Superannuation in Australia refers to the arrangements which people make to have
ID: 1208140 • Letter: S
Question
Superannuation in Australia refers to the arrangements which people make to have funds available for them in retirement. Currently Australians cannot access these funds until they retire. Thus, they cannot use them to buy a house to live in until then. Federal Treasurer Joe Hockey has suggested people should be able to use their superannuation to buy their first homes. Follow the link to read the article "Using super to buy first home" published on the Sydney Morning Herald on March 8, 2015. Then answer the questions.
7.2 What would the likely consequence of the policy on house prices?
A.they would increse
B.they would stay the same
c.they would decrease
A.the policy would create an excess of supply an prices would adjust by going down
B.the policy would have no effect on the housing market
C.the policy would create an excess of demand and prices would adjust by going up
7.4
In the first question we drew the supply curve with a 45 degree positive slope. As we know, slope and price elasticity are closely related. In reality, it is hard to be precise on the exact elasticity of the housing supply. However, by using common sense and economics we can at least have a rough idea of how it would be. Read the article below by Ross Gittins on the Sydney Morning Herald "Help for first-time home buyers a con". When discussing the effect of letting people use superannuation to buy houses, what level of supply elasticity is he definitely ruling out?
A.perfectly inelastic
B.unit elastic
C.perfectly elastic
7.5 Watch the ABC Q&A episode of Monday 16 March, 2015 "Intergenerational Wealth and Health" (link below). Use the navigation panel on the right hand side to jump to the discussion on Super House Buying. Keep watching until minute 34:53 (Negative Gearing question). When discussing the effect of letting people use superannuation to buy houses, Chris Bowen uses an example of someone now having an extra $30,000 available and going to an auction. What level of supply elasticity is implicit in Chris Bowen's analysis of the effect of the policy? (ends at minute 35:31)
A.perfectly inelastic
B.unitary elastic
C.perfectly elastic
7.2 What would the likely consequence of the policy on house prices?
A.they would increse
B.they would stay the same
c.they would decrease
7.3 Why would there be such an effect on house prices?A.the policy would create an excess of supply an prices would adjust by going down
B.the policy would have no effect on the housing market
C.the policy would create an excess of demand and prices would adjust by going up
7.4
In the first question we drew the supply curve with a 45 degree positive slope. As we know, slope and price elasticity are closely related. In reality, it is hard to be precise on the exact elasticity of the housing supply. However, by using common sense and economics we can at least have a rough idea of how it would be. Read the article below by Ross Gittins on the Sydney Morning Herald "Help for first-time home buyers a con". When discussing the effect of letting people use superannuation to buy houses, what level of supply elasticity is he definitely ruling out?
A.perfectly inelastic
B.unit elastic
C.perfectly elastic
7.5 Watch the ABC Q&A episode of Monday 16 March, 2015 "Intergenerational Wealth and Health" (link below). Use the navigation panel on the right hand side to jump to the discussion on Super House Buying. Keep watching until minute 34:53 (Negative Gearing question). When discussing the effect of letting people use superannuation to buy houses, Chris Bowen uses an example of someone now having an extra $30,000 available and going to an auction. What level of supply elasticity is implicit in Chris Bowen's analysis of the effect of the policy? (ends at minute 35:31)
A.perfectly inelastic
B.unitary elastic
C.perfectly elastic
Explanation / Answer
Hi,
7.2: the prices would increase as the deand for houses will increase but supplu will take time to catch up.
7.3: .the policy would create an excess of demand and prices would adjust by going up
7.4: we would be ruling out perfectly elastic.
7.5: video is not available
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