Macroeconomics

Assume you have been hired as an economic analyst by the government. In your role you are required to produce an appendix to the state of the nation report to government ministers. This report must address each of the sections below. As this is a report, you must NOT paste the “questions/requirements” in the report – just you answers and diagrams.

Assignments must be submitted electronically via Canvas and must constitute your own work (they are not group assignments). Submission for this assignment is via Turnitin and any form of plagiarism will not be tolerated.

Late submissions of assignments without special consideration or extension will be automatically penalised at a rate of 10% of the total marks available per day (or part of a day) late – 3 marks deducted per day. Of course, if you have encountered some trouble and have been unable to meet the deadline for genuine reasons then you can apply for Special Consideration. For information and instructions about how to apply for Special Consideration go to: http://www1.rmit.edu.au/students/specialconsideration (Links to an external site.). Information on extension requests are provided here: Extensions of time for submission of assessable work

Answers and diagrams are to be in entered into the Word document provided under the relevant section headings. For required diagrams you can either draw directly in the word document using ‘shapes’ and ‘text boxes’ for labelling (please remember to ‘group’ all your diagram items as they are likely to move on in your document – especially when you upload the word file and you will lose marks if  we cannot ‘see’ it properly – OR you can draw the diagram free-hand on paper, take a photo and paste into the Word document. Do not copy and paste diagrams out of textbooks, web pages, provided lecture slides……. This must represent your own work.

Remember that this is part of a report for ministers in government therefore your writing and expression should be professional and succinct (these are very busy people). Your wording needs to be structured as a report not as an answer to questions in a test.

Be sure to observe word limit requirements and provide well crafted answers that provide adequate information and explanation without being either too brief (insufficient detail) or too long (long winded).

Your answers must be provided under the 3 sections provided in the Word document and address each of the following components: Australia Technical Appendix.docx

Actions

Details:

Consider the current covid-19 situation and its negative impact on economic activity.

Section 1: COVID-19 Impact [300 word maximum]

Using the (1) Aggregate Demand-Aggregate Supply Model with the Labour Market Model and the (2) Aggregate Expenditure (AE) Model with the Labour Market Model and assuming the Australian economy was at the natural rate of output at the onset of the crisis:

· Illustrate the impact of the crisis on the domestic economy using both the (1) AD-AS model and its associated labour market model and the (2) AE model and its associated labour market model. Ensure you clearly label all parts of the diagram, clearly demonstrating the original equilibriums and the COVID-19 outcomes.

· Discuss your rationale for the outcome you have demonstrated in your diagrams, ie discuss which components of AD/AS/AE have been affected and why – the basis of the shifts you demonstrated in the diagrams. Explain what has occurred in your labour market models and why.

Section 2: Model Assumptions and Resultant Outcomes [200 word maximum]

The 2 models you have used have different underlying assumptions.

· Outline the major underlying difference(s) between the two models.

· Briefly discuss and illustrate how the difference(s) in the model assumptions impact the degree of the potential impact on the economy. Use the AD-AS Model and provide ONE diagram to illustrate the potential difference in outcomes depending on the assumptions made. (Hint – consider the assumptions underlying the AE model – what SRAS curve reflects this?)

Section 3: Policy Recommendations [500 word maximum]

Based on the differences of the model:

· Provide alternate policy recommendations for each model, the justification for the policy recommendations and any costs/benefits you perceive of these actions. Discuss whether self-correction is possible for either model – if so, what is the process. Discuss the costs and benefits of self-correction in this case relative to government intervention.

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Marking Criteria

Grades will be awarded on the following basis:

Fail (NN):
The submitted work does not meet the criteria set.

Pass (PA) 50-59%:
The submitted work meets the criteria provided set for the tasks and an awareness of relevant substantive issues. This includes clear comprehension of substantive issues within the course, correct application of modelling and basic computation skills.

Credit (CR) 60-69%:
In addition to satisfying the conditions for a pass, the submitted work shows evidence of the ability to engage in detailed quantitative and qualitative application, sensitivity to and understanding of the substantive area and its significance, the ability to comprehend relevant theoretical ideas, and a thorough appreciation of potential outcomes.

Distinction (DI) 70-79%:
In addition to satisfying the conditions for a credit, the submitted work shows perceptive analysis of relevant material, the ability to engage in complex qualitative and quantitative analysis, and apply extensive and relevant theoretical analysis. The submitted work presents convincing and logically constructed arguments that are cogent and coherent.

High Distinction (HD) 80%:
In addition to satisfying the conditions for a distinction, the submitted work shows evidence of high order critical analysis and insightful use of wide and relevant theoretical and mathematical understanding as well as thorough attention to presentation of answers. The submitted work demonstrates the capacity to independently articulate consequences and potential outcomes.

Assessment Declaration:

This is an individual assignment. That means it must be your own work and you can’t copy or get help from anyone. However, it is fine to discuss the issues, ideas and how you may approach the questions with fellow students.

By submitting this assessment you are declaring that you have read, understood and agree to the content and expectations of the Assessment declaration (Links to an external site.)Links to an external site. (Links to an external site.).