Economics

Due date: Tuesday, 11:59pm, January 10, 2017

Assignment Overview: This assignment is partly based on the attached article,

“Long-run Trends in Housing Price Growth,” by M. Kohler and M. van der
Merwe, Bulletin, September 2015, Reserve Bank of Australia. Please read this
article carefully before attempting the questions. You will be required to
demonstrate your understanding of economic concepts taught in the unit and
relate them to the cases in the article.

Learning Objectives: This assignment is designed to encourage you to think

about the applications of economic concepts learned in this unit to real world
scenarios.

Assessment: Based on the attached Rubric, your assignment will be graded on

your use of appropriate economic theory and concepts, clarity of exposition and
overall quality of your answers.

Questions: Answer all questions. Limit the total word count of your assignment
to less than 3,000 words. Depth is encouraged over breadth: that is, it is more
important that you demonstrate you understand a concept fully, rather than talk
about 3 related concepts only cursorily. You are encouraged to provide
necessary graphs, figures and data wherever possible. Please be careful in
implementing referencing styles.

Total mark: 40 marks. Allocation as indicated next to the question. Your score
on this assignment contributes towards 40% of your final score for this unit.

Submission: This assignment must be submitted electronically on CloudDeakin

Dropbox area by all students by 11:59pm on the due date. No hard copy is
required. Print your name and student ID clearly on the first page of your
answers. Please check the Academic Honesty and Misconduct section in the
Unit Guide. Submitting your answers automatically implies that you have read
and accepted the Plagiarism and Collusion Declaration, and that the submitted
answers are entirely your own work.

Late submission: From T3 2016, the university policy on late submission of

assignments (this is now standard across the University) is as follows:

Penalties for late submission of assessment tasks (46) A due date and time will
be set for the submission of each summative assessment task. A marking
penalty will be applied where the assessment task is submitted after the due date
without an approved extension as follows:

5% will be deducted from available marks for each day up to five days
where work is submitted more than five days after the due date, the task will not
be marked and the student will receive 0% for the task. 'Day' means working
day for paper submissions and calendar day for electronic submissions.

(47) The Unit Chair may refuse to accept a late submission where it is
unreasonable or impracticable to assess the task after the due date.

Please note: since students will have several weeks to complete this assignment
and are expected to make good use of this time, being unfit on the due date or
just one or two days prior to the due date, may not be an acceptable ground to
get an extension.

A request for a time extension must be made in writing to the unit chair,
Dr C. C. Chao (c.chao@deakin.edu.au) at least one day before the due date.
This request must include documentary evidence, such as medical certificate.

Question 1: (10 marks) In your own words, summarize the article, “Long-run
Trends in Housing Price Growth,” by M. Kohler and M. van der Merwe,
Bulletin, September 2015, Reserve Bank of Australia. In particular, what are
the main messages of the article?

Question 2: (10 marks) Using appropriate diagrams, figures and data to answer:
Are the Melbourne’s housing prices over heated? Why or why not?

Question 3: (10 marks) Suppose that the Melbourne’s housing market is

perfectly competitive (i.e., many real estate developers). The city government
decides to levy a buyer’s tax (specific tax) on housing purchases. Using
appropriate diagrams to answer:

(a). Examine the impacts of this buyer’s tax on the equilibrium housing prices,
consumer surplus, producer surplus, and total surplus (or social welfare).
(b). Can an increase in the buyer’s tax raise social welfare? Why or why not?
(c). Can an increase in the buyer’s tax raise city government’s tax revenue?
Why or why not?

Question 4: (10 marks) Find at least three countries or economies that have
housing policies or measures to stabilize the housing markets. Explain
and comment their housing policies. Provide your views or suggestions on the
best measure to stabilize the housing markets that could be considered or used
in Melbourne