1. A carbon pricing scheme (CPS), commonly known as a 'carbon tax' was introduced by the Gillard Government in 2011 and took effect on 1 July 2012. Under the legislation, Australia's biggest carbon-emitting companies were required to pay a price for each tonne of carbon emitted. Then Opposition Leader Tony Abbott referred to the proposed tax as a "toxic tax from a government with the Midas touch in reverse". Gillard's CPS was operational until it was replaced on the 17 July 2014 by the Abbott government. Australia's leading economists overwhelmingly advocate for the reintroduction of the carbon price, which had effectively reduced Australia's emissions between 2012 and 2014. A.Using appropriate diagram/s, analyse whether the carbon pricing scheme can serve as a sufficient measure to address market failure and decrease CO₂emission. Additionally, illustrate the socially optimal level of output and price of carbon content of fuels using a diagram. B. Prime Minister Gillard also proposed that Australian households would receive more than $15 billion in compensation to mitigate the impact of carbon tax. Explain why the carbon tax needs to be compensated? How would this compensation stimulate the output, employment, and price level?
2. Gross fixed capital formation (GFCF) (investment) one of the most volatile components of GDP. In a diagram, show the movement of private and public GFCF of Australia over 2005 and 2024. Explain why GFCF is an important contributor to an economy.