MPE781 ECONOMICS FOR MANAGERS
MPE781 T3.2017 Assignment
Question 1: (10 marks)
In your own words, summarize the IMF report article, “Australia,” IMF Country Report No. 15/275, September 2015 (pp. 1-21 only). In particular, what are the main messages of the article?
Using appropriate diagrams, figures and data collected to answer: “Are Melbourne’s housing prices overvalued?” a question raised in the above IMF report. Why or why not?
Question 3: (10 marks)
In the news article by Clayton Utz (23 June 2016), from 1 July 2016, new stamp duty surcharges have been imposed for foreign property buyers in Australia.
For example, in Victoria, residential stamp duty is 5.5% for domestic buyers (citizens plus permanent residents), while an additional duty surcharge on foreign buyers was raised from 3% to 7% from 1 July 2016 (i.e., residential stamp duty increased from 8.5% to 12.5% for foreign buyers).
Suppose that the Melbourne’s housing market is perfectly competitive (i.e., many real estate developers and many buyers).
Using appropriate diagrams to answer:
(a). Examine the impacts of an increase in the foreign buyer’s stamp duty (tax) on the equilibrium housing prices, consumer surplus, producer surplus, and total surplus (or social welfare).
(b). Can an increase in the foreign buyer’s stamp duty (tax) raise social welfare? Why or why not?
(c). Can an increase in the foreign buyer’s stamp duty (tax) raise city government’s tax revenue?
Why or why not?
Question 4: (10 marks)
Discuss, explain and comment at least three other housing policies or measures to stabilize the housing markets and the economy.
Provide your views or suggestions on the best policy/measure to stabilize the housing markets that can be considered or used in Melbourne.
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