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QUESTION 1:
Consider this statement: ‘When the average level of prices of goods and services rises, the inflation rate rises. ' Do you agree or disagree with this statement? Explain.
QUESTION 2:
The following table shows data on the Australian economy in 2007 and 2013.
2007 (%)
2013 (%)
Unemployment rate
4.25
5.8
Inflation rate
3.0
2.2
Economic growth rate
4.3
2.3
(i) Define and explain how these three key economic indicators are calculated.
(ii) Consider the data for 2007 and 2013 and comment on the changes in terms of whether they are good for the economy or not.
(iii) What are some of the reasons why there is such a significant decline in growth rate?
QUESTION 3:
"Does productivity growth increase unemployment and therefore reduce economic wellbeing?"
Given the outcome of the scenario that you have just read, where the community is no worse off than before but it is no better off either, can you think of alternative actions that the little island community could have taken to make use of the potentially very beneficial, but socially disruptive new technology? What could have happened to the community's economic well-being if such actions were taken? How could short-term transitional costs be handled?
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