What does the slope of the yield curve tell us? Suppose that economy is in recession and monetary authority decreases policy rate (interest rate) to return output to its potential level. Illustrate using relevant graphs when the yield curve is i) approximately horizontal ii) downward sloping (Hint: Use expectations augmented I S - LM model) .

Assignment Task Three

a) A taxpayer received a lump sum of $91,333 on redemption of a fixed deposit. This represented the original principal of $80,000 and interest for the previous year of $3,000. This interest was rolled over with the principal and invested for another 12 months. The remaining $8,333 was the interest accrued on this total of $83,000.

b) A taxpayer lent a friend $10,000. Interest was payable at 10% p.a. The friend paid the taxpayer $1,000 by cheque on 30 June CY which was not deposited in the taxpayer's bank account until 15 July of the following financial year.

c) Taxpayer's employer had a cash flow problem in the previous financial year and could not pay her all her salary. $9,000 of last year's salary was paid in the current year in addition to this year's salary of $55,000.

d) An employee received the sum of $1,600 on 13 June CY being in respect of 5-week long service leave commencing 30 June CY. The employee intended to return to work at the end of the period of leave. Would your answer be different if the leave commenced on 1 July the following year?

e) A landlord receives rent in advance from his tenants. Actual receipts for this financial year were $3,800 of which $250 was in respect of the month of July of the following year. An amount of $200 was received during the previous year in respect of the month of July CY.

----Required Indicate if assessable income has been derived and when it was derived in the above situations.

Define Marshall-Lerner condition and J-curve. Explain the relation between the two concepts.

Define Marshall-Lerner condition and J-curve.Explain the relation between the two concepts (25 pts.)

Assignment Task Two (300 words - 7 marks)

The coronavirus intervened Australia in early 2020.

On 12 May, the Morrison government issued an unprecedented progress report on the delayed budget, outlining the coronavirus pounding to the national economy and the huge outlay to deal with the pandemic.

What were the main issues presented? How do you think they would affect the economy, social and employment situation in the near future?

Examine the effects of a decrease in foreign output and foreign interest rate under

flexible

-

exchange rate regime when the goal of the central bank is to achi

eve output

stability

(Hint: Use Mundell

-

Fleming model)

.

What happens to the components of

demand?

Examine the effects of a decrease in foreign output and foreign interest rate under

flexible-exchange rate regime when the goal of the central bank is to achieve output stability(Hint: Use Mundell-Fleming model)

.What happens to the components of demand?

A manufacturing company is considering purchasing a 10 HP electric motor which it estimates will run an average of 6 hours per day for 250 days per year. Past experience indicates that: (1) its annual cost for taxes and insurance averages 2.5% of first cost, (2) it must make 10% on invested capital before income tax considerations, and (3) it must recover capital invested in machinery within 5 years. Two motors are offered to the company. Motor A costs $ 340 and has a guaranteed efficiency of 85% at the indicated operating load. Motor B costs $290 and has a guaranteed efficiency of 80% at the same operating load. Electric energy costs the company 2.3 cents per KW-hr. Calculate the annual cost of each motor and indicate which motor should be purchased

Demand is given by QD= 250 –2P and a firm’s cost function is C = 5Q + Q2.

(a) If this industry is a monopoly, what is the profit maximizing quantity? What is price? How much total surplus is generated?

(b) If this is a perfectly competitive industry with a cost structure equivalent to the monopoly (i.e., there is a large number of firms, the sum of whose marginal cost curves is equal to the monopolist’s marginal cost curve), what is the quantity produced? What is price? How much total surplus is generated?

Examine the effects of a decrease in foreign output and foreign interest rate underflexible exchange rate regime when the goal of the central bank is to achieve output stability (Hint: Use Mundell-Fleming model) What happens to the components of demand?

Examine the effects of a decrease in foreign output and foreign interest rate under

flexible - exchange rate regime when the goal of the central bank is to achieve output stability

(Hint: Use Mundell-Fleming model) What happens to the components of demand?

2. Discuss the potential impact of Social Entrepreneurship on poverty in general terms (in Western Washington)

Why does Charles C. Mann call his article "The Real Story of Globalization?"