Assignment:
Refer to the ‘Buckaroos Model' and the group exercise from Module One. Also refer to the Wray reading. (Remember to reference that reading.). This assignment is worth 3 marks, each of the six sub-questions below is worth 0.5 marks.
Treasury grants a total of 95 student labour hours in Semester 1 to three Community Service (CS) Providers A, B and C as follows: CS(A) 60 hours, CS(B) 20 hours, and CS(C) 15 hours. There are 3 students, who wish to extinguish their tax liability (B 25 per student) for the semester.
1. Can we be certain about the level of Treasury spending? What are the minimum and maximum levels of Treasury spending? Explain.
2. Under what circumstances would Treasury end up running a deficit?
3. If a deficit is run in Semester 1, is the capacity of the University Treasury to spend in Semester 2 limited as a consequence? Explain.
4. Should the Treasury raise the tax rate by increasing the required hours per student per semester to address a deficit? Under what (other) circumstances might Treasury choose to raise the tax rate?
5. Why might the Treasury run a surplus in Semester 2, assuming that students are committed to meeting in full their S2 tax liability?
6. Assume now it is a new year and semester and that just 200 hours of CS are available to 10 new students. (Because the students are new, no one has saved up Bs from previous work and the students from the previous semester have graduated and left - therefore no excess Bs to be found.) The tax liability for each student is still 25 hours per semester. Can all students meet their tax liability? Would you recommend motivation counselling and training for any students who have not met their tax liability? Briefly explain.