Answer the following question ensuring that you apply economic principles or theory related to understanding the health of the economy and the need for government intervention to inform your analysis and support your decisions. Communicate your ideas with correct grammar, spelling and writing style and support your answer with diagrams and examples as necessary.

Question (15 marks)

Using an appropriate diagram, explain the concept of a stable economic equilibrium and provide your assessment of whether or not the US economy, the Australian economy and the Chinese economy are all currently at a stable equilibrium.

Rationale

This assignment will give you practice in preparing an answer to a question which is similar to the type of questions you are likely to be asked in the examination.

The question addresses the following learning outcomes:

Learning Outcome 5: be able to critically examine and demonstrate why it might be necessary for government to intervene in the production of goods and services and in the distribution of income.

Learning Outcome 6: be able to examine critically the health of the economy as a whole through the analysis of major economic variables and advise on likely policy alternatives.

Presentation

Answers should be typed and diagrams must be clear and neat and preferably drawn electronically. Hand-drawn diagrams are acceptable. Sources used in your answer should be fully referenced in APA 6th style. The answer to the question should be divided into three parts:

Part 1: Introduction

The introduction sets up your response by succinctly stating your understanding of the issues, what you think is the best way to analyse the situation – including choice of theory and sources of evidence, what type of findings you expect and what potential applications you expect there to be.

Part 2: Analysis

The analysis will represent the bulk of your work. Here you will provide your answer in detail by drawing upon the literature, the theory and the evidence to come up with an answer to the question posed. You may find that you want to break this section up into a number of sub-parts – one for a detailed discussion of the issues including your non-technical response, one for a detailed analysis of the tools of analysis you will use (theory), one for your extensive consideration of the evidence, one where you draw together your information and findings along with their implications.

Part 3: Conclusion

In the conclusion you briefly and succinctly review what you have done in answer to the question and indicate what further issues there might be to be considered.
Requirements

Sources used in your answer should be fully referenced in APA 6th style.

Assignments must be submitted through EASTS.