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Task Answer four (4) questions. Maximum of 400 words for each question. These are questions which require short answer responses to a series of issues relating to economic principles and concepts. Attempt to answer each question in full and directly. Question 1 (10 marks)“All economic models are false and so they serve no practical use.” Explain, discuss and evaluate the accuracy of this statement. Use an example of an economic model in developing your answer.Question 2 (10 marks)“Negative gearing” is a tax instrument in Australia which allows investors to claim tax deductions on financing loans for and maintaining investment properties. Using the demand and supply model illustrate the potential effects of removing the policy of “negative gearing” on the aggregate property housing market for Australia. Use the model to predict the consequences for the volume of houses and units sold and their prices. Be explicit about any assumptions made in developing predictions. Perform a web-search to identify recent estimate(s) of the effect of removing negative gearing on Australian house prices. Explicitly cite the employed web-source(s). Question 3 (10 marks)Invariably the Australian government increases the excise tax on tobacco products in annual budgets. Perform a web-search to determine the amount of excise tax charged (as at 1 July 2016) on a standard 20 packet of cigarettes, which has a before tax price of $10. Illustrate using the demand and supply model, the effects of a tax imposed on sellers of tobacco products. Explain in detail who pays the tax (buyers and/or sellers) and discuss the role the price elasticity of demand plays in determining the impact on prices and quantity of tobacco products sold. Be explicit about any assumptions made in developing predictions.Question 4 (10 marks)The Australian Government called for tenders to supply twelve submarines for the defense force. The Government has recently accepted a bid from a French company to help build these submarines
