Official Final Assessment
| Subject Title | Economics and Finance for Business |
| Subject Code | ECO600 |
| Lecturer/Tutor | Dr. xxxxxxxxxxx |
| Trimester | February 2022 |
| Assessment Title | Official Final Assessment |
| Learning Outcomes | All of them |
| Assessment Type | Individual |
| Weighting | 40% |
| Word Count | Maximum 2,000 words |
| Due Date | 11:59 pm, Monday, 25 April 2022 |
| Submission | Turnitin |
| Submission Type | PDF document |
| Final Examination Instructions | Instructions to Examination Candidates Answer ALL four (4) sections. They contains a short-answer questions. There are NO multiple-choice questions. Each section is worth 10 marks (total: 40 marks). Keep your answers WITHIN 500 words per section. Answer in BULLET-POINT style, not as paragraphs. Write CLEARLY. DO NOT REWRITE the exam questions in answers. When answering, first write the section number, such as ‘Section 1’, followed by question and sub-question numbers, such as ‘1(i)’. Answer each section ON A NEW PAGE. If you use and cite an article or book, please reference them appropriately. Refer to the ICMS Style Guide 2021. E.g.: “According to Bieber (2021), unemployment in Australia is at an all-time low this year. Therefore…” Then, mention the full source at the end of your answer: E.g.: Bieber, J. (2021, July 21). Australia’s unprecedentedly low unemployment shocks analysts. Bloomberg. |
Section 1: Ethical enterprises in the modern economic system: the circular economy (10 marks; length: max. 500 words)
Background
You are hired as the sustainability manager of Manly Golf Club. It is in Sydney, not too far away from ICMS’s main campus.
Learn about the golf club, its facilities, and the services it provides here, in this website.
To distinguish itself from rival golf clubs in the area, this club is under pressure to demonstrate its circular economy credentials.
It has hired you to propose strategies that apply the circular economy principles to all aspects of its operations.
…
Question
- Propose four (4) circular economy strategies, two for each of this golf club’s two services:
- golfing
- weddings and functions
Where possible, demonstrate how each strategy could be good/profitable for the business. Use a different R principle for each of your four strategies. Use any of the 9Rs below:
Figure taken from Kirchherr, J., Reike, D., Hekkert, M. (2017) Conceptualizing the circular economy: an analysis of 114 definitions Resources, Conservation & Recycling 221-232. If needed, see full article here.
Tips: apply the circular economy principles correctly. Your strategies must be specific to this business; creative, interesting, or, if possible, original; and feasible (something this business could realistically implement without much trouble).
Section 2: International trade and development (10 marks; length: max. 500 words)
Background
Papua New Guinea is a large island country north of Australia. It has a largely underdeveloped economy: it mostly exports raw materials such as timber and copper.
It does not have a large manufacturing base, relying instead on importing manufactured goods from abroad.
To learn about the country, go here. To learn about its economy, go here.
To see its low and high complexity exports, use Harvard University’s Atlas of Economic Complexity (click here):
- Enter the country’s name and click ‘start exploring’
- Find the section called ‘Export basket’ (the products it exports).
- Lastly, click on ‘Export complexity’ near the bottom.
…
Question
1. Select one (1) export item from this country whose complexity is low.
Then, follow these three steps:
First: propose how this item’s complexity could be improved using creativity, innovation or value-adding. Provide interesting detail. Argue why your proposals might be beneficial for this country’s economy.
Second: which country or region would be good target markets for this export, and why?
Third: suggest any trade-related policy that could help this country in this project.
Section 3: Macroeconomic fundamentals (10 marks; length: max. 500 words)
Background
Maldives is an archipelagic country made up 1,200 islands of which only around 200 are inhabited. It has a population of 540,000 people. It is located to the south of India, in the Arabian Sea.
The economy is heavily reliant on tourism, which is its largest ‘export’ industry by far, followed by seafood exports (fish, prawns etc.)
Macroeconomic situation
Since 2012, Australia’s inflation rate was around 2% and falling, before rising sharply in 2022 to almost 4% as COVID-19 restrictions were largely removed (go here, click on ‘10Y’ button to see the last 10 years’ trend).
In contrast, Maldives inflation in 2012 was almost 20%, fell to 5% in 2018, and was mostly negative (between 0% and -5%) since then. Analyse Maldives inflation rate since 2018, by going here and clicking on the ‘10Y’ button. See how it look like, in contrast to Australia’s.
Analyse Maldives unemployment rate, here (click on the ‘50Y’ button for a long historical perspective. Analyse its balance of trade, here (click on the ‘25Y’ button).
Contrast that to Australia’s unemployment and balance of trade (see here and here, click the ‘25Y’ button). You may investigate these and other macroeconomic measures more on the Internet.
…
Question
- By contrasting Maldives and Australia’s macroeconomic measures up to today in 2022, assess which phase of the business cycle Maldives is likely to be in (see here to learn about the business cycle). Justify your answer.
- You are the general manager of the Four Seasons hotel chain in the Maldives. Given your analysis of the business cycle above:
- assess whether it might be a good idea for Four Seasons to invest in expanding its hotel operations in the Maldives
- assess issues involved in hiring new hospitality managers and other workers for its hotels.
Section 4: Fiscal, monetary and supply-side policy (10 marks; max. 500 words)
Background
Country X is a developing country with a large government bureaucracy that is quite inefficient. The processing of applications to start new businesses are slow.
This country also has generous unemployment benefits: its unemployed citizens receive a generous payment that allows them to pay for rent and food such that there is little motivation for some of the unemployed to look for jobs.
The key macroeconomic measures of Country X over time– from two years ago to the present– are shown below. Examine them carefully. They are expressed in quarters (quarters means in chunks of three months):
(a) GDP growth: -2%, -1%, -2%, 14%, 5%, 3%, 2%, -1%
(b) Unemployment rate: 8%, 9%, 10%, 6%, 6%, 5%, 5%, 8%
(c) Inflation rate: 2%, 2%, 1%, 3%, 3%, 1%, 0.5%, 0.5%
(d) The purchasing managers’ index, PMI, in the manufacturing sector: 47, 48, 49, 49, 45, 48, 46, 45
The current official interest rate is 4%.
…
Question Monetary policy
Given the macroeconomic information above about this country’s economy:
- Would this country’s central bank be likely to increase or decrease its official interest rate or maintain it at the same level? Why do you say that?
Next, based on your answer above, assess how that action might affect or transmit to each of these, with sufficient detail and discussion:
- consumer spending (C) and business investment (I)
- the unemployment rate
- the inflation rate
- the currency’s exchange rate, assuming all other things being equal (will the currency’s value tend to appreciate or depreciate, and why?)
- the exchange rate’s effect on the country’s exports, assuming all other things being equal (could the trade balance move towards a surplus or a deficit?)
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