ECON1010- Principles of Economics

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Macro1 (ECON1010), Sem. 2 2017 Question SetMACRO1(ECON1010) Assignment 1 (Chapter 28, 26&27 Principles of Economics or Chapters 9,7 & 8 Principles of Macroeconomics )Submit online at the ‘Assessment Task’ in Blackboard Due: 11:59PM on 10 September (Sunday)TutorialTimeandDay:_______________________________________________________________________________________________StudentName:________________________________________________________________________________________________________StudentID:_____________________________________________________________________________________________________________This assignment covers the following topics:Unemployment (Chapter 28 or Chapter 9)Productivity and Growth (Chapter 26 or Chapter 7)Saving, Investment and Financial System (Chapter 27 or Chapter 8)READ THE FOLLOWING FIRST (Very Important)1.This assignment contributes to 20% of the overall marks for the course. 2.Only a single submissionpermitted (hence, please ensure to attach the file version of theassignment)3.Use and Submit this template onlyfor your submission (i.e., write down your answers inthe space provided in each question and submit) – any other form of the file is NOT accepted(Failing to do so will automatically mean zero mark for this task).4.If you do not have a word processor installed in your home computer, follow this link and in “APPS” you can use a Microsoft word processor; http://www1.rmit.edu.au/students/mydesktop5.The recommended browsers when uploading the file are Chrome, Firefox or Explorer (somehave suggested that Safari might not work well).6.The font size has to be at least 12.7.Explain your answers, but be succinct. 8.Label each axis and explain the diagram that you use carefully (if any). 9.Show all of your working in order to get partial credits.10.After the due date any late submission will be marked as ‘late’. A penalty of 10% of the allocatedmarks (i.e., 2 marks) per day will apply for late submissions.11.A failure of your home computer (or any kind of the IT problem) cannot be a reason for the late submission (all requests for an extension of this nature will be rejected immediately). 12.Make sure you have included your student ID and name in the front page of the assignment13.Working with other fellow students is strongly encouraged. However, you cannot just copy yourfriend’s answers. If we find out this, you will be harshly punished for the academic plagiarism.See ‘students responsibilities’ at RMIT’s policy on this: 14.http://www1.rmit.edu.au/browse;ID=sg4yfqzod48g1Page 1 of 6
Macro1 (ECON1010), Sem. 2 2017 Question SetShort Answer Questions:1.Consider a closed economy in which GDP equals $20 billion, consumption equals $13 billion,government purchases equal $3 billon and tax revenue equals $1 billion. Use this information toanswer the following questions: (3 marks)a. What is private savings equal to in this economy? (0.5 mark)Public Savings = T – G$1billion - $3billion= - $2 Billionb. What is public savings equal to in this economy? (0.5 mark)Private savings = Y - T – C$20 Billion - $13 Billion - $3 Billion= $4 Billionc. How would the level of public savings impact the supply of loanable funds? (0.5 mark)Private savings is the source of loanable funds. Therefore high level of private spending leads toincreased supply of loanable fundsd. What is national saving equal to in this economy? (0.5 mark)S= Y - C – G$20 Billion - $13 Billion - $3 Billion = $4 Billione. What are net exports equal to in this economy? (0.5 mark)There are no net exports since it is a closed economy. That is the GDP is as a result of internaleconomic activity onlyPage 2 of 6
Macro1 (ECON1010), Sem. 2 2017 Question Setf. What is investment equal to in this economy? (0.5 mark)Investment is equal to the National Savings = $4 billion2.Explain how labour productivity is determined. In your answer address why human capital is considered to be so vital to lifting labour productivity levels. To illustrate your understanding provide an example. Your answer should be between ½ page and a full page. (4 marks)Labour productivity is given by the number of output per period (GDP) divided by the number of workers.Human capital is vital in lifting labor productivity levels since it is a component of the equation thatdetermines labor productivity. It is through the human capital that performance and targets are able to beachieved. For example when one person is able to produce 1000 units per hour while another is able toproduce 2000 units per hour. The individual who produces 200 units per hour is more productive comparedto that one who produces 1000 units per hour. In this case it is more economical for the firm to select the onethat does 2000 units per hour in order to maximize on the labour productivity.Page 3 of 6

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