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BUS171 Foundations of

Economics

Discussion about the


final exam

1
Murdoch University, Western Australia.
BUS171 Final Exam
The exam is 2 hours, plus 10 minutes reading
time.
The exam is worth 40% of the units total
assessment. Section A is worth 20 marks and
Section B of the exam is worth 30 marks, (the total
exam mark will be converted to 40%).
EXAM FORMAT
Two Sections: Section A and Section B.
Section A contains 20 compulsory multiple
choice questions.
Questions are taken from material covered in
Topics 1 10. 2
Murdoch University, Western Australia.
BUS171 Final Exam

Section B: Answer 2 written, essay-style


questions; you must answer one entire question
from Part 1, and one entire question from Part 2.

You choose 1 question from a choice of 3


questions in Part 1, and 1 question from a
choice of 3 questions in Part 2.

If a question has two or more sub-sections to it,


e.g. (a), (b) and (c), you must answer all parts -
this counts as one question only.

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Murdoch University, Western Australia.
BUS171 Final Exam

Section B: Part 1 comprises microeconomics


questions (Microeconomics was covered in
topics 1-6.)

Section B: Part 2 comprises international


economics and macroeconomics questions.
(This material was covered in topics 7-10.)

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Murdoch University, Western Australia.
BUS171 Final Exam

What to bring and what not to bring.


Bring pens and an eraser.

Bring your student ID card.

Closed book exam; Do not bring books, notes


or calculators.

Do not bring mobile phones.

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Murdoch University, Western Australia.
Exam technique suggestions

1. Aim to write 2-3 pages for each entire essay-


style question in Section B (more if graphs are
included). For example, if the question has part
(a) and part (b) write one page or more for
each part.
2. Always define the main economic terms in your
essay.
3. Include graphs where relevant, and explain the
main points on the graph.
4. If your writing is absolutely shocking, leave a
blank line between each written line.
5. Do NOT write in pencil.
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Murdoch University, Western Australia.
Exam technique suggestions

6. Marks will be lost for incorrect or irrelevant


material in the written section. Marks will NOT
be lost for incorrect spelling or grammar, if your
meaning is clear.
7. If, and ONLY IF, you run out of time:
Write down the main ideas for your essay in
point form - you will get some marks.
Guess the MCQ answers - you have a 1 in 4
chance.

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Murdoch University, Western Australia.
Revision: Past exam written,
essay-style question (1)
Answer both of the following. This counts as one question.

(a) Explain the main determinants of the price elasticity of


demand. (6 marks)
AND

(b) Farmers in Queensland, Australia, grow a significant


proportion of Australias tropical fruit. Much of this fruit
was destroyed due to a severe cyclone in early 2011.
Use the model of demand and supply to illustrate and
explain the effect of the cyclone on the market for tropical
fruit, and to illustrate and explain the flow-on effects to
other related markets. (9 marks)
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Murdoch University, Western Australia.
Revision: Past exam written,
essay-style question (1)
Points to include and explain fully include: Part (a)
Define price elasticity of demand, include the formula,
and briefly outline what is meant by elastic and
inelastic demand.

Go through each of the seven main determinants of


the price elasticity of demand explain them.

Note: In written questions, do not just list points - they


should be explained.

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Murdoch University, Western Australia.
Revision: Past exam written,
essay-style question (1)
Points to include and explain fully include: Part (b)
Show the shift leftwards in the supply curve for tropical
fruit, and explain, using the demand/supply graph that
there is a new lower equilibrium quantity and higher
equilibrium price.
Related markets include substitutes such as the
market for non-tropical fruits and canned fruit. A graph
can be used to show a shift rightwards in the demand
curve for each of these, leading to new equilibriums.
Complementary products may also be affected,
including manufacturers of tropical fruit products,
restaurants who use tropical fruits etc.. The supply
curve for these may shift leftwards as the cost of inputs
rises. 10
Murdoch University, Western Australia.
Revision :Past exam written,
essay-style question (2)
2. Answer all of the following. This counts as one question.
(a) Outline the advantages of free world trade. (5 marks)

(b) What policy measures do many economists recommend to


help to reduce extreme poverty in poor countries?
(5 marks)

(c) If Australia raised its interest rates relative to the interest


rates in other countries, what effect would this have on
Australias exchange rate, ceteris paribus? Use a graph to
help explain your answer. (5 marks)

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Murdoch University, Western Australia.
Revision: Past exam written,
essay-style question (2)
Points to include and explain fully include: Part (a):
Explain what is meant by free world trade.
Briefly explain each of the advantages.

Points to include and explain fully include: Part (b):


Promoting economic growth has been shown to be
very effective at reducing extreme poverty, e.g. parts
of Asia.
Foreign aid to help develop laws and governance,
education, health, infrastructure etc. is important.
Debt forgiveness will assist.
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Murdoch University, Western Australia.
Revision: Past exam written,
essay-style question (2)
Points to include and explain fully include: Part (c)
Explain that Australias exchange rate is a floating
(flexible) exchange rate, with its value determined by
the demand for and supply of the currency in
international currency markets.

Explain the effect that higher relative interest rates will


have on Australias exchange rate, i.e. an
appreciation, and explain why.

Use an exchange rate graph to show the rightward


shift in the demand for the Australian dollar, leading to
the appreciation.

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Murdoch University, Western Australia.
Exam Revision

Thank you and good luck!!!

Image source: Microsoft Clip Art

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Murdoch University, Western Australia.

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