ECON7021

Policy Response

Assessment Task Policy Response

Assessment Type Research Essay

Group or Individual Individual

Weighting 25% of course (100 marks reweighted to 25%)

Word Limit 1,000 words, excluding the cover sheet and reference list

Due Date 21 October 2022, 4 pm

Marking Rubric Blackboard > Assessment > Policy Response > Marking Rubric

Submission Submit your assessment as a Word document on Turnitin via the course
Blackboard site. (See submission details on page 6)

Academic Integrity UQ has strict rules against academic misconduct, including cheating,
plagiarism, colluding and solicitation. You are responsible for maintaining
the highest standards of academic integrity in your work. Please read
and familiarise yourself with these rules: PPL 3.60.01 Student Code of
Conduct and PPL 3.60.04 Student Integrity and Misconduct.

Context

In its World Economic Outlook published in April 2022, the International Monetary Fund (IMF)
forecasts slower global growth of 3.6% in 2022 and 2023 (following 6.1% growth in 2021) due to
rapid energy and food price increases fuelled by the war in Ukraine.

Therefore, it is topical to consider the macroeconomic effects of an adverse oil supply shock. In
this assessment task, you need to suggest appropriate policy actions that a specific country’s
government and its central bank should implement in response to an adverse oil supply shock,
ceteris paribus (see page 2 for the country allocation). You must also illustrate and describe the
short-run and long-run effects of the adverse oil supply shock and the suggested fiscal and
monetary policies on the country’s economy, using the Mundell-Fleming (IS*-LM*) and AD-AS
models.

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Task

For the allocated country, suggest appropriate fiscal and monetary policy responses that the
government and the central bank should implement in response to an adverse oil supply shock,
ceteris paribus. Also, illustrate and explain the short-run and long-run effects of the adverse oil
supply shock and the suggested fiscal and monetary policies using the Mundell-Fleming (IS*-LM*)
and AD-AS modelling frameworks.

Your essay should include a maximum of three (3) figures (diagrams, graphs, or tables). Note the
following stipulations:
• Tables or graphs may consist of data for more than one variable.
• Figures may contain more than one diagram as long as the included diagrams are
interconnected, e.g. adding the IS*-LM* model in the top panel and the AD-AS model in the
bottom panel of a figure, with the interconnected variable being output (Y) on the horizontal
axes of both diagrams.
• You must produce your own figures rather than cut and paste them from other sources.
• Insert figures as images rather than Excel objects in your document.

Country Allocation

The country you must use for this essay is based on the last digit of your student number. So,
for example, if your student number is 44194359, then your allocated country is Sweden.

Last digit Country

0 or 1 Denmark

2 or 3 Finland

4 or 5 Iceland

6 or 7 Norway

8 or 9 Sweden

PLEASE NOTE: The number in your student email address (e.g., S4419435) is not your student
number; it misses the last digit (i.e., 9 in this example). A 10-mark penalty (out of 100 marks)
will be applied if you fail to follow the country allocation rules.

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Research Essay Structure

The following is your guide to researching and writing your essay.

PLEASE NOTE: You must use the essay template on Blackboard > Assessment >
Policy Response > Template.

Formatting requirements:
• Font type: Arial
• Font size: 11
• Line space: 1.5
• 1,000 words, excluding the cover sheet and references

Referencing style: APA 7th

You can use direct quotes provided the total number of quoted words sums to 20 words or
less in the whole research essay.

The essay template includes a cover sheet. You must complete and include this cover sheet
with your submission. A penalty will be applied if you fail to do so. Do not write your essay on the
cover page. Instead, the first page of your essay should be the page after the coversheet (as it is
in the template).

The word count excludes:

• Cover sheet
• Title of essay
• Figures
• Figure headings
• Source notes underneath figures
• Reference list

The word count includes in-text citations, footnotes, and endnotes.

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Policy response to an oil supply shock
(Maximum 1,000 words)

In the essay’s introductory paragraph, briefly introduce the allocated country and provide a brief
overview of its macroeconomic performance in 2021.

The essay’s body paragraphs should include the following. First, illustrate and explain the short-run
and long-run effects of an adverse oil supply shock, ceteris paribus (i.e., other things equal), on the
country’s economy using the Mundell-Fleming (IS*-LM*) and AD-AS models. Second, suggest
suitable fiscal and monetary policies that the government and the central bank should implement to
alleviate the adverse effects of an oil supply shock. Third, illustrate and explain the short-run and
long-run effects of the suggested policies using the IS*-LM* and AD-AS models to demonstrate
how the policies will alleviate the adverse effects of the oil supply shock.

In the conclusion paragraph, summarise your findings.

GUIDELINES:
• Consider trends in macroeconomic data from 2019 to 2021 to briefly evaluate the
country’s performance in 2021. The brief evaluation should refer to relevant data for
the three key macroeconomic indicators: real GDP growth, the inflation rate, and the
unemployment rate.
• You need to recommend one fiscal policy and one monetary policy. These
policies could be expansionary, contractionary or unchanged (i.e., no policy action).
To motivate your recommended policies, you should cite peer-reviewed journal
articles.
• To illustrate the short-term and long-term economic impacts, you must include and
refer to the Mundell-Fleming (IS*-LM*) and AD-AS diagrams. To explain the
economic effects, you must refer to these diagrams. The diagrams should clearly
show the relevant movements in the curves and the macroeconomic variables.
Ensure your diagrams align with the appropriate IS*-LM* and AD-AS modelling
frameworks introduced in the course textbook (Mankiw, 2022 or 2019).

References

References and citations must be in APA 7th referencing style.

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 TIPS:
• Use credible sources, e.g., the World Bank’s World Development Indicators (WDI) for
data sources and peer-reviewed journal articles for research sources.
• Only use English sources.
• Consult the APA 7th referencing style guide.
• You must reference sources for your text, graphs, or tables.
• You must reference even when you have paraphrased the original content.
• If you directly quote the original content word for word, it must be in quotation marks.
• When to paraphrase and when to quote? This guide from the University of Adelaide
may be helpful to you.

Accessing Data

You only require data for the brief evaluation of the macroeconomic performance of the economy
that you should include in the essay’s introductory paragraph.

Your primary data sources should be national or multinational agencies, e.g., The World Bank,
OECD, IMF, and the Bank for International Settlements. Data from secondary sources may be
used as a supplement only if those data are not available from any primary sources. Using non-
primary data when primary source data is available can lead to a loss of marks.

PLEASE NOTE:
• Do not falsely claim that specific data are not readily available from a primary source
without doing your due diligence. Only national or multinational agencies have the
capacity to collect data at the national level (e.g., GDP and unemployment rate).
Therefore, it is doubtful that these data are available from a secondary source but not
a primary one.
• If you use data from a source (e.g., a report) that indicates it drew the data from a
government statistical bureau, your data is from a secondary source, not a primary
source. However, if you go to the government statistical bureau and extract the same
data (and verify that what you read is accurate), it is considered to have come from a
primary source.

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Accessing Peer-Reviewed Journal Articles

You can access peer-reviewed journal articles through the UQ Library. Refer to the following
guides to help you search for and identify relevant resources.
Subject guide for Economics: https://guides.library.uq.edu.au/economics
Library search: https://web.library.uq.edu.au/research-tools-techniques/library-search
Search techniques: https://web.library.uq.edu.au/research-tools-techniques/search-techniques

Submitting Your Essay

• Your essay must be submitted as a Microsoft Word document through Turnitin on

Blackboard. While most instances of plagiarism are unintentional (e.g., forgetting to close a
quotation mark), the Turnitin originality report will reveal any form of plagiarism (intentional
or unintentional).
• Your essay should have a Turnitin similarity index value of 15% or less. From the
originality report, the marker will check whether any part of your essay is potentially
plagiarised from other sources, which could result in mark penalties, as shown in the
marking rubric. Therefore, you should carefully review the originality report before your final
submission.
• After uploading your essay, you must click the Submit to Turnitin button. Then, download
your digital receipt in your Assignment inbox to confirm successful submission (refer to the
Turnitin Student guide). UQ ITS rule: No digital receipt, no submission.
• The deadline for submission is based on the time your assessment has been successfully
uploaded on Turnitin as recorded by Turnitin, not the time you tried to upload it.
• Many students fail to meet the deadline because they have internet connection problems
on their side, but they mistake it as an IT problem of UQ. If UQ has any internet connection
problems, it will keep a record of it.
• The only way to guarantee not missing the deadline is to submit your research essay well
before the deadline.
• Having more in-text citations and references will reduce the number of words for the main
body. But having too few in-text citations and references will lessen the credibility of the
essay. Therefore, you need to balance the two.
• There is a penalty if the number of words exceeds the word limit (see marking rubric for
details). In addition to the penalty specified in the marking rubric, the marker will not read
beyond 1,000 words. Thus, the marker will ignore words over the word limit.