Student Number: (enter on the line below)
Student Name: (enter on the line below)
HC1072
Economics and International Trade
final assessmeNt
Trimester 3, 2021
Assessment Weight: 50 total marks
Instructions:
· All questions must be answered by using the answer boxes provided in this paper.
· Completed answers must be submitted to Blackboard by the published due date and time.
Please ensure you follow the submission instructions at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.
Question 1 (8 marks)
Define, discuss and provide examples for each of the following:
a) Substitutes and complements. (2 marks)
ANSWER a): ** Answer box will enlarge as you type
b) Inferior and normal goods. (2 marks)
ANSWER b):
c) Microeconomics and macroeconomics. (2 marks)
ANSWER c):
d) Elastic and Inelastic Demand. (2 marks)
ANSWER:
Question 2 (10 marks)
“A key role of central banks is to conduct monetary policy to achieve price stability (low and stable inflation) and to help manage economic fluctuations.”
a) Discuss this statement by defining monetary policy. (3 marks)
ANSWER a):
b) Identify the tools used to implement monetary policy. (3 marks)
ANSWER b):
c) State and explain at least 2 limitations when the central bank implements monetary policy. (4 marks)
ANSWER c):
Question 3 (7 marks)
The table below shows economic information for a hypothetical economy with a flexible
exchange rate.
| | 2017 | 2018 |
| CPI | 100 | 115 |
| Labour force (’000) | 11000 | 11360 |
| Full-time employed (’000) | 7250 | 7920 |
| Part-time employed (’000) | 3200 | 3400 |
| Net foreign debt ($ billion) | 900 | 1000 |
| Net foreign liabilities ($ billion) | 1050 | 1053 |
a) With reference to the table, calculate the unemployment rate in 2017 and 2018. Show all working. (1.5 marks x 2 = 3 marks)
ANSWER a):
b) Explain 2 types of unemployment that we discussed in class. (2 x 2 marks = 4 marks)
ANSWER b):
Question 4 (7 marks)
A CNBC new story published 14 December 2021 reports, “OPEC and non-OPEC oil producers, an influential group known as OPEC+, decided on Thursday to stick to a previously agreed upon plan of hiking output by 400,000 barrels per day in January 2022.
However the alliance said in a statement that “the meeting remains in session,” meaning they can “make immediate adjustments” should the current market conditions shift.
In what was a hotly anticipated meeting, the energy alliance convened via videoconference to determine whether to stick with its plan to release more oil into the market or to restrain supply amidfears over the omicron Covid-19 variant. Other issues on the table included aU.S.-led release of strategic reservesfrom crude-importing nations andIran’s possible re-entry into oil markets.”
a) Identify the market structure where OPEC operates. (2 marks)
ANSWER a):
b) Discuss extensively 2 features of that market structure. (2.5 x 2 = 5 marks)
ANSWER b):
Question XXXXXXXXXXmarks)
Using the data in the table below, to complete the tasks for this question.
| | Data for 2019 (Base Year) | Data for 2020 |
| | Quantity | Price | Quantity | Price |
| Potato | 600 | 2.50 | 680 | 3.00 |
| Rice | 840 | 2.00 | 800 | 2.80 |
| Computers | 500 | 850 | 450 | 950 |
| Cars | 300 | 15,000 | 200 | 18,000 |
a) Calculate Nominal GDP for 2019 and 2020. (2 marks) Show your workings.
ANSWER a):
b) Calculate Real GDP for 2019 and 2020. (2 marks) Show your workings.
ANSWER b):
c) Calculate the GDP Deflator. (2 marks) Show your workings.
ANSWER c):
d) Identify 2 possible exclusions to GDP and discuss why they have to be excluded.
(2.5 x 2 = 5 marks)
ANSWER:
Question 6 (7 marks)
a) Discuss the role of foreign exchange in international trade. (3 marks)
ANSWER a):
b) “Foreign exchange is determined based on demand and supply for a specific currency.” Explain and discuss this statement based on the economic principles learned in class.
(4 marks)
ANSWER b):
END OF FINAL ASSESSMENT
Submission instructions:
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