ECON6049 Economic Analysis Assignment-Macquarie University Australia.

Instructions: This Assignment includes five (5) questions of equal marks (20 marks each), and each question contains a number of parts. Together the Assignment is worth 100 marks, and accounts for 20% of the Unit total. 1.Your answers must represent your own work. 2.Your answers must be typed (except diagrams/graphs) using any font type with a font size of 12.
3.Diagrams/graphs can be hand-drawn or created using software. They can NOT be taken from other sources (e.g., the internet, or copied from friends, etc) and must be your own creation.
ECON6049 Economic Analysis Assignment-Macquarie University Australia.

ECON6049 Economic Analysis Assignment-Macquarie University Australia.

4. Your diagram must be fully labelled and therefore you must label both axes and lines or curves, correctly determine the vertical and horizontal intercepts. Please note when using diagrams to illustrate answers you must still provide a written explanation of what your diagrams are showing (i.e, diagrams can’t speak for themselves).
5.Referencing, both in text and in the reference list, of sources is required. Any reference style/format is accepted.
6.Make sure your name and ID are on every page of the submitted assignment.


  • The assignment must be converted and submitted as a PDF.
  • The assignment must be submitted online via the unit’s web page by 11:59 pm AEST Thursday 13 May 2021.


1.Each assignment must represent the student’s own work. In particular, this means that the written answers and diagrams/graphs submitted by the student should be composed by that student. Copying of another student’s answer or from references or any other sources, or getting someone else (with or without payment) to do the assignment for you, or part thereof, is clearly regarded as plagiarism.

2.Cases of plagiarism will be dealt with severely. For further information on plagiarism and how to avoid it, please refer to the university policy about academic honesty and integrity.

Late submission:

1.No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24- hour period or part thereof that the submission is late (for example, 25 hours late in submission incurs a 20% penalty).Late submissions will be accepted up to 96 hours after the due date and time.
2.This penalty does not apply for cases in which an application for Special Consideration is made and approved. Note: applications for Special Consideration must be made within 5 (five) business days of the due date and time.

Question 1
Suppose that the market for soft drink in Australia is competitive and described by the following supply and demand functions:
Demand: QD = 200 – 25P
Supply: QS = 50 + 50P

a.Calculate the equilibrium price ($ per litre) and quantity (measured in litre) and draw a diagram to illustrate your answer. Show on your diagram and calculate the size of the consumer surplus, producer surplus, and total surplus.
b.Due to the health reason, the government wants to discourage people from soft drink consumption. Suppose that the Australia government levies a tax of $1 per litre on soft drink producers. How would this tax change your answer in part (a).
c.Given the imposition of this sugary drink tax, calculate the tax burden on
consumers and producers. Explain why tax burden is not equally distributed between consumers and producers.
d.Offer your opinion on the efficacy of such sugary drink tax on solving social issues(i.e,. improve people’s health). (Your answer should not be more than 200 words.)

Question 2
a) Based on the functions of money discussed in the lecture, reason if cryptocurrencies such as Bitcoin can be considered as money. (Your answer should not be more than 300 words.)
b) Consider a bank’s balance sheet as shown below. Would this bank face any liquidity risk? What would follow such risk? (Your answer should not be more than 300 words)

Question 3
The figure below shows the demand and supply shocks in a number of sectors due to the pandemic in 2020.
a) Assume the information market and manufacturing market are competitive and were at the market equilibrium before the pandemic. With the help of diagrams,illustrate the impact of Covid-19 on the equilibrium for these two markets.
b) Discuss some possible reasons leading to the supply and demand shocks in these two industries (hint: you may want to focus on the situation in your country). (Your answer should not be more than 300 words.)

Question 4
a) Consider the multiplier model as discussed in the lecture. Compare two economies, which differ only in their share of credit-constrained households but are identical otherwise. In which economy is the multiplier larger? Illustrate your answer using a diagram.

ECON6049 Economic Analysis Assignment-Macquarie University Australia.

b) The below table shows MPC by distribution of wealth and income, and by employment status. Discuss some likely reasons why top wealth holders and income earners have a lower MPC than the bottom wealth holders and income earners. And why does the MPC vary by employment status? Your answer should not be more than 300 words)

Question 5
In France and Germany, it is difficult for a household to increase its borrowing based on an increase in the market value of the house. In addition, large down-payments(as a percentage of the house price) are required for house purchases. In the meantime, in the US or UK, loans are more easily available based on a rise in home equity and only a small down-payment is required.

a) On the basis of this information, how would you expect a rise in house prices in France or Germany to affect spending by households? How would you expect your answer to change when considering the US or UK? (Your answer should not be more than 300 words.)
(Note: A December 2014 VoxEU article, ‘Combatting Eurozone deflation: QE for the people’, tells you more about the influence of a change in house prices on spending in Europe and the US.)

b) How would you answer change if we take into account the fact that overtime, as people get older, they may move to smaller houses, apartments, or retirement villages? (Your answer should not be more than 300 words.)

ECON6049 Economic Analysis Assignment-Macquarie University Australia.

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