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Question 1: Should gross domestic product (GDP) be used as a measure of the wellbeing of the society? Why? Why not? In your short essay, you are required to address the following points:•Discuss the advantages and disadvantages of using GDP as a macroeconomic indicator•Identity and explain the rationales behind alternative measures of the wellbeing of the society.•Articulate your own view on GDP and other measures of the wellbeing of the society Question 2: The Australian government identified three priorities in its Budget 2016–17; these priorities included “jobs and growth”, “tax and super” and “balancing the budget”. Based on the information provided in http://budget.gov.au/2016-17/content/glossies/overview/html/, discuss the likely impacts of the Budget on the Australian economy. In your short essay, you are required to address the following points:•Given that the Budget focuses on investment in infrastructure and innovation, use the income-expenditure (IE) analysis to demonstrate the effect of such changes on equilibrium output in Australia.•Suppose that changes to the superannuation system have been successful and encouraged individuals to save more for their own retirement. How would this behavioural change affect national saving and investment? Overall, is it good for the Australian economy in the long run? Discuss.•A key point-of-difference between the Coalition and the Labor Party going into the 2016 General Election remains on the best way to balance the budget, particularly over the next 10-year period. In your view, does it matter whether the government runs a budget deficit or surplus? Why? Why not? Question 3: According to the May Minutes of the Monetary Policy Meeting of the Reserve Bank Board, the Board decided to reduce the overnight cash rate by 25 basis points, to 1.75 per cent. In your short essay, you are required to address the following points:•Briefly explain the nature of the open-market operation required to bring down the overnight cash rate by 25 basis points. •Based on the May Minutes, what were the main reasons behind the RBA’s move to cut the overnight cash rate? Use the aggregate demand-inflation (ADI) analysis to explain the likely effects of this rate cut on the Australian economy in the short and long run?What is the effect of an inflation target on the position of the monetary-policy rule? Why does the RBA follow an explicit 2–3% inflation target rather than alternative rules?
