Economics Homework: Understanding Market Dynamics and Policy Impacts

This economics assignment solution addresses several key concepts. It begins by analyzing the impact of new equilibrium points on supply and demand. It further examines the shift in demand curves due to changing consumer preferences. The price elasticity of demand (PED) and price elasticity of supply (PES) for coffee are calculated and interpreted. The assignment then calculates real GDP and GDP per capita, followed by the unemployment rate and labor force participation rate. Finally, the solution discusses Australia's economic phase within the business cycle, identifying it as an expansion phase, and outlines fiscal and monetary policies implemented in response to economic challenges, such as the China dispute, including JobKeeper and other support schemes.

Economics

Question 11
Price Demand Supply New demand
3.00 60 30 30
3.25 55 40 15
3.50 50 50 0
3.75 45 60 -15
4.00 40 70 30
New equilibrium point = 3.75 Quantity is 60.
As, at price 3.75, Demand will increase to 60 (45 + 15) which is equivalent to supply of 60.
Question 12
Option (A)
The demand curve for coffee will shift from D1 to D2 as given in option A. The demand for
coffee may increase due to the change in the taste of the people which lead to increase in
demand even when the price was increasing. This factor has a huge influence over the
demand of the goods in the market.
Question 13
A)
PED for coffee
Initial Price (PI) = 3.5, New Price (PN) = 3.75,
Initial Quantity (QI) = 50, New Quantity (QN) = 45.
PED = ((QN − QI) / (QN + QI) / 2) / ( (PN - PI) / (PN + PI) / 2 )
PED = ((45 − 50) / (45 + 50) / 2) / ( (3.75 - 3.5) / (3.75 + 3.5) / 2)
PED = -0.0263 / 0.0172
PED = -1.5263
Since PED > 1 ⇒ demand is elastic.
B)
PES for coffee
Quantity calculation:
new – old * 100
(new + old) / 2
(60 – 50) *100

(60 + 50) / 2 = 18.18
Price calculations:
= (3.75 -3.50) * 100
(3.75 + 3.50) / 2
= 6.90
Price Elasticity of Supply = % Change in Quantity Supplied / % Change in Price
= 18.18 / 6.90
= 2.64
Supply is Elastic.
Question 14
GDP = C + I + G + NX
GDP = 12.20 + 5.30 + 21.00 + 0.30
GDP = 38.80
Real GDP = 38.8 billion
Population = 0.0049 billion
GDP per capita = 38.8 / 0.0049 = $7918.37 per capita
The GDP per capita measures the sum of marketed goods and services which is being
produced within the national boundary which is averaged across the population residing
there.
Question 15
Unemployment Rate = (Unemployed People ÷ People in the Labor Force) x 100%
= (0.2 billion / 4.1 billion) * 100 = 4.9%
Labor Force Participation Rate = Labor Force / Working Age Non-Institutionalized
Population
= (2.8 + 0.2) / 4.1 = 73.17%

Question 16: The Australia is in Expansion phase of the business cycle due to current
economic data, the economy of a country is not stable due to pandemic. As a result, there is a
negative impact drawn from the situation. As per the article, organization expects
unemployment to average 6.8% this year and increased by 7.9% in 2021. The statement
clearly indicate that government making planning in order to minimize the negative impact of
such situation so that policy respond to support jobs. Also, the economic data signifies that
there is a negative GDP identified from two consecutive years which lead towards a
recession at starting of 2020 which is a phase of decline. At the end of 2020, the economy of
Australia is experiencing in expansion phase that helps to recover the economy soon.
Another statement from the article that shows the expansion phase is related to
improvement identified from government and RBA support that cut down the interest rate
and buy government bonds. Thus, pandemic lead to decrease the income of people and job
losses, that is why, government introduced different fiscal policies which helps to provide
employment to job keepers such as JobKeeper Wage subsidy and JobSeeker supplement
schemes. Therefore, these statements clearly reflected that the country's economy is in
expansion phase in which government took range of measures to improve the current
situation which in turn lead to convert the negative GDP into positive within next year.
Question 17
During the China dispute, there are two fiscal and monetary policy implemented in order to
response Australian authority such that such policy acted quickly in order to support the
demand. Under fiscal policy, JobKeeper scheme which is a wage subsidy so employers may
maintain their employees during negative impact upon crisis. Coronavirus supplement
receiving a range of welfare payment, allow individual to make early withdrawals from their
old-age pension, intensify depreciation deduction to motivate business investment and
payment to SME firms to grow up their business.
Moreover, in the context of monetary policy, a 3-year government bond yield to
0.25% through secondary market and Term Funding Facility for the banking system in order
to promote the small and medium business. Also, paying 10 basis point on exchange
settlement balance that facilitate other policies. This response through the policy create a
positive impact over the economy and responding in positive manner in order to make the
situation under-control.