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ECONOMICS HOMEWORK: AUGUST 2016 Due Date: Monday 29th August (for ATLs) (submission to drop box: 3:00pm) Homework Exam: Wednesday 31 August / Thursday 1st September (Graded A to F) 45 minutes. (2nd part of period). Structure of Homework Words or questions in bold may require research. Bibliography A bibliography should be submitted which complies with all conventions. Topic 1: UK Economy Article 1: UK Ponders Post Brexit Fiscal Policy Source: Date: Financial Times (UK) Reproduced in the Australian Financial Review 8th August 2016. 1. The terms fiscal policy and monetary Policy are used in this article. Explain the difference between fiscal and monetary policy. 2. The Bank of England is the Central Bank of the United Kingdom. Explain the purpose of a Central Bank. 3. 3a. 3b. The article discusses the Brexit. Outline two reasons why the people of the UK voted to leave the European Union. Suggest two negative consequences from this decision. 4a. 4b. Explain the meaning of the term “bonds” in the context of this article. What is bond buying program? How could this assist the UK economy? (This is challenging question!!) 5a. 5b. Define the term “public borrowing” What has happened to public borrowing in the UK over the last few years. 6. How do people think the government should help the economy? 7a. If UK is going to increase spending, more should be spent on infrastructure. Define the term infrastructure. 7b. Why would an increase in spending in this area be desirable? 8. What is physical and digital infrastructure? 9 What would be a quick way to rejuvenate consumer spending? 10. How can you boost business investment? 11. One economist suggests that high levels of debt should not be a concern. Why? 12. The Governor of the Bank of England, stresses the importance of productivity as a determinant of long term prosperity. Explain the concept of productivity. Topic 2: US Economy Article 2: Strong jobs, weak growth a riddle for the US Source: Date: Australian Financial Review 8th August 2016 1. What is the great paradox in the US economy? 2. The Federal Reserve, is the C_____________ B____________ in the United States. 3a. 3b. What is the current unemployment rate in the United States? This rate is close to what has traditionally being deemed full employment. Explain the concept of full employment 4. What has been the growth in wages? 5a. With very low levels of unemployment, what would be the normal response from the FED? 5b. When you have low levels of unemployment, why might inflation become a problem? 6. What is said about the current growth rate for the United States? 7. Explain the meaning of the words highlighted in bold in this sentence. An inventory rundown by firms likely explains the recent tepid quarterly production growth. 8. What is the trade-off decision facing the Fed? 9. There appears to be a major problem with lagging productivity growth. How is productivity defined in this context? 10. How does slower productivity growth impact on the economy? 11. What explains feeble productivity globally? 12. The article states that newly emerging services are more difficult to measure than goods from the old economy. Suggest two reasons why it might be difficult to measure newly emerging services, when calculating GDP/economic growth. Topic 3: South Korean Economy Source: Date: Economist Magazine July 2nd 2016 Questions 1. The government in South Korea wants to reduce the red tape around mergers. In this context, what is red tape? 2. Explain the purpose for the government’s stimulus package? 3. What does the article say about monetary policy in South Korea? 4. Why has the slowdown in China impacted South Korea? 5. What factor is reducing demand for Korean ships? 6. Last year the three biggest ship builders reported annual losses of 6.4 trillion won. Convert 6.4 trillion won to US dollars. 7. How will the reduction in interest rates benefit South Korean consumers? 8. The government will provide wage subsidies for the long term unemployed. What are wage subsidies? In what way would money be provided/allocated? 9. The government also wants to boost consumption with tax breaks Provide a practical example of a tax break. 10. What is said about debt-levels in South Korea? 11. Define the term under-employed in this sentence: The money could be better spent goading under-employed South Koreans.. 12. In which sector does productivity need to improve? Topic 4: China & The Middle Class 1. The article claims that since 1978 more than 700 million people have been lifted out of poverty in China. Define the term poverty, from the World Bank perspective. 2. One major discontent in China is the issue of inequality. Define the term inequality. Explain how an economist might try to measure inequality. 3. When the Community party seized party in 1949, China’s bourgeoisie was tiny. Define the term bourgeoisie. 4. What was the Cultural revolution in China? Was this a period of high growth or very low economic growth? 5. What was privatized in the 1990s? 6a. 6b. 6c. Describe the growth of the middle class from 2000 to 2016. What income bracket is used in this article to define the middle class in China? In the United States, what income bracket might be considered “middle class”? 7. Where is the middle class highly concentrated? 8. The government encourages private investment without adequately regulating financial products. Explain the concept of financial regulation. Eg: What might need to be regulated? 9. What comparison is made to South Korea and Taiwan? 10. China opened up its markets in the 1980s. Explain the meaning of expression “opened up” in this context. Support your response with practical examples. 11. Many people in China are frustrated by a lack of accountability and transparency. Define in the terms accountability and transparency in the context of this article. 12a. In 2013, the Chinese communist party listed seven things that should not be discussed. This includes… 12b. One item on this list is economic liberalism. Define the term economic liberalism. 13. Richer and better educated people are more likely to support market allocation of resources. Another way of saying market allocation could be…. 14. What has been the communist party’s most important source of legitimacy. 15. Industrial overcapacity is now a major concern in China. Give one example of an industry in China which is facing the problem of industrial overcapacity. 16. Why might migrant workers in cities feel marginalized 17a. 17b. Based on the graph in the article, which Chinese city is the richest per capita? Suggest one reason why you believe this city is more wealthy per capita, than other cities. Extended Response 18. The article states: China is beginning to reach the limits of growth without reform. In a response of about 400 words, explain 3 major economic reforms China needs to implement in the future. Appropriate research required. 3 different sources.