1.A balanced federal budget and balance of trade are considered secondary goals of macroeconomics while growth in the standard of living is considered a primary goal.Why do you think so? (or) 2.Give...

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Subject code: ECON6000 Economic Principles and Decision Making
Assessment: Module 1 and 2 - Assessment 2: Short written assessment
Date:
Table of Contents
    Descriptions
    Page No.
     Module: 1
    3
     Module: 2
    6
    Module: 3
    10
    References
    11
Module: 1
3.What is globalization and how do you think it might have affected the economy over the past decade?
Solution:
Globalization can be defined as the multifaceted process that has significantly improved the flow of trade, capital, resources and culture among the nations. The socio-economic implications of globalization is huge that has transformed the world today. The impact of globalization is no doubt felt by every country across the world though is varying magnitude. Due to easy flow of goods and services and enhanced integration among the countries, globalization has significantly contributed to boost the economic growth and promote economic prosperity for majority of the nations. It has been advocated by most of the economists that globalization provides more benefit than cost – it improves the international competitiveness of the economies across the world thereby make the global market more efficient and competitive. But on the negative side, globalization has increased the risk of macroeconomic instability, leads to environmental degradation and even erosion of cultural identity. But I personally believe the benefits associated with globalization has far outpaced the cost therefore globalization must be embraced by all the governments, business analysts and the policymakers in the world. (Kuepper, 2018)
4. It is clear that productive inefficiency is a waste since resources are being used in a way that produces less goods and services than a nation is capable of.Why is allocative efficiency also wasteful?
Solution:
Productive inefficiency is wasteful in the sense that it wastes materials and resources. On the other hand, an efficient production is associated with lower cost because it does not waste any materials or energy. Inefficient production whether it is a machine or an organization operates at a higher cost. (Khanacademy)
Allocative efficiency implies the society is producing a certain combination of goods along the production possibility frontier and the combination represents the mix that the society desires the most. If the production does not attain allocative efficiency, it simply implies the mix of production process occurs inside the PPF that are wasteful. For example, a monopolist or a cartel produced smaller output and charges higher price results in allocative inefficiency. It leads to waste of resources and the making the consumers worse off. Thus allocative inefficiency is said to be wasteful. (James D Gwartney, 2014)
Module 1: (10 marks)
1) Draw a graph of the demand curve for a normal good like noodles.
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Price
Demand curve for noodles
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Quantity demanded
2) Suppose income increases, will consumers buy more noodles; explain
Consumer income is the key determinant of the demand for noodles. When the income increases, consumers have more income to buy more noodles. Since noodles is a normal good, consumer’s income has a direct relation with the demand for noodles. With the increase in income, consumers will buy more noodles resulting a rightward shift of the demand curve. (Nicholas Gregory...