Expert Answer :Econ 101 Assessment 2 – Macroeconomic Essentials f

Solved by verified expert :Autumn Session 2015Econ101 Macroeconomic Essentials for BusinessAssessment 2: In Class EssayInstructions.Go to the subject Moodle site. In the very top left hand corner of the screen, click on ‘My Library’,then click on ‘Econ101 Subject Readings’. The reading that is relevant to this essay is titled ‘Falling A$brings back businesses’. In your responses to the questions below, you should refer to informationfrom this reading to clarify your discussion as necessary.Essay Questions.1. The reading suggests that the appreciating A$ of the last decade has had a substantialnegative impact on Australian manufacturing firms. Explain, using a demand/supply diagramto clarify your explanation, how the Australian mining boom contributed to a significantappreciation of the $A over the currencies of its major trading partners. (4 marks)2. Explain the likely impact of this $A appreciation on non-mining sectors of the Australianeconomy such as manufacturing and agriculture. As part of your explanation, include anumerical example by assuming that a Japanese car imported into Australia has a constantlanded price of two million yen. Assume an initial exchange rate of A$1=Yen100, and thenshow numerically how a strengthening $A (assume the exchange rate becomes A$1 = Yen200), other things equal, is bad for Australian car manufacturing firms. (4 marks)3. Discuss two likely reasons why in the last 12-18 months the $A has depreciated significantly,and show the effects of these changes in the demand/supply diagram you used in yourresponse to part 1 above. Explain the likely impacts of this recent depreciation on the nonminingsectors of the economy. (6 marks)4. Explain the likely impact, other things equal, of the mining boom of the 2005 -2012 period,and the current decline in mining activity, on Australia’s Balance of Payments. (6 marks)