QUESTION 1

a. Your mate, whose business is in the long run, told you that he will keep running his business because he is making a normal profit. Explain, using diagram(s) In your everyday life, you make strategic decisions. Using the game theory concept, explain one of these decisions. (assume he is in a perfectly competitive industry).

b. In your everyday life, you make strategic decisions. Using the game theory concept, explain one of these decisions. 2 Marks

QUESTION 2

a. In a conversation, someone mentioned that “Australia’s economic grew because current or market GDP in 2016 was 1.11 trillion and in 2017 it was 1.14 trillion”. Upon checking you found that in these two years Australia’s GDP price deflator increased from 104.2 to 105.7. Explain with numerical calculations if the statement is factually accurate. 3 Marks

b. Will robots and artificial intelligence replace jobs in the future? What kind of jobs are most vulnerable? Provide examples of 2 jobs. 2 Marks

QUESTION 3

a. Fred told his friend Flintstone that she is very fortunate as the slow-down in the economy has not decreased sales in her grocery store by much compared to sales of new cars in his car dealership. Explain what Fred meant using the concept of the business cycle, durable and non- durable industries. 2 Marks

b. Describe 2 variables a government will look at to predict where the economy will be in the next six months. 2 Marks

QUESTION 4

a. Your brother came home last night feeling frustrated because his real wage has decreased compared to a year ago. He told you his union should not have signed an agreement with his employer for an annual wage rise of 2 percent. Explain what your brother meant using the concepts of real income, nominal income, anticipated and unanticipated inflation rate. 3 Marks

b. When the price of a good has increased, reflect on two issues you would considered before buying the good. 2 Marks

QUESTION 5

Three friends, Tom, Jerry and Mary were having coffee in the GOSSIP CAFÉ and were discussing their job prospects.

Tom told his mates that he has just resigned from his current job because he worked long hours and did not have enough time to spend with his kids. He said he is looking for a new job with normal hours and family friendly policies.

Jerry, who was feeling a bit down, mentioned that after graduating with an Information Technology degree a year ago she still can’t find a job because the economy is in a contractionary phase.

Mary joined in and said that since she moved to the countryside a year ago she still can’t find a job because there are not many jobs available in that area.
To lighten the mood, Tom told them things will get better as the unemployment rate decreased last month by 0.2 percent to 5.9 percent. Mary did not share Tom’s optimism and told them that the decrease in the unemployment rate is not good news because it was due to a fall in the participation rate.

a. Which type or category of unemployment best describes Tom, Jerry and Mary situation. Explain. 3 Marks
b. Explain what Mary means when she said that the fall in last month’s unemployment rate is not good news. 2 Marks

QUESTION 6

a. Why a credit card is not considered money? 2 Marks
b. Money is demanded for three main purposes. Provide an example where you have demanded money for each of these three purposes. 3 Marks