For each question, explain whether the given statement is true, false or uncertain. Start your answer by selecting one of the options - "True", "False" or "Uncertain" and then provide arguments to justify your selection

Question 1

[The world price of oil has risen recently. For Australia (which is a net exporter of oil), this development will imply that the CPI will increase roughly by the same amount as the increase in the GDP deflator.]

Question 2

[Kylie started her new job as a junior legal assistant in prestigious law firm in 2018. She negotiated on a wage contract where for the next two years (till 2020), her salary was indexed to rise by 2% each year. In 2019, actual CPI inflation turned out to be lower than expected. This has negatively affected Kylie's purchasing power and she was not able to afford the same standard of living as before.]

Question 3

[ Redistribution policies are aimed at addressing economic inequality. However, these redistribution policies may have the effect of suppressing economic efficiency and growth?]

Question 4

[Suppose government allocates more funding to universities for vaccine research. Assuming no change in government tax revenue (and any other factor in the economy), this policy is likely to have a positive effect on private investment in the economy. Note: Private investment refer to investment in physical capital by firms and residential investment by households. (Hint: think about the effect of this policy in Loanable Funds Market).]

Question 5

[The saving rate (gross domestic saving as a % of GDP) in Australia, a small open economy, was 15% in 2011 while the investment rate (domestic investment as a % of GDP) was 25%. Consequently, there was trade surplus (when receipts from exports exceed the expenditure on imports) for Australia in 2011.]