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ECON10003 Introductory Macroeconomics Semester 2, 2016
ASSIGNMENT 1
The assignment is worth 10% of your overall mark for this subject.
Length: Maximum of 1000 words.
In this assignment, you will be asked to consider three questions. These questions are
designed to assess your knowledge of macroeconomics.
THE ASSIGNMENT IS DUE BY WEDNESDAY AUGUST 31ST AT 2.00PM.
THERE WILL BE NO EXTENSIONS GRANTED.
Assignments can be submitted by a group of up to a maximum of THREE students,
BUT all group members must be enrolled in the same tutorial class. Students will choose
and form their own groups. For assignments submitted as a group, all students in the group
will receive the same mark for the assignment. Students who attempt to submit an assignment
with a group that is not in their own tutorial class, or in a group with more than three
members, will not receive any credit for that assignment. Students may choose to work and
submit their assignments on their own (in which case when submitting the assignment you
will create ‘a group’ with only one person in it)
Assignment must be submitted online via the LMS page. The submission process will have
two steps. The first one is for group registration and the next one is for submission of the
assignment. The group registration link will be available from the main menu of the LMS
page and students must register in a group by 25th August. If you choose to do the assignment
on your own you will still have to register as a group of one, without registering you won’t be
able to submit the assignment. Finally the submission link will be available from 26th of
August.
Please note that students are required to keep a copy of their assignment after it has been
submitted, as in the event that the assignment is lost, students must be able to produce a copy
of their assignment at the request of their tutor or lecturer at any time after the submission
due date.
Plagiarism or other forms of academic dishonesty will result in discipline proceedings being
brought against you.
All submissions will be scanned by academic honesty software. This means that you must be
very careful to adhere to the Department of Economics’ academic honesty policy. Breaches
of this policy, such as failing to reference sources, or plagiarism, will result in action being
taken. A copy of this policy is provided below.
University Policies on Word Limits
At the discretion of the Board of Examiners, assignments that exceed the word limit by more
than 10%, inclusive of footnotes, should attract a marking penalty of 10% of the marks that
would otherwise have been awarded. Assignments that exceed the word limit by 25% or
more may attract a higher penalty, including a cap on the maximum grade awarded, unless a
student gains an exemption. For example, an assignment with a limit of 2000 words will be
marked down by 10% if there are more than 2200 words.
Academic Honesty
It is the policy of the Department of Economics that attention is drawn to the nature and
serious consequences of cheating and plagiarism.
Any student who copies from or otherwise uses the answer of any other person engaged
in the performance of the same or comparable component of assessment or permits any
other person to copy from or otherwise use his or her answer shall be deprived of credit
for the whole or part of any assessment within that subject or disciplined in some other
way.
In this regard your attention is drawn to Rule 3 of the rules made by the Council of this
University pursuant to Statute 12.2.10. The following may be regarded as evidence of an
infringement of that Rule:
a) the submission of an answer substantially similar to that submitted by a student in the same
or any preceding year, whether at this University or any other institution;
b) the submission of an answer not based substantially on the student’s own work (or, in the
case of joint work, not based on the work of those named as having done the joint work
herein); or
c) the submission of an answer containing substantial quotations from another work (whether
in the same words or in some variation thereof) without appropriate reference to the source.
Students should note that Rule 3 applies also to the student whose answer is copied.
There is no objection to assignments being discussed in a preliminary way among students.
What is not permissible is anything in the nature of joint planning and execution of any
assignment assessable task.
You should also consult the section on Plagiarism and Collusion on page 10 of the Subject
Outline handout distributed to you at the start of the semester (a copy of this is on our subject
homepage).
Robert Dixon
THE QUESTIONS
Question 1 The National Accounts
(i) What do we mean by “GNE”?
(ii) Is it (GNE) the same as GDP(E)? Why or why not? Are there any situations in which they
would be equal? Explain your answer fully.
[1 + 2 = 3 marks]
Question 2 The Cobb-Douglas Production Function
Imagine a closed economy where the total level of real output produced (Y) depends upon the total
amounts of the inputs of labour (L) and capital (K) in use such that:
Y AK L1
Assume that all individual units of labour receive the same reward in real terms (we call this ‘the real
wage’) and that this is equal to the marginal product of labour. Assume also that all individual units of
capital receive the same reward in real terms (we call this ‘the real rental’) and that this is equal to the
marginal product of capital. Show that if this is true (ie that both factors of production are ‘rewarded’
according to their marginal products) and we add together the total value of real income to all units of
labour and the total value of real income to all units of capital, that sum will be exactly equal to the
total level of real output in this economy.
[4 marks]
Question 3 Okun’s Law
Imagine that we know that Okun’s Law applies to a particular economy, let’s call it “Messi-land”.
Suppose we are told that over a certain period employment in Messi-land grew by 2% while over the
same period the labour force in Messi-land grew by 3%. Assume that the natural rate of
unemployment in Messi-land has not changed over the period. What can we say must have happened
to the output gap in Messi-land over the period? Has it risen? Fallen? Remained the same? Can’t
say? Explain your answer fully.
[3 marks]
