increased as the concert came nearer. The rock band made sure that as the concert came near people who want to have front row seats would offer as high as possible. The rock band controlled the pricing of the front row seats. The prices of front row seats could make up for the expenses in the concert and the fees being asked by the rock band members.
Question 9
Since there are concerns on the teenagers drinking and becoming intoxicated at an early age the government should enact laws that would change the allowed drinking age. Underage teenagers cannot drink and become intoxicated if the allowed drinking age would be over 18 years old. The government can also restrict the sale of intoxicating products and put some curfew on the sale of such products. Economists would suggest to increase the taxes on intoxicating products so that its price would rise thus younger people would have lesser finances to purchase such products.
Question 10
People observe price rigidity in oligopolistic industries because some oligopolistic industries tend to reduce resources as price remain constant. This will affect the supply and also affects price in the long run.
Part 2
Question 1
The four macroeconomic goals include achieving a sustainable but high rate of potential growth in the GDP; having a smooth fluctuation in the country’s business cycle; making sure that they have low unemployment and making sure that there are lower rates of inflation. There should be no problem in achieving all of them but it will take some time before all will be fully achieved.
Question 2
Among higher inflation and higher unemployment, higher unemployment is worse because if there will be more people unemployed, lesser people will buy products and they cannot reduce the rates of inflation. Inflation can be stabilized to more purchases and the reduction of supplies.
Question 3
In the consumption type of aggregate expenditure an example would be the materials used in making the export products. In the investment type of aggregate expenditure an example would be airline business in other countries. In the government expensed type of aggregate expenditure and example would be the expenses in road construction. In the investment type of export an example would be transport equipment. Among the four investments represent the largest share of GDP in Australia. An expenditure exponent can be negative when there are lesser to zero expenses and cost on a certain type of expenditure.
Question 4
The trade cycle involves economic activities that fluctuates around a long-term growth trend. This cycle involves shifts between periods of rapid growth of output and then periods of decline. The phases of such cycle includes peak, expansion, fluctuation and contraction. Currently Australia is in its peak phase due to its good economic standing and excellent GDP rates. The Australian government has made use of good strategies to manage their economy.
Question 5
The paradox of thrift is a belief that states that if everyone save more during times of recession, then a country’s aggregate demand will fall. This in turn will lower total savings in the population. If majority of the population saves, then there is a decrease in consumption it leads to lower aggregate demand and it also leads to decrease in economic growth. If more people save their money, there would be lesser purchase of products this does not help the GDP of the country and it does not help the country have enough savings for future expenses. This would hamper economic growth and cause future changes in inflation and unemployment rates.
Question 6
As the exchange rate abruptly decreases there would be aggregate supply for a country’s money, this in turn would lead to lesser demand for the country’s money. People would not buy a currency that has too much supply and has lower value.
Question 7
If an economy in recession accepts a good stimulatory fiscal policy the result would be better rates of GDP and lower rates of inflation. It would then result to renewed confidence from businesses and consumer thus their confidence ratings will improve. It will affect the future of the country and the businesses within it. If an economy in recession accepts an unacceptable stimulatory fiscal policy the result would lower rates of GDP and surging rates of inflation and there would be lower confidence ratings from businesses and consumers.
Question 8
Inflation is the increase of level of prices of goods and services in an economy over a period of time, deflation is its opposite. Deflation can be a sudden decrease in the level of prices of goods and services. Budget deficit happens when a country has more expenses than income. Trade deficit happens when a country’s imports exceeds its exports. A trade deficit represents too much domestic currency in comparison to foreign markets. A lagged economic indicator is something that does not and should not change direction. It only changes after the economy accepts change. One lagged economic indicator is the unemployment rate this indicator tends to increase in 2 to 3 quarters only after the economy changes. A future economic indicator are something that give clues to what might be the future for the economy. Recession describes the reduction of a country’s GDP for at least two or more quarters. It is known as negative real economic growth. The economic slowdown precedes the occurrence of recession. Countries use the crowding out effect during a recession. The crowding out effect happens when the government has to borrow more funds so that it can support increased expenditures. The crowding- out effect is likely to be larger during recession or when the economy is near full employment because the government has to borrow more funds to satisfy the near full employment and it has to make sure that the recession would be stabilized. The crowding out effect is higher during recession because the government has to make sure that it has enough funds that can be used to assist the people who are affected by the recession.
Question 9
Most macroeconomic policy has its focus on the fiscal policy. In the fiscal policy the head of state had tight control of government expenditure. This led to surplus and curbing of the structural deficit. The fiscal policy creates benefits for the state for quite some time but after such time the fiscal policy is being characterized by more deficits. As the macroeconomic policies gets changed the tendency is for the country to focus on its local needs thus it acquires more imports rather than send more exports. The prices of oil are affected by various things that include the supply of oil compared with its output, oil reserves of countries, the demand for oil and other petroleum products, macroeconomic conditions and world crisis. The demand for oil is highly dependent on global macroeconomic conditions and will affect the prices of oil. Some economists say that high oil prices and other petroleum products have a large negative impact on the global growth. The global economy like inflation rate and other factors can be affected by the rise or fall of oil and petroleum products. The drop in prices of oil results to the slowdown of the global economy since some of those countries who benefit from the prices of oil will have to suffer. The benefactors of the prices of oil offer bigger contributions to the success or failure of the global economy. The increase in oil affect real domestic output because the materials that will be used to create the product will increase. Such materials came from various destinations. The materials increase their prices because oil is used in the creation or delivery of the raw material. The increase in the prices of oil would then cause instability in the prices of products.
Credit:ivythesis.typepad.com
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