1 7902AFE: Business Economics Semester 2 2013 Problem-solving Paper This problem-solving paper consists of five (5) questions. Each question contributes towards 10% of your final grade. Each question should be able to be answered in no more (and ideally considerably less) than 600 words. The assignment should be submitted in pdf format via the appropriate submission point on Learning@Griffith. Each question will be marked against the following criteria: -Demonstrated understanding of key economic concepts (40%) -Demonstrated ability to apply key economic concepts to the scenario (40%) -Clarity of exposition (20%). Question 1 – 10 marks At the national level, public debate has centred on the performance of the main monetary measure – GDP. Each year we must do better than the last; otherwise we are officially in recession…while GDP growth is important for raising living standards, it is not synonymous with happiness. The Weekend Australian June 1-2 2013 a) Critically discuss the strengths and weaknesses of using per capita national income (even once adjusted for purchasing power parity) as a measure of welfare. (6 marks) b) Discuss at least two alternative measures of national welfare that have been put forward? What are the primary strengths and weaknesses of these alternatives? (4 marks) Question 2 – 10 marks On 3 February 2009, the Australian Government, in response to the global financial crisis and fears of its impact on the Australian economy, announced the Household Stimulus Package to provide widespread assistance to low and middle-income households, as well as substantially increased expenditure on infrastructure. The total size of the Stimulus Package is estimated at $42 billion. a) Briefly discuss the case both for and against governments engaging in active economic stabilisation. (4 marks)
2 b) What are automatic stabilisers, and how do they work? (4 marks) c) Evaluate the following statement: ‘Fiscal policy is a very precise tool for controlling…