The following are four excerpts from articles appearing in the famous “Kapunda Herald”. Please read each and comment on the proposition posed in the article.
Article 1:
Kapunda, 3rd November, 2015:
“In a speech to the World Economic Forum held this week in Kapunda on the topic of Diminishing World Resources a leading Nobel Laureate suggested that the current product differentiation in a monopolistic market had provided too many brands in the market which has resulted in market inefficiencies and waste. She postulated that under the old Eastern European and Soviet models most basic consumer products were standardised. That is there was only one type of soap or tooth paste on the shelves in stores. A toaster is a toaster, a bottle of wine is a bottle of wine why do we need to have so many different models or brands to choose from, they all do the same thing. By eliminating wasteful brands, resources could be diverted into areas of research and development which would benefit all of human kind – such things as medical research, food production in poor countries and education.”

Do you agree with the proposition that the world market is oversupplied with brands and less in this case is more?

Article 2:
Kapunda, 2nd November 2015:
Answering questions on the state of the economy a senior business leader commented that the latest GDP figures showed an annualised decrease in nominal GDP of (-1.7%). The business leader commented that this result was much better than expected as the market had suggested the figure would be far higher, that is the economy would have shown a greater slowing.
He commented: “The general market conditions have not deteriorated as expected and the growth rate of (-1.7%) should give investors’ confidence to join the market and invest in future projects”
This reporter is rather concerned about the comments as the latest statistics suggest the fall in Real GDP in constant 2010 market prices is much higher at (-4.9%).

What is GDP and how is it measured. Why is it such an important economic measure and why is there more than one measure of GDP. Why are the two figures different? Which is the better indicate of economic activity.

Article 3:
A report on the latest CPI figures by a “Kapunda Herald” staff reporter:
“The latest inflation figures indicate living costs are falling across the board resulting in consumers having more money to spend each week after the CPI fell be 0.5% across all categories in the latest published results.
A spokesperson for a leading retailer suggested that the latest inflation figures were a very good set of figures. “
“With Housing and Utilities down by 3.6%, Transport costs down by 2.3% and Household Durables falling 2.2% consumers would be better off and have more to spend on other goods and services each week”.

Do you agree with these comments; just because the CPI falls are consumers “better off”? Is the CPI an indicator of the general cost of living? Are there any wider implications of a falling general price level (CPI) on the general economic health of the Australian Economy? Is there any connection between the CPI and other indicator(s) which may point to what is happening to the economy as the CPI falls?

Article 4:
A special article on the state of the economy, published in the “Kapunda Herald”, reports that Australian business leaders are cautious about economic growth as a result of a slowing in the minerals boom and subsequent reduction in investment and employment in the mining sector. Use a dynamic aggregate demand and supply graph to show the effect of the minerals down turn on the Australian economy. Briefly explain how the economy adjusts from the short-run equilibrium to the long run equilibrium.

The following are four excerpts from articles appearing in the famo...