Assignment Task:
Assignment 1: Project Read the article titled “Fitch downgrades Australia’s economic growth, while Rabobank tips ‘modest’ global recession” (Source: By business reporter David Chau, ABC news, and answer the following questions:
- Briefly summarise the main issues discussed in this article. What are the concerns associated with a fall in China’s growth with the Australian economy?
- Define and explain the four most common national macroeconomic objectives. Use the variables GDP growth, inflation, exchange rate and cash rate as the basis for describing the Australian economy over the last three years using quarterly or monthly data, and its likely development. This will be assessed according to both data acquisition (15 marks) and analytical capacity.
- Based on your data plots in part (b), provide reasons for the RBA’s move to cut the cash rate. Do you agree or disagree with the adopted expansionary monetary policy? In particular, explain the effectiveness of a cut in the interest rate on boosting aggregate demand (i.e. consumption, investment and exports). Explain.
- Suppose that the exchange rate stabilises at US 68C per AUD. What actions could the Reserve Bank of Australia take in order to bring the exchange rate to US 80C per AUD, and what side effects might this action have on the housing market? (10 marks out of 60) Marking Guide: Marking guide is uploaded on Moodle. Please refer to the marking guide for marking criteria and question weights. Word Limit: 2000 words maximum. Word count (excluding references) must be provided.
Have a minimum of 3 peer-reviewed references. Submission Instructions: Submit your report in Week 8 online Via Moodle. In addition to the online submission, hand in your hard copy of the assignment to the tutor on or before Week 8. Assessed work submitted late will be penalised by the deduction of 10 per cent of the maximum possible mark for that assessment per working day or part thereof. The operation of this rule will not result in a negative mark being carried forward.
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