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Written Assignment 2 (Macroeconomics) for GA503/MA503 Economics Trimester 1 2016 3

Read the following excerpt from media and provide answers to the questions below


Question 1 (10 Marks) a) What is meant by deflation? b) According to the article given below what are the reasons for having deflation in Australia? Discus the problems does it cause for an economy?


Question 2 (10 Marks) Discuss the consequences on GDP based on the following points mentioned on the article. a) “Falling prices discourage spending and investment as both consumers and businesses hold off.” b) “As usual, the price of services such as healthcare, education, insurance and other financial products continued to climb, but even their rise was more subdued than usual.”