Question 01:

If the price of one product is lowered, the substitution effect suggests that consumers will buy more of the product whose price has not changed. True / False? Explain your answer.

Question 02:

Many people think that uunk food is an inferior good. If consumer incomes increase, what happens to:

1) The demand curve for junk food

2) The quantity demanded

3) The equilibrium price.

Question 03:

a) Define interest rates and outline the three factors that affect their level.

b) What is meant by the policy mix? What is the government trying to achieve via the policy mix?

Question 04:

a) Why is it important to have a strong regulatory system of Australia's financial markets?

b) Who does APRA regulate and who does ASIC regulate?