Question 1
[Consider the effects of an increase in the global price of oil. For a country such as Australia, which is a net exporter of oil, this development will imply that the CPI will increase roughly by the same amount as the increase in the GDP deflator. (100 words) (4 marks)]
Your answer: [True/False/Uncertain and explain why]
Question 2
[Consider a scenario where you start new job as an economist in 2021. You successfully negotiate an employment contract with your employer where your salary is indexed to rise by 2% each year for the next two years, in line with inflation expectations at the time. In 2022, actual inflation turned out to be higher than expected. This has had the effect of increasing your purchasing power, meaning you are able to afford a higher standard of living than in previous years. (100 words) (4 marks)]
Your answer: [True/False/Uncertain and explain why]
Question 3
[Redistribution policies aim to address the problem of economic inequality, but there is a risk that these policies have the effect of suppressing economic efficiency and growth. (100 words) (4 marks)]
Your answer: