BUS110 - Quantitative Methods for Business

Data Analysis Assignment

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Question 1:

The Reserve Bank of Australia (RBA), Australia's central bank, is in charge of monetary policy, controlling
the money supply, and regulating interest rates. Additionally, it is crucial for preserving the stability of the
nation's financial system. It is a challenging task for the RBA to maintain a robust and developing Australian
economy while keeping inflation at manageable low to moderate levels. This complexity arises from the
existence of a large number of potentially influential and usually unforeseen factors. The status of the
economy (Bernanke, 2004), variations in the price of basic resources like oil (Mishkin, 2009), fluctuations in
the exchange rate (Mankiw, 2014), and wage growth (Ball, 2014) are a few of these factors. Each of these
elements may affect the dynamics of inflation in a unique way. Setting interest rates is one of the key tactics
the RBA use to control inflation. If interest rates are kept excessively low, the RBA may stimulate
borrowing, which would increase demand for goods and services and perhaps drive up prices. In contrast, if
interest rates are set excessively high, businesses may reduce borrowing and investment, which would
reduce demand for goods and services and perhaps push down prices. Employment, economic growth, and
inflation are just a few of the many factors that the RBA considers while making decisions. Maintaining
inflation within a target range of 2% to 3% is the RBA's main objective (Ball, 2014). The RBA might do this
by changing interest rates in response to the status of the economy at the time. To slow down economic
development and lessen inflationary pressures, the RBA may, for instance, raise interest rates if inflation
exceeds the target range. In contrast, if inflation is below the target range and the economy needs a lift, the
RBA may lower interest rates to promote borrowing, spending, and investment. In general, interest rates and
inflation have a positive relationship, thus as inflation rises, interest rates also frequently do as well. The
RBA typically boosts interest rates in reaction to rising inflation in an effort to cool the economy and
prevent overheating, which leads to this beneficial relationship. However, other factors that have an
influence on interest rate decisions, such as the level of economic activity and changes in exchange values,
are not solely to blame for the connection.
Question 2:

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Rent a Toyota Is this cost item a relevant cost for the

Cost item Buy a Toyota Corolla Corolla decision making?

Purchase
price $30,000 N/A Yes

Registration $600/year $600/year Yes

Insurance $1,200/year $1,200/year Yes

Fuel $1,500/year $1,500/year Yes

Maintenance $1,000/year N/A No

Depreciation $5,000/year N/A No

Question 3:

a) Calculate the compound amount and compound interest that you would have in your savings account at
the end of year four using compound interest and the formula I = PRT. Include all principle and interest
amounts for each year in the overall computation. To the closest penny, round up.

Year Principal Interest Total

1 $20,000 $1100 $21,100

2 $21,100 $1155 $22,255

3 $22,255 $1216 $23,471

4 $23,471 $1284 $24,755

Total compound interest: $4655

Formula: I = PRT

P: Principal amount = $20,000 R: Interest rate = 5.5% = 0.055 T: Time = 4 years

Interest: I = $20,000 * 0.055 * 4 = $1100

Total amount at the end of year 4: $20,000 + $1100 = $21,100

Interest in year 2: $21,100 * 0.055 = $1155

Total amount at the end of year 2: $21,100 + $1155 = $22,255

Interest in year 3: $22,255 * 0.055 = $1216

Total amount at the end of year 3: $22,255 + $1216 = $23,471

Interest in year 4: $23,471 * 0.055 = $1284

Total amount at the end of year 4: $23,471 + $1284 = $24,755

b) Calculating the compound amount and compound interest that you would have in your savings account at
the end of year four using compound interest and the formula M = P (1 + i)T. Display the entire computation
while rounding to the closest penny.

Formula: M = P (1 + i)T

P: Principal amount = $20,000 i: Interest rate = 0.055 T: Time = 4 years

M = $20,000 (1 + 0.055)4 = $24,755

Compound interest: $24,755 - $20,000 = $4755

As you can see, the answers in part (a) and part (b) are the same.

c) Are your answers in part (a) and part (b) the same, given that minor rounding errors can be
ignored? Which method of calculations do you prefer? Why?

The responses provided in both section (a) and section (b) are identical, with the exception of negligible
discrepancies resulting from slight rounding mistakes. The formula M = P (1 + i)T is used because of its
simplicity and ease of recollection.
Question No. 4

a) The proportion of people in each stratum of the population must be multiplied by the overall sample size,
which is shown as n = 5,000, in order to obtain the proper sample size for each stratum in the survey.

In the context of this study, the term "stratum 1" refers to a certain set of people, namely foreign students
who are enrolled in full-time academic programs and do not participate in any type of job.

There are 18,000 students in this particular segment of the population.

By dividing the number of people in the strata (18,000) by the entire population size (60,000), one may
compute the proportion of this specific stratum within the population, which comes out to be 0.3.

The sample size for this specific stratum is determined by multiplying 0.3 by the 5,000 overall population
size, which yields a sample size of 1,500 students.

Those who are classed as overseas students and who combine part-time job with part-time education make
up stratum 2.

9,300 students make up the population of this particular stratum.

By dividing the entire population size (60,000) by the number of people in the strata (9,300), one may get
the fraction of this specific stratum within the population, which equals 0.155.

The fraction of interest, 0.155, is multiplied by the entire population size, 5,000, to arrive at the sample size
for this specific stratum. The result of this computation is a sample size of 775 students.

Domestic students who are engaged in full-time academic programs and do not have any jobs make up
stratum 3.

24000 pupils make up the population of this particular stratum.

Calculated as 24,000 divided by 60,000, the percentage of this particular stratum in the population is equal
to 0.4.

For this specific stratum, the sample size is computed as 0.4 times the population size of 5,000, which yields
a sample size of 2,000 students.

Stratum 4 consists of domestic students who work a part-time job in addition to attending school part-time.

There are 8,700 students in this particular stratum as a whole.

By dividing the entire population size (60,000) by the number of people in this specific stratum (8,700), one
may get its percentage among the whole population, which comes out to 0.145.
A total of 725 students make up the sample size for this specific stratum, which is computed as 0.145 times
5,000.

As a result, the distribution of students from each stratum to be included in the survey sample is as follows:

There are 1,500 students in stratum 1.

There are 775 students altogether in stratum 2.

There are 2,000 students in stratum 3.

Stratum 4 has a total enrollment of 725 students.

b) My opinion is that it is a commendable idea to adopt the proposal to give students free public
transportation. In society, public transportation plays a crucial role, and students may have financial
constraints that make paying for commute expenses challenging. The introduction of free public
transportation would give students the choice to direct their financial resources toward other essential costs
like food, accommodation, and instructional supplies. Additionally, it would make educational institutions
more accessible, which may lead to improved academic performance. However, it's critical to consider any
potential restrictions. Concerns include the possible rise in costs for non-student commuters brought on by
funding student transportation. Despite this, I maintain that the costs of providing free public transportation
to students would be outweighed by the benefits of doing so.

Environmental considerations must be made when evaluating this proposition. Promoting greater use of
public transportation has the potential to have positive benefits on the environment, particularly through
reducing carbon emissions and easing traffic congestion. Additionally, as a greater number of people would
have simple access to getting to their facilities, businesses situated in areas with effective public
transportation networks would see a boost in patronage (Perera, 2020). I continue to support this proposal
because I am aware of its potential to result in positive changes for Australian students. I am open to taking
into account other people's perspectives on this matter since having a thorough discussion is essential for
making decisions that benefit society as a whole.
References

 Ball, L. (2014). Long-term damage from the Great Recession in OECD countries. NBER Working Paper, 20185.
 Bernanke, B. S. (2004). The Great Moderation. Remarks at the Meetings of the Eastern Economic
Association, Washington, D.C.
 Mankiw, N. G. (2014). Principles of Economics. Cengage Learning.
 Mishkin, F. S. (2009). Economics of Money, Banking, and Financial Markets. Pearson Education.
 Perera, S., Ho, C. and Hensher, D., 2020. Resurgence of demand responsive transit services–Insights from
BRIDJ trials in inner west of Sydney, Australia. Research in Transportation Economics, 83, p.100904.