Assignment Overview: This assignment is partly based on an attached article, “Australia,” IMF Country Report No. 15/275, pp. 1-21, September 2015, and a news article, “New duty and land tax surcharges for foreign buyers of land in Australia,” by Clayton Utz, 23 June 2016. Please read them 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 articles.
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.
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?
Question 2: (10 marks)
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.