FINC5090 Individual Assignment Instruction S1 2024
1. Due Date
Thursday 28 March 2024 23:59.
2.Academic Honesty
This is an individual assignment where students are expected to work independently on the assignment tasks. The similarity of assignment answers will be checked in Turnitin. Any plagiarism, collusion and other dishonest conduct will be penalised subject to the university
Academic Integrity Policy. You are highly recommended:
• to keep your workings beyond the access of any other students,
• not to share your document by any means with any students,
• not to attend any private tutoring sessions on this assignment and
• not to use any assignment help services from a third party.
The FINC5090 teaching team is keen to help. Please do not hesitate to contact tutors and lecturers for support.
3. Generative AI
Under the Academic Integrity Policy 2022, students cannot ‘inappropriately use digital or information technology to complete an assessment task, including generating content using artificial intelligence; or using paraphrasing or translation software to disguise plagiarism, collusion, contract cheating or other academic integrity breach.
As a typical example, an allowed use of these technologies might be to help improve the grammar of your draft assignment. A disallowed use of these technologies would be to draft the entire content of answers to the questions that you are required to write yourself.
Generative AI is not a reliable or reproducible source of information, unlike a journal article or even webpage. Another person cannot obtain the same completion you did, even if they use the same prompt. Therefore, in this assignment, you are not allowed to quote AI-generated text as references.
For more information regarding generative AI and how to ethically use AI tools in your learning, please visitAI in Education.
4.Assignment Tasks
From 2020 to early 2022, the Reserve Bank of Australia (RBA) took a wide range of actions to support the Australian economy through the sharp contraction triggered by the Covid pandemic. However, since the second half of 2021, inflation in Australia has picked up sharply, peaking at around 7.8 percent at the end of 2022. To constrain inflation, the Reserve Bank
shifted to a phase of aggressive monetary policy tightening, which has continued to this day.
This assignment provides you with an opportunity to use the theories and models introduced in FINC5090 to analyse the impact of the RBA's monetary policy on money supply and inflation, and their ongoing impact on the Australian economy in the aftermath of the pandemic crisis.
Task 1 RBA and monetary policy (8 marks, Do NOT write more than 50 words for each question in Task 1 except for Part b (iii)).
a. Search on RBA website (www.rba.gov.au) for relevant information and answer the following questions.
i) What is the role of the RBA in the economy of Australia? According to the Reserve Bank Act 1959, what are the three objectives forthe RBA in the formulation and implementation of monetary policies? (1 mark)
ii) What is the principal medium-term objective of the RBA’s monetary policy? (1 mark)
b. Search on the RBA website for information on the bond purchase program.
i) When did the RBA start to implement this policy? When was the program completed? How
large is the total size of the program during its implementation? (1 mark)
ii) In the bond purchase program, who is/are the buyer/s and who is/are the sellers of the bonds?
(1 mark)
iii) Refer to the RBA explainer regarding how the RBA implements monetary policy (https://www.rba.gov.au/education/resources/explainers/how-rba-implements-monetary-policy.html), explain the role of exchange settlement balances in the bond purchase program.
Is it a form. of money? Explain your answer. (4 marks)
Visit https://www.rba.gov.au/statistics/tables/. In Money and Credit Statistics, download the spreadsheet named “Monetary Aggregates – D3”. Use the data in Columns J, K, L, M and N (seasonally adjusted currency, M1, M3, broad money and money base) only. This table will be referred to as Table 1 in the following task descriptions. On the same webpage, download the data table named “Consumer Price Inflation – G1” under Inflation and Inflation Expectations. Use the data in Columns C (Year-ended inflation) only. This table will be referred to as Table 2 in the following task descriptions. For both tables, use the data reported between December
2015 and December 2023. Answer the questions below.
Task 2 Money in the Australian Economy (10 marks)
a. Use the data in Table 1, calculate the difference between currency and money base for each month and display the results (as a time series) using aline chart. Label the figure properly to ensure that readers understand the information conveyed by the chart. (2 marks)
b. Describe and discuss the changes reflected by the line chart obtained in part (a), focusing on any remarkable changes in the difference between currency and money base. What are the possible reasons for these changes? (4 marks)
c. Based on you understanding developed in Task 1 and the mostrecent monetary policy of the RBA, discuss whether the current trend reflected by the line chart will persist in 2024. (4 marks)
Task 3 Money supply and inflation (8 marks)
a. Use the data in both Table 1 and Table 2, compute the changes in money base, broad money and compare them with inflation. Make necessary adjustments to align the frequency of data and to achieve comparability. Plot two graphs for the changes in the three variables during two sub-periods: 2016 to 2019 and 2022 to 2024. Display the graphs only in your answer to this task. (2 marks)
b. Describe the changes in the variables as reflected in the two graphs obtained in part (a). What relationship do you observe between inflation and money base? Is this relationship consistent with what you learn from Tasks 1 and 2? In your opinion, what other information is needed in order to support your analysis on the relationship between money supply and inflation? (6 marks)
Overall quality and referencing (6 marks)
Maximum length of assignment: We expect a reasonably presented assignment to have around 1500 to 2000 words excluding the title page, reference list and appendix. 5 marks will be deducted for every 100 words exceeding the word limit. For example, you will lose 5 marks if your report has 1499 words or 2001 words.
Formatting requirements: 1.5 line spacing 2 cm margins, 12pt font size, Times New Roman and Arial are both acceptable.
Tables and figures should be clearly labelled. Penalties apply for poorly presented work. You must display the required tables and graphs in the body of the report. You will NOT receive any marks if you put tables and graphs in appendix just in order to satisfy the word limit.
You are not required to present the answers in a formal report format. However, you must label your answers to each part of the tasks clearly. (e.g. Task 1, Task 2, a. b., etc.). You can attach the complete Excel calculations to the report as appendix. You can also add other less important results in Appendix.
Referencing: You are expected to use academic references to support your analysis and arguments. Citations and the reference list must be prepared using APA 7th or Harvard referencing styles (https://libguides.library.usyd.edu.au/citation).
Writing: The logic of the answers must be easy to follow. There are expected to be no spelling or grammatical errors and terminology should be clearly defined.
5. Marking Criteria
The criteria below will be followed when marking each part of the assignment (including in assessing the overall quality of the report):
i. The extent and quality of critical reasoning/critical thinking
ii. The demonstration of knowledge of relevant theory.
iii. The successful usage and interpretation of relevant data
iv. The extent to which the work is clearly and concisely presented.
Weight of Final Mark: This assignment will be marked out of 32 marks and will be scaled to account for 25% of course total mark.
6. Submission
i. The only acceptable form of submission is electronic via the submission link in the unit’s Canvas site. Hardcopy and email submissions will NOT be accepted. Late submissions will be penalised according to assessment policy. All submission will be checked through TURNITIN for similarity with external sources.
ii. Submission format: Only a PDF format document will be accepted, and it is your responsibility to ensure all pages correctly display your original content. Missing or distorted figures and formulas will result in lower marks.
iii. Cover page: Ensure the Student Identification Number (SID) is on the cover page of your assignment. The name of student must NOT show up on the assignment to ensure the anonymous marking requirement. The cover page should be submitted with the assignment in a single file (as the frontpage).
iv. Document name: Your project PDF file must be named in the following format:
FINC5090_SID_2024.PDF Example: FINC5090_420082664_2024.PDF.