Question 1 (7 marks)
Part A. Analyse each situation and answer the blanks based on the economic classification of good and services. (1 mark each)
- Research shows that in countries where incomes are high and continue to exhibit an increasing trend, couples decide to have less children. Children are regarded as a/an _______________ good.
- A beer business in NSW sources glass bottles from a supplier in Victoria as well as tin bottlecaps from a company in Western Australia to package and ship its final product. For the beer business, glass bottles and tin bottlecaps are _______________ goods.
- A marathoner crossed the finished line after 5 hours of running. His support team had a can of Red Bull energy drink, a bottle of vitatmin enriched water, a jug of orange juice and a bottle of red wine on hand and the runner can make his own choice. For the thirsty runner — the sports drink, water, juice and wine — are ______________ goods.
- Mary received a job promotion. With her salary increase, Mary decides to buy a new car despite having a perfectly usable car bought just 8 months ago. Cars in this scenario can be considered a/an _______________ good.
Part B. Classify whether the 4 situations above fall under microeconomics or macroeconomics (1 mark). Justify your answer (2 marks).
ANSWER: ** Answer box will enlarge as you type
Question 2 (11 marks)
Discuss the workings of tight monetary policy. What is/are the possible objective/s of a tight monetary policy? (3 marks) What are the tools used to control the policy? (3 marks) When will it be necessary to impose tight monetary policy in an economy? (3 marks) Who is responsible for overseeing monetary policy in Australia? (2 marks)
Question 3 (11 marks)
- Compare and contrast GDP versus GNP. (3 marks) Provide an example of each. (3 marks)