Assignment 3 consists of two problems worth 5 marks each. Text material which may be relevant to the...

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Assignment 3 consists of two problems worth 5 marks each. Text material which may be relevant to the question may be drawn from any of text chapters 12, 13 and 14.  Question 1Using data from the Australian Bureau of Statistics (ABS) http://www.abs.gov.au/ collect information on the consumer price index (CPI) and average weekly earnings for the period 2005 to 2015 inclusive. Employ annual figures. Define and provide sources for the data obtained including the ABS catalogue number.Calculate the rate of inflation based on the CPI and the rate of average weekly earnings growth and plot the inflation rate and weekly earnings growth on a single diagram using time on the horizontal axis. Provide an economic interpretation of these time series plots.  Question 2Employ the aggregate demand and supply model for the Australian economy, to analyse the consequences for real GDP and the general price level of the following scenarios. Confine your analysis to the short-run. In your response clearly state your assumptions and illustrate your answers with diagrams.(a) the price of iron ore, a major export product, increases substantially,(b) a favourable set of weather conditions leads to a substantial rise in Australian agricultural output,(c) the government spends significant money in developing a broadband internet network across the country,(d) the price of oil, a product Australia primarily imports, fall substantially.
	
Document Preview: Assignment 3 consists of two problems worth 5 marks each. Text material which may be relevant to the question may be drawn from any of text chapters 12, 13 and 14. Question 1 Using data from the Australian Bureau of Statistics (ABS)  HYPERLINK "http://www.abs.gov.au/" http://www.abs.gov.au/ collect information on the consumer price index (CPI) and average weekly earnings for the period 2005 to 2015 inclusive. Employ annual figures.  Define and provide sources for the data obtained including the ABS catalogue number. Calculate the rate of inflation based on the CPI and the rate of average weekly earnings growth and plot the inflation rate and weekly earnings growth on a single diagram using time on the horizontal axis.  Provide an economic interpretation of these time series plots. Question 2 Employ the aggregate demand and supply model for the Australian economy, to analyse the consequences for real GDP and the general price level of the following scenarios. Confine your analysis to the short-run. In your response clearly state your assumptions and illustrate your answers with diagrams. (a)   the price of iron ore, a major export product, increases substantially, (b)   a favourable set of weather conditions leads to a substantial rise in Australian agricultural output, (c)   the government spends significant money in developing a broadband internet network across the country, (d)   the price of oil, a product Australia primarily imports, fall substantially.

David · Accepted Answer

Assessment item 3
Question 1
Using data from the Australian Bureau of Statistics (ABS) http://www.abs.gov.au/ collect 
information on the consumer price index (CPI) and average weekly earnings for the period 
2005 to 2015 inclusive. Employ annual figures.  Define and provide sources for the data 
obtained including the ABS catalogue number. 
 Calculate the rate of inflation based on the CPI and the rate of average weekly earnings 
growth and plot the inflation rate and weekly earnings growth on a single diagram using 
time on the horizontal axis.  Provide an economic interpretation of these time series plots.
CPI Index data
6401.0 - Consumer Price Index, Australia, Mar 2017 Quality Declaration  
LATEST ISSUE Released at 11:30 AM (CANBERRA TIME) 26/04/2017    
 
 
 CPI 
index ( 
annual) 
rate of inflation  Inflation rate  
2005 331.9   
2006 343.7 0.035552877 3.555287737 
2007 351.7 0.023276113 2.327611289 
2008 367 0.043502985 4.35029855 
2009 373.5 0.017711172 1.771117166 
2010 384.4 0.0291834 2.918340027 
2011 397.1 0.033038502 3.303850156 
2012 404.1 0.017627802 1.762780156 
2013 414 0.024498886 2.449888641 
2014 424.3 0.024879227 2.487922705 
2015 430.7 0.015083667 1.508366722 
2016 436.2 0.012769909 1.276990945
Average Weekly earnings data:
6302.0 - Average Weekly Earnings, Australia, Nov 2016 Quality Declaration  
LATEST ISSUE Released at 11:30 AM (CANBERRA TIME) 23/02/2017
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6302.0Nov%202016?OpenDocument
Year  Annual weekly 
earnings  
 week earnings 
growth  
rate of weekly 
earnings growth  
2005 2113.1   
2006 2167.4 0.025697 2.569684 
2007 2275.1 0.049691 4.969087 
2008 2382.3 0.047119 4.711881 
2009 2511.6 0.054275 5.427528 
2010 2628.8 0.046663 4.666348 
2011 2748.4 0.045496 4.549604 
2012 2871.1 0.044644 4.464416 
2013 2982.6 0.038835 3.883529 
2014 3058.2 0.025347 2.534701 
2015 3102 0.014322 1.432215 
2016 3168.8 0.021534 2.

Assignment 3 consists of two problems worth 5 marks each. Text material which may be relevant to the question may be drawn from any of text chapters 12, 13 and 14. Question 1 Using data from the...

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