MACROECONOMICS 1 (ECON1246 ECON1273) Assessment 2 Part 1 Submit online at the Assignment folder in Canvas by: Friday 31 August 2018 at 6 PM This assignment covers the following topics: GDP and economic activity Topic 3 Aggregate Demand / Aggregate Supply The Product Market Topic 4 READ THE FOLLOWING FIRST This assessment contributes 20% of the overall marks for the course. Only a single attempt of submission is permitted. Please ensure to attach the final version of the assessment. Attach your assignment to the Assignment cover sheet for the submission of work. The cover sheet is in the Assignment folder. Submit your assignment using either word or PDF format. The font size has to be at least 11. Explain your answers, but be succinct (brief and relevant). Label each axis and explain the diagram that you use carefully. Show all of your working in order to get partial credits. After the due date any late submission will be marked as late. A penalty of 10% of the allocated marks (i.e., 2 marks) per day will apply for late submissions. Note on Plagiarism: You cannot just copy your friends answers. This is considered academic plagiarism. See students responsibilities at RMITs policy on this: https://www1.rmit.edu.au/browse;ID=sg4yfqzod48g1 Use footnotes where you have referred to RMIT notes and or articles listed below or other written material Articles and Macroeconomics notes related to the assignment Articles: Trump Eyes Even Higher Tariffs as China Trade War Escalates Bloomberg News, 6 July 2018 (relates to Q1, Q4) Trumps Trade War Has Officially Started Bloomberg Editorial Board, 6 July 2018 (relates to Q2) Trade Conflicts and Tariffs wont hurt US economy, but they do have a dark side Patti Domm @pattidomm, 3 July 2018 (relates to Q2, Q3) Economic reality: Trump is imposing tariffs on Americans, not Europe AEI 31 May 2018 (relates to Q3) Is China fighting trade war with currency? The Age Business, 3 July 2018 (relates to Q4) Yuans Fallout for Markets. Bloomberg 20 July 2018 (relates to Q4) How Trumps steel and aluminium tariffs could affect state economies Brookings The Avenue, 17 July 2018 (relates to Q2, Q3) Notes: USA tariffs – Teaching notes Oliver Rose Macroeconomics 1 Lecture, Topic 4 – slides 14 to 32 Macroeconomics 1 Tutorial, Topic 4 – Problems and Applications, p297-299: Q1.5, 2.5 and 2.7 and Application Question. Question 1. Identify and explain the Presidents objectives (a) Use the articles listed above to identify 2 aggregate demand and or aggregate supply factors that the US Presidents actions are intended to affect. (b) Explain these factors and their intended impact on US RGDP, unemployment and price level. For AS factors indicate whether they are long-run or short-run AS factors or both. (c) Draw a AD-AS diagram to illustrate your answer. (1 + 4 + 1 = 6 marks) Question 2. Criticism of the US actions (a) Refer specifically to the Bloomberg editorial Trumps Trade War Has Officially Started and Trade Conflicts and Tariffs wont hurt US economy, but they do have a dark side Identify 1 aggregate demand and 1 aggregate supply factor that will have a negative impact on the US economy. (b) (c) Draw a AD-AS diagram to illustrate your answer. (1 + 4 + 1 = 6 marks) Question 3. Evaluate / express an opinion Will the US Presidents actions be successful in the short to medium term (1 to 3 years)? Explain your answer giving two reasons for your evaluation of the success or otherwise of the US actions on trade tariffs. [no explanation = no marks] (1.5 x 2 = 3 marks) Question 4. Chinas response and Impact on China (a) What actions have, or can the Chinese government and Chinas central bank take in response to the US trade tariffs? In your answer identify two actions (one for the Government and one for the Central Bank). (b) Explain these actions and their intended impact on Chinas RGDP, unemployment and price level. [For AS factors indicate whether they are long-run or short-run AS factors or both]. (c) Draw a AD-AS diagram to illustrate your answer. (1 + 3 + 1 = 5 marks) Additional information Diagram template: The diagram below can be used for your diagrams. (Tips: to create new lines, simply copy the existing curves and move to the new location)
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