Reference no: EM132288143

Question 1:
Explain the concept of scarcity and opportunity cost. Give an example of how it is applied in your everyday life.

Question 2:
An economic system is the way a nation organises its economic activities to solve the issue of scarcity and the basic economic problems. The workbook describes two main economic systems: the command economy and the free market economy. Describe in your own words 2 advantages and 2 disadvantages of each system.

Question 3:
The global financial crisis (GFC) is commonly believed to have begun in US in July 2007 with the credit crunch, when loss of confidence by US investors in the value of sub-prime mortgages caused a liquidity crisis.
Perform your own research and briefly explain 2 reasons why the liquidity crisis happened in the first place. Limit your answer to 200 words.

Question 4:
The global financial crisis originally started in US has spread and became a global issue. Australia never actually went into a full recession as it experienced only one quarter of negative economic growth.
Identify 2 actions of the Australian Government that were targeted to fight the global financial crisis and explain how they were meant to help the economy.

Question 5:
Australian Banks regularly publish Capital Adequacy Ratios. If a Bank published Total Capital ratio of 13.01%, would the Bank be in a strong capital position? Explain your answer with reference to Basel accords and APRA authority.

Question 6:
Explain how the exchange rate of Australian dollar to a particular currency is determined and explain the major causes of its volatility.

Question 7:
What is the main source of the current account deficit in Australia? Why do you think Australia is running a deficit balance and should we consider it a problem for the Australian economy? Limit your answer to max 200 words.

Question 8:
Victor Smith, is one of your clients and has opened a small business providing tax and accounting advice to his clients. He employs 2 junior accountants to help him service the clients. He achieved total revenue for the financial year of $300,000. His junior accountants are paid a total of $200,000. He has just received an offer to work as corporate accountant for a large organisation earning $85,000 salary. He owns the office space he is using and he can rent it for $10,000 a year and can earn $200 interest per annum on it. His overheads for the period totalled $15,000 and Interest expense $350. He had additional payments of $6,500 on the top of that.
Required: Analyse if his business is profitable and advise him if to take the employment offer. Use both accounting and economic profit in your comparison and recommendation.

Question 9:
Finncorporation Ltd is one of your listed clients. They are thinking of issuing new shares. The expected return on governmental bonds at the moment is 7% and expected return on portfolio of shares is 12%. Their Beta has been determined by a market analyst as 0.9.
Required: Based on the information provided, advice your client what return they can expect on their shares.

Question 10:
Many economists point out that GDP is not a sufficient measure of living standards in an economy. Explain why this is. What other measures could be used to overcome the issues of current GDP measurement?

Question 11:
a) Why are shares exposed to systematic and unsystematic risk and yet a Treasury bond is not?
b) What effect does the exposure of shares to systematic and unsystematic risk have on the expectation of return in the Capital Asset Pricing Model?
c) Detail two items and explain why you have a more elastic demand for one over the other.
d) When everything else remains the same but the supply of a good or a service increases what happened to the price of the good? What branch of economics focuses on this relationship?
e) A traveller finds himself in Delhi at 11pm at night without accommodation or a plan having broken his rule of predominantly using his credit card in Singapore where it is readily accepted. He had used up all his cash in his wallet only to discover that his spare cash which he leaves in his blue pants in his luggage has been left on his bed at home because his quick travel turnaround. With two weeks in India and only $100 to spend describe how the concept of utility maximisation will apply to his spending decisions.
f) The United States of America is often referred to as a Capitalist economy. Describe reasons to support this classification and reasons why it is not supported.
g) Detail recent evidence of the economic concept of monetarism.
h) How do post-Keynesian economists view Keynes compare with Neo-Keynesian and New-Keynesian economics?
i) Regarding Value theory, describe to what extent you value the theory.

Case Study Information:
Download and review supporting document Environment Scan 2012 Financial Services Industry.

Case Study Question 1:
Based on the report, summarise the main trends in employment in the financial services industry with reference to the economic climate in Australia. Limit your answer to a maximum of 250 words.

Case Study Question 2:
Based on the report, what are the main issues financial services sector is facing in relation to labour productivity?

Case Study Question 3:
What is the likely impact of the increase in the productivity in financial services on overall economic growth in Australia?

Case Study Question 4:
What actions is Australian Government taking in order to increase productivity in the financial services sector?

Case Study Question 5:
Explain how productivity can affect the costs of a business.

Case Study Question 6:
Could regular overtime work solve the issues of productivity faced by the industry? Refer to the concept of marginal product in your answer. Can you think of one example of an action that could be used to solve the issue with productivity in the long term?

Case Study Question 7:
The report identified an undersupply of financial planners and insurance professionals due to the many recent natural disasters Australia has faced. Explain what undersupply is and its likely impact on the salaries of professionals that have expertise in this area. In your answer refer to forces of supply and demand.