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1 Official Final Exam Subject Title Economics for Business and Finance Subject Code ECO600 Lecturer/Tutor Dr. Hemanath Swarna, Dr. Yiling Zhang, Dr. Carolyn Tran Trimester February 2020 Assessment...

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Official Final Exam
Subject Title Economics for Business and Finance
Subject Code ECO600
Tutor Dr. Hemanath Swarna, Dr. Yiling Zhang, Dr. Carolyn Tran
Trimester Fe
uary 2020

Assessment Title Official Examination
All of them
Assessment Type Individual
Weighting 40%
Word Count Maximum 2,000 words

Due Date Week 15, 11:59 pm, 12 June 2020 (Friday)
Submission Turnitin
Submission Type MS Word document

Final Examination
Instructions to Examination Candidates

1. Please answer ALL four (4) sections. Each section contains
short-answer questions, with sub-questions. Each section is
worth 10 marks (total: 40 marks).

Section 2 has no word limit, but students are expected to keep
ief. Sections 1, 3 and 4 have a word-length target of 300-
500 words.

2. Students are expected to answer the question in BULLET
POINT style, and not in the style of long paragraphs.

3. Write CLEARLY. Make it easy for your lecturer to read and
understand you.

4. DO NOT REWRITE the exam questions in your answer
document. Only include the section, question and sub-question
numbers with your answers.

5. Please begin your answers for each section ON A NEW PAGE,
with a heading at the top that states the section number (e.g.,
‘Section 1’ or ‘Section 2’).

Section 1: International trade and exchange rates (10 marks; length: XXXXXXXXXXwords)
The country you will focus on throughout this section is Indonesia.
Indonesia’s textile and leather footwear industry used to export a lot of shoes in the 1990s
and 2000s. But it has faced tough competition from lower-cost producers in Vietnam and
China. The government is considering protecting the industry from the full effects of free
1. Suppose this country has decided to protect the mentioned industry.
(i) What trade protectionist policy (or policies) would you propose?
(ii) Justify your action: discuss how it will benefit the industry or country
(iii) What problems could arise from implementing it? How will you address the
(4 marks; XXXXXXXXXXwords)
2. See Trading Economics (click here for the website). In the list, find the country’s name
(the country in the case study above). Click on it. To view the trade balance for multiple
years, set the chart’s duration to ‘25Y’ (25 years) or ‘Max’.
(i) Comment on the country’s trade balance over the last several years— for
example, is there a trend towards a surplus or deficit?
(ii) Assume that this country reduces its official interest rates to lower levels than the
USA does. All else remaining the same, will this country’s cu
ency appreciate or
depreciate versus the US dollar? Could it make this country’s exports more attractive
or not?
(2 marks, XXXXXXXXXXwords).
3. See Harvard University’s Atlas of Economic Complexity (click here for the website).
- Enter the country name (the same country you examined above).
- Jump to the section on the page called ‘Economic Structure’. There click on and
examine the country’s ‘Export basket’ (the products it exports).
- Then, click on and examine the country’s ‘Export complexity’ (how complex or high-
value its export products are).
Develop a convincing new export plan.
(i) Propose the export sectors or products whose complexity you feel could be improved.
Argue why.
(ii) How should those sectors or products be improved, in terms of complexity and value-
added, so that they are globally competitive and can increase the country’s export earnings?
(4 marks; XXXXXXXXXXwords).

Section 2: Macroeconomic fundamentals and development economics (10 marks;
length: no word limit— keep it
The COVID-19 pandemic and lockdown has affected the Australian economy in many ways.
1. Discuss how they might have affected each of the four components of Australia’s GDP
(also known as aggregate demand, AD), other than government spending, G. (2 marks)
2. Assess which of the three main types of unemployment might COVID-19 lockdowns be
causing the most. Explain why. (2 marks)
3. COVID-19 has affected both AD and aggregate supply (AS).
(i) Draw a simple AS and AD diagram to show how they might have shifted. Draw in
MS Word or draw on a piece paper, photograph, and paste the image in your answer
document. (2 marks)
(ii) Based on the diagram, comment on how GDP and the inflation rate would have
changed. (2 marks)
4. For 2020, Australia’s inflation rate is expected to be 1.43%.
If a loaf of
ead in the supermarket was A$4 at the start of 2020, what will its price be at the
end of 2020?
Show your workings by typing it, or by writing it on a piece of paper, taking a photograph of
it, and pasting it in your answer document. (2 marks)

Section 3: Development economics (10 marks; length: XXXXXXXXXXwords)
You are the newly elected prime minister of the Southeast Asian country Cambodia.
Cambodia is a Buddhist, low-middle-income country with a GDP of between US$20-30
illion. Its GDP growth was rapid: 8% each year of the last decade. Still, the GDP’s size is $5
illion smaller that Nepal’s and a tenth (1/10th) of neighbour Vietnam’s.
The same leader has been its prime minister for 35 years. Its population is 16 million. Of
that, almost 5 million people are ‘near-poor’, meaning although above the poverty line, are
vulnerable to becoming poor again if there are economic and other shocks (like COVID-19).
Though its capital city has shopping malls, nearly 80% of the population live in rural areas.
Only 57% of its population finish secondary education (high school); a quarter do not have
good access to water; a third do not have access to good sanitation (toilet and sewage).
The economy was once almost entirely agricultural. Though less dependent on it, agriculture
still makes up a quarter of its GDP. It mainly produces rice. Half the country is forest.
Most of its economy is reliant on (i) exporting simple garments (women’s wear, men’s t-
shirts, sweaters) and (ii) tourism. The garment factories are largely owned by foreign
corporations. Its tourists are mostly Chinese, Vietnamese and Thai.
Unemployment is officially ‘low’. But many Cambodians are actually ‘underemployed’: they
have jobs that could be easily lost, or work for their family or are farmers but have no salary.
The shock of COVID-19 has today severely affected its economy. Tourist a
ivals has dried
up, as has demand for its clothing exports.
Can Cambodia be developed into a better economy of the future? Can it be a prosperous
model for other developing countries?
1. Outline a development plan for Cambodia. Do not only propose clever ideas. Discuss also
some of the challenges in implementing them, if possible. A prime minister like you should
e realistic and balanced.
To generate ideas, use:
(i) the five structural changes to boost development
(ii) the list of internal and external ba
iers to development that needs to be overcome
(iii) ideas from the Youtube video (click here) on ‘premature deindustrialisation’,
where several ‘development models’ are described— could it adjust its export-
oriented model, or use or combine it with other growth models?
(iv) ideas from the Youtube videos you watched about how Japan and South Korea
developed from being poor, rural societies.
(10 marks; XXXXXXXXXXwords)

Section 4: Fiscal, monetary and supply-side policies (10 marks; XXXXXXXXXXwords)
Pakistan is a low-income country with a population of around 200 million and an annual GDP
of about US$300 billion. Literacy rates are low: only 59% of its people can read or write
(mostly in the cities). Women get discriminated against, and only 26% of them are
participating in the labour force and getting paid.
There is also income inequality. The very small proportion of the u
an rich live lavish
lifestyles, and easily spend on sports cars, whereas most people survive with small incomes.
Compared to Australia’s 10% GST tax, Pakistan’s is 17%. This sales tax on buying things
could burden the bulk of its citizens, who are low-income earners.
Pakistan’s infrastructure is inadequate and poorly maintained. This raises business costs:
domestic companies cannot make, transport and export its products cheaply. They struggle
to compete with exporters in India and China, its neighbours.
Table 1 shows some key economic measures for Pakistan in the last 12 quarters:

Table 1: Quarterly GDP growth, unemployment and inflation rates, PMI, as well as government-debt-to-GDP ratio
(generally accurate but modified for this exam).
GDP growth
ate (%)
ate (%)
Inflation rate
index (PMI)
atio (%)
Fiscal policy and supply-side policy
1. You are the finance minister of Pakistan. Your ministry officials show you Table 1. They
advise you to implement fiscal policy.
(i) Briefly: will you implement contractionary or expansionary fiscal policy? Why?
Discuss in detail: what specific fiscal policies will you implement? Creatively use the
two tools that governments can use for fiscal policy to devise a clever but realistic
plan. Refer to the country’s economic profile and table for hints.
In addition to your fiscal policies, provide one supply-side policy (write ‘SSP’ next to it
so that I know).
(4 marks; XXXXXXXXXXwords)
(ii) What is a limitation to the effectiveness of your fiscal policy? (1 mark)

Monetary policy
2. Given the same situation:
(i) Would this country’s central bank try to increase, decrease or maintain its official
interest rates? Why do you say that? XXXXXXXXXXwords)
(ii) How will its central banks change the interest rate (clue: it involves using bonds)?
(20-50 words)
(iii) Assess how that action will affect each of these XXXXXXXXXXwords):
(a) consumer spending and business investment
(b) GDP growth
(c) unemployment
(d) inflation
(5 marks)
Answered Same Day Jun 10, 2021 ECO600 ICMS (International College of Management Sydney)


Komalavalli answered on Jun 12 2021
134 Votes
ASSESSMENT TEMPLATE___________________________________________________
    Subject Title
    Subject Code
    Lecturer / Tuto
    FEB 2020
    Assessment Title
    Learning Outcome/s (found in the Subject Outline)
    C, D, E
    Assessment type (group or individual)
    Weighting %
    Word count
    Due day & date
    Class submission
    Lecture Tutorial
    Submission type
    Paper copy X Turnitin
    Format / Layout of Assessment
(details of what to include)
ICMS Cover Page
Table of Contents
Synopsis / Executive Summary
Reference List
ICMS Cover Page    
Reference List

    Oral Presentation:
Paper submission
PowerPoint submission
Peer review (group presentation)
Reference List
    Assessment instructions
(clear, succinct, without repetition)
Where must the student go?
Students must be present in the exam hall
oomto complete this final exam.
Other rules and information
Students will be given sufficient reading time. Then, the exam will run for two and a half hours. It will be a closed-book assessment.
This exam will short-answer questions. Student may be asked to also sketch diagrams.
Students are only allowed to use their pens. Calculators are not required – there will be no calculations involved.
The exam will test students on the topics of Weeks 8 to 14 (everything after the mid-term
Student will be expected to apply the concepts learnt in real-life situations.
    Readings for the assessment
(instructions where they can be found e.g. MyAthens database, Moodle etc.)
To prepare for the exam, students must refer to:
(i) their lecture notes and slides,
(ii) notes taken during classroom activities
(iii) reading material and exercise questions provided by the lecturer.
    Grading Criteria / Ru
See scoring guide below.
Scoring guide
    H. Distinction
Section 1: International trade and exchange rates
i) The trade protectionist policy that the Indonesia will implement is import tariff. Import tariff means taxing the goods that imported to Indonesia.
ii) Implementing import tariff will make foreign country’s textile and footwear products relatively costlier in Indonesia. So the demand for domestic industry goods will increase. Therefore the policy will benefit the domestic industry.
iii) Through implementing the policy country might face trade conflicts between the nations and it can be...

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