MACROECONOMICS 1 (ECON1246 ECON1273)
Assessment 1
Submit online at the ‘Assessment Task’ in Blackboard by: 6 PM 4 August (Friday)
Student Name: __________________________
Student ID: _____________________________
Group: _____________
Tutorial Day and Time: ____________________
This assignment covers the following topics:
• Introduction to economics, Production Possibility Frontier – Topic 1
• Circular Flow of Income – Topic 2
READ THE FOLLOWING FIRST
• This assessment contributes 10% of the overall marks for the course.
Only a single attempt of submission is permitted. Please ensure to attach the final version of the assessment.
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Question One
Background
Assume that in 2015 the economy expanded (in expansion phase of business cycle).
Further assume that net injections within the economy are $9,000 mill. In this year the financial sector has a net leakage of $1,500 mill, the government sector has a net injection of $6,500 mill and the external sector has a net injection $4,000 mill.
During 2016 the transactions in the sectors of the economy were:
Imports $25,100
Savings $18,500
Government spending $61,800
Private investment $19,700
Exports $25,400
Taxes $62,200
During 2017 the transactions were:
Taxes $66,100
Private investment $18,300
Exports $28,100
Government spending $69,200
Imports $26,100
Savings $20,200
a) Calculate the net injections / leakages for 2016 and 2017. Also undertake a sectoral analysis for both years.
(3 marks)
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b) Explain the effect of the changes on the economy, i.e. whether the economy expanded or contracted, in each of the two years, and why.
(2 marks)
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c) Which sector is expected to be the biggest contributor to the overall change in each of the two years? Give reasons.
(3 marks)
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Question Two
Demonstrate, using a production possibilities frontier, and briefly explain the impact of each of the following:
a) a decrease in the efficient use of existing resources;
b) an increase in the allocation of resources from consumer to capital goods;
c) a decrease in the Labour Force (Quantity of resources) and at the same time a decrease in unemployment in the past year. (1.5 + 2 + 2.5 = 6 marks)
(to create new lines, simply copy the existing curves and move to the new location)
a)
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b)
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c)
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Question 3
Read the article ‘The Japanese economic miracle’ and answer the following question.
Use the 5-sector model to explain how Japan achieved economic growth in the 1960s.
In your answer explain how each sector of the economy contributed to economic activity and the factors contributing to growth for each sector. You are also required to use the concepts of injections and leakages in your answer. 6 marks
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