Post by: RuiAce on July 21, 2016, 11:06:40 pm
HSC ECONOMICS Q&A THREAD
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What is this thread for?
If you have general questions about the HSC Economics course or how to improve in certain areas, this is the place to ask! 👌
Who can/will answer questions?
Everyone is welcome to contribute; even if you're unsure of yourself, providing different perspectives is incredibly valuable.
Please don't be dissuaded by the fact that you haven't finished Year 12, or didn't score as highly as others, or your advice contradicts something else you've seen on this thread, or whatever; none of this disqualifies you from helping others. And if you're worried you do have some sort of misconception, put it out there and someone else can clarify and modify your understanding!
There'll be a whole bunch of other high-scoring students with their own wealths of wisdom to share with you. So you may even get multiple answers from different people offering their insights - very cool.
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Original post.
Before you can ask a question, you'll have to make an ATAR Notes account here. Once you've done that, a little 'reply' button will come up when you're viewing threads, and you'll be able to post whatever you want! :)
Hi everyone! This is a place to post your economics questions!
The course can sometimes, frequently or always be rigorous. The HSC itself was never intended to be easy either. But someone will come to your query in due time!
Always remember that this is a community for everyone to collaborate. Never be afraid to post; you are not the only one who needs it!
Hi everyone! This is a place to post your economics questions!
The course can sometimes, frequently or always be rigorous. The HSC itself was never intended to be easy either. But someone will come to your query in due time!
Always remember that this is a community for everyone to collaborate. Never be afraid to post; you are not the only one who needs it!
Post by: Spencerr on July 22, 2016, 05:42:08 pm
What is the impact of globalisation on the distribution of income in the Domestic Economy and In the global economy?
What is the impact of globalisation on the quality of life and economic growth in the global economy?
Post by: conic curve on July 22, 2016, 09:22:18 pm
Thanks ;)
Post by: RuiAce on July 22, 2016, 09:37:25 pm
Can someone here please explain to me factors affecting elasticity of demand, like I read this and I still don't get itHaving done Micro 1 at UNSW I can help you out here.
Thanks ;)
Note that the elasticity of demand is a measure of responsiveness as to a change in price. It is basically the change in quantity demand for a small change in price.
(Keep at the back of your head that according to the law of demand, consumers have a greater willingness to buy more in quantity when the prices are low.)
Analyse the scenarios logically. Consider the elastic side. (I'll leave some for you to do yourself)
Elastic demand implies that a change in price will more greatly affect a consumer's decision to purchase the product.
- If a luxury goes up in price, the consumer would really have to think about if it's worth buying anymore (everyone has different reservation prices). The demand would be elastic because depending on the scenario, even small price changes can largely affect their decision.
- If there are close substitutes, the consumer can just say oh well we can buy the other good then. Hence for a small change in price they probably won't go for the same good anymore, rather go for a similar good.
- In the long run, consumers probably have a better understanding of the market and they also have more money to be flexible with. They now know that if the price changes for something, they can go elsewhere.
Then consider the inelastic ones.
- If a necessity goes up in price, you're still going to buy it. E.g. you will probably buy water no matter what the price is. You need it.
- If there are few substitutes, then if the price goes up by a tiny amount you really can't buy anything else. The consumer's responsiveness is quite low yet again because they can't jump to something else - they will still buy the same product. It would probably have to be a much greater change in price before they go for something else.
- In the short run, consumers have to make their decisions fast. If the price change is minor, they don't have the time to think into the future and will probably buy it anyway.
Post by: birdwing341 on July 22, 2016, 09:40:55 pm
1. Global GDP Inequality (which isn't income inequality but kind of relates to the second one): It's basically when different countries produce more than other ones because of their natural factor endowment.
2. Domestic Inequality: the income inequality that arises when the process of globalisation affects a nation. Often the wealthy are bigger winners as they generally have a higher propensity to save. These savings can be used to invest in companies which experience growth due to globalisation. Those with less income are unable to capitalise so much on these investments, but are still able to experience increased income by skilling up in these industries
3. Income inequality between nations: Basically involves different nations having different GDP per capita kind of due to the population and the output of the country. Generally advanced economies have higher GDP per capita, because of their natural factor endowment. There are also a number of reasons for differences in economic development between nations which you can add on.
Hope that helps :)
Post by: hermansia12 on July 22, 2016, 10:27:32 pm
A few questions on globalisation if someone could help me with them :)
What is the impact of globalisation on the distribution of income in the Domestic Economy and In the global economy?
What is the impact of globalisation on the quality of life and economic growth in the global economy?
For both extended responses, first start off with a definition:
Globalisation is the increasing integration between different countries economies and culture.
Then identify some key economic issues that arise due to globalisation; e.g It has led to a shift in global trade flows, trade blocs etc.
The first question: The distribution of income is directly related to the quality of life and the changing trade flows which lead to a more integrated economy. Whilst this may be beneficial for some economies (mostly those in developed economies) It can cause exploitation of workers in order to "maximise" productivity and increase profits (decreasing quality of life). However, this can lead to income gaps which hinder an equal distribution of income in domestic economies. The Aus gov. combats this by setting a minimum wage (which is $17.70 per hour).
To answer the second question, identify how the above-listed issues relate specifically to the quality of life (ie distribution). So the first paragraph can include an explanation of how globalisation increases trade flows and its effects (e.g globalisation has allowed for the trading of technology and innovation which in turn leads to cheaper transport costs, lowering production costs) This can increase the quality of life (consumers can buy more-> Econ. Growth) This can be seen with the increase in the volume of world trade by 50 times the 1950s volume.
Innovation and the effects of sharing tech are also key factors in the changed quality of life and economic growth. People doing Brazil as a case study can include the effects of Ethanol on Brazil's economy and environment (which also relates to Quality of life).
The increase in the volume of world trade can also be attributed to trading blocs and an increased focus on free trade (a decrease in protectionist policies). Then this paragraph should link to how whilst trade blocs ideally leads to increased trade (comparative advantage so Econ. growth), there are some disadvantages. Exclusivity of trading blocs and free trade agreements usually exclude developing countries (lower demand for their exports) which can stump economic growth and cause income gaps (then a lower quality of life). With recent news of Britain leaving EU, it is also evidence that trading blocs may not be as effective, so the effects of Globalisation on growth may be slowing down. This means governments should look towards fiscal policy for future economic growth.
Of course, this is just my interpretation of how I would answer thequestion. In economics, everything links so there are many different topics and ideas you can put in the essays. Just ensure there are stats and relevant current affairs analysis to back your points. For me, these 2 questions are really similar so the same stats and concepts could be used but argued differently.
Post by: green-jake on July 24, 2016, 11:50:22 am
Post by: hermansia12 on July 24, 2016, 06:54:33 pm
Three effects of a persistent CAD on external stability?
Hey green Jake,
External stability is the ability for Australia to service its foreign liabilities sustainably. This will affect how susceptible the economy is to external economic shocks and volatility.
Now if an economy (such as Australia) has a persistent CAD, then it means that it has less to spend on fiscal policy due to the accumulation of interest from foreign debt. (Foreign debt is a debit in the net primary income) This can affect the quality of life in the economy (less to spend on infrastructure due to fiscal burden-> unemployment and economic growth) which can slow down long-term economic growth (affecting our external stability as it becomes even harder to pay our debts).
A long term CAD can also make the economy more volatile (economy is linked to other countries economies more closely-> Less stable) This can mean that long-term economic growth slows down, causing an increase in long- term unemployment which makes the economy less productive
However a CAD is not all bad- Australia has had a history of low savings (with Household savings ratio at 0% in 2002). The CAD has allowed the financing of expensive infrastructure which allows for comparative advantage (Increase in productivity -> More exports). This improves our external stability by increasing the credit in the Balance of Goods and services. This was seen in the 2010 mining boom.
Hope this helps :)
Post by: isaacdelatorre on July 24, 2016, 07:21:48 pm
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.
Thank you :)
Post by: brontem on July 24, 2016, 08:04:12 pm
Hey,
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.
Thank you :)
You definitley need the economic objectives of the RBA/gov; the inflation target, unemployment target, Eco growth target
The current stances of monetary/fiscal policy (expansionary or contractionary?) the current cash rate, how much the budget is in deficit (& when it aims to be balanced)
The current rate of unemployment, inflation, economic growth (and their long term trends), the CAD and % of CAD of GDP
Australia's HDI, GNI per capita, gini coefficient and what rank this places them against the rest of the world (for HDI its also good to know what the lowest is)
Also knowing the diagrams for appreciation/depreciation of AUD, the phillips curve, lorenz curve and the tariff/quota/subsidy diagrams are useful to have :D :D
Post by: olivercutbill on July 24, 2016, 08:13:10 pm
Post by: hermansia12 on July 24, 2016, 08:19:40 pm
Hey,
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.
Thank you :)
Hey isaacdelatorre,
It's great to hear that you're doing practice essays and finding stats that way- That's a great way to prepare for the economics exam. In Economics you'll find that everything links. A good essay on economic growth (or any other economic issue) will inevitably tackle the other issues such as unemployment, inflation, external stability and environmental sustainability.
Therefore in your stats summary, I recommend looking over the budget and the proposed economic policies as well as key economic events such as the mining boom and GFC as well as some stats regarding the trade patterns in globalisation (e.g globalisation has increased volume of trade by 50 times the 1950s volume, APEC boosted Aus. output by 7% and created 50 000 jobs by 2010).
The key trends that you should have memorised by now are economic growth, unemployment rates (especially with our notorious structural unemployment- manufacturing check this news article out Car manufacturing jobs at risk, cash rate, inflation and the current exchange rate (The changes in exchange rate is a powerful stat when doing external stability- amount of debt, cost of imports, confidence and speculation etc.)
This is a lot to process and remember- my econ teacher always said economics was the physics of humanities subjects.
The best way to memorise stats I found was just doing as many questions and practice essays as possible and incorporating them as much as possible. If essays are too time-consuming, just write a thesis/topic sentence on how you would write the essay paragraph and dot point the stats that back it up.
Good luck in trials!
Post by: Spencerr on July 28, 2016, 03:19:02 am
Given the fact that the headline inflation rate fell down to 1%, what does this reflect about our economy? what impact will this have on the rest of the economy? and also how can fiscal policy be used to address this?
Post by: hermansia12 on July 28, 2016, 08:30:51 pm
Quote
author=diiiiiiiii link=topic=166444.msg890270#msg890270 date=1469639942]
Hey there economics question!
Given the fact that the headline inflation rate fell down to 1%, what does this reflect about our economy? what impact will this have on the rest of the economy? and also how can fiscal policy be used to address this?
Hi there diiiii
This is actually very exciting news for your course. This stat. can encompass a lot of economics theory.
Now inflation rate is currently at its lowest since 1999 (way lower than RBA’s target of 2-3% in order to stimulate stable economic growth) Unfortunately for the economy, such a low inflation rate shows that consumers are spending less -> Businesses will then lower prices in order to stimulate demand and economic activity. Our economic growth is demonstrative of this as we only have 3% growth, lower than the 3.5% required for us to maintain a stable unemployment rate.
Because of this lower demand and economic activity, RBA will usually implement monetary policy in order to stimulate demand. Lower Cash rate -> lower interest rate -> borrow more to spend (credit) -> High demand -> Higher inflation and growth. Historically, it has worked and been very effective to Australia’s stable growth, unfortunately monetary policy hasn’t been as effective recently as it has in the past (Gradual fall of the cash rate from 2.5% in 2015 to the current rate of 1.75%)
The cash rate and low inflation also relates to our Exchange rate (which is at $0.75US per Aus. Dollar). Theoretically, a fall in the exchange rate should stimulate exports (law of demand) however, Australia isn’t doing so well on the export front (cough structural unemployment -> Manufacturing only accounts for 7% of our output and slow down of the mining boom with slower growth in China). We have a greater focus on skilled labour -> School retention is high at compulsory of completing 12 years of education now and services accounts for 58% of our output.
Now with the effectiveness of monetary policy slowing down, we need to have focus more on implementing fiscal policy in order to stimulate economic activity -> Increase inflation to a healthier rate of 2-3%.
With our services sector so high, the government should have an increased focus on expanding tourism in Australia (This means no polluting the Great Barrier Reef -> Coalition promises to spend $1 Billion during election). This works with how tourism increases the amount of injections in the economy (Injection > Leakages = Econ growth). It should also increase spending on infrastructure -> increase our construction sector which accounts for 9% of our output. This will stimulate long term economic growth and allows for job creation -> Lowering unemployment (at 5.7% which is higher than the NAIRU rate of 5.5%) We can also make our services sector become more productive.
They should also focus on fiscally supporting small businesses and making them more efficient and productive. This will lead to job creation and an increase of spending in the economy. Small businesses are the backbone to long term economic growth! We are still relatively uncompetitive in the retail sector of the economy, accounting for only 5% of our output.
And these are just some of the effects that inflation has on our economy! Economics is exciting because literally everything links!
Hope this helps :) Happy analysing!
Post by: sudodds on July 29, 2016, 12:10:05 am
Thanks!
Post by: hermansia12 on July 29, 2016, 04:12:51 pm
heyaaa Idk if anyone has already asked this, but what are peoples opinions on including graphs within your essays? My teacher said you could but I was wondering if it is really worth the time, and whether or not you will receive the same amount of marks if you just reference the statistics/changes demonstrated?
Thanks!
Hi There :)
It is definately worth your time to put in the graphs when you can (e.g shift in supply and/or demand, NAIRU etc)! This is because it shows a deeper understanding in the concepts whereby you can engage with stimulus and show it visually (Band 6 level up!). Only catch is you must refer to them to make your point stronger. Label everything and call the drawing as "figure 1" or something of the sort so the marker knows that you are referring to it.
Hope this helps :) :)
Post by: Adriaclya on July 29, 2016, 05:47:50 pm
So recently i came across money flow and credit flow in a textbook. What are they exactly?
And also, why is positive cash flow good?
Thanks!!
Post by: brontem on July 30, 2016, 05:40:03 pm
Post by: jakesilove on July 30, 2016, 05:53:40 pm
Does anyone have any good acronyms/mnemonics/devices etc for remembering information about exchange rates? like what causes it/the effects etc?? I'm planning on avoiding it if its an essay question, but I want a good way of remembering it, just in case :) :)
Noooo idea (lol economics) but I found a cool info graphic here!
Post by: brontem on July 30, 2016, 05:56:42 pm
Noooo idea (lol economics) but I found a cool info graphic here!
Fantastic! We've now got our own personal researcher! (seriously though that's v helpful thank you :D :D)
Post by: jakesilove on July 30, 2016, 06:00:01 pm
Fantastic! We've now got our own personal researcher! (seriously though that's v helpful thank you :D :D)
I tried coming up with an mnemonic device using the descriptors, the best I could do was CIGGIS sorry
Post by: jakesilove on July 30, 2016, 06:00:15 pm
Fantastic! We've now got our own personal researcher! (seriously though that's v helpful thank you :D :D)
Also, economics lol
Post by: brontem on July 30, 2016, 06:05:15 pm
I tried coming up with an mnemonic device using the descriptors, the best I could do was CIGGIS sorryThat's so laughable I might actually remember it ::)
Also, economics lolFight me hahahahahaah
Post by: conic curve on July 31, 2016, 05:03:55 pm
Try to think of it in the way that I have listed below
Post by: isaacdelatorre on July 31, 2016, 06:03:51 pm
In the prelim topic "markets", what are they referring to? (i.e. are they referring to businesses or stores like K-mart or what)
Try to think of it in the way that I have listed below
Hey, from what I remember.
The topic of markets is an introduction into the different kinds of markets. E.g.
Financial Markets - forex and domestic
Product Markets - market for goods and services (so like Kmart and other businesses)
Factor Markets - market for factors of production
Labour Markets - market for human capital
The first few subsections within markets - supply, demand and equilibrium are applicable to all markets in that each market will have a market equilibrium that is influenced by changes in supply and demand.
Post by: Spencerr on July 31, 2016, 09:22:16 pm
The first few subsections within markets - supply, demand and equilibrium are applicable to all markets in that each market will have a market equilibrium that is influenced by changes in supply and demand.
Except the labour market, it's a social institution!
Post by: birdwing341 on July 31, 2016, 09:45:53 pm
Hey, from what I remember.
The topic of markets is an introduction into the different kinds of markets. E.g.
Financial Markets - forex and domestic
Product Markets - market for goods and services (so like Kmart and other businesses)
Factor Markets - market for factors of production
Labour Markets - market for human capital
The first few subsections within markets - supply, demand and equilibrium are applicable to all markets in that each market will have a market equilibrium that is influenced by changes in supply and demand.
Just to simplify, a market is basically a place where a certain product/resource can be bought or sold. It doesn't refer to a specific place (like Paddy's markets :P), but to the combination of all buyers and sellers whose demand and supply of such products/resources create an equilibrium price and quantity.
So a financial market trades various financial instruments (such as bonds, debentures etc.), a product market trades goods and services (like isaac said shoes, cars, food etc.), a factor market trades inputs (such as land, capital etc.) and a labour market trades...well...labour. In return for supplying product/resources suppliers receive a monetary payment equal to the equilibrium price :) (and in the case of labour, sometimes extra benefits such as shares).
Post by: conic curve on August 01, 2016, 01:00:41 pm
I'm having a mind blank at the moment and don't remember how to
Thanks ;D
Post by: uries on August 02, 2016, 01:04:50 pm
Haven't done these since term 1 and I've gone completely blank. : ^ (
Thanks in advance !
Post by: brontem on August 02, 2016, 02:46:26 pm
Help please !!For the first one (q18) you need to find the simple multiplier (which will be the same for year 2-3)
Haven't done these since term 1 and I've gone completely blank. : ^ (
Thanks in advance !
The MPC will be change in consumption/change in income
So 40/50 = 0.8
And the multiplier uses the MPS which is 1-MPC so
1-0.8 = 0.2
k = 1/MPS
k(multiplier)= 1/0.2 = 5
calculating the change is always the same
Change in national income = k x change in exports (for this question)
100 = 5 x change in X
100/5 = 20
Change in X = 20
I hope that makes sense :) its a bit of an eyesore (I can write it out if you want) but I have no idea how to do that fancy maths input that everyone else uses sorry
Post by: jakesilove on August 02, 2016, 02:59:41 pm
For the first one (q18) you need to find the simple multiplier (which will be the same for year 2-3)
The MPC will be change in consumption/change in income
So 40/50 = 0.8
And the multiplier uses the MPS which is 1-MPC so
1-0.8 = 0.2
k = 1/MPS
k(multiplier)= 1/0.2 = 5
calculating the change is always the same
Change in national income = k x change in exports (for this question)
100 = 5 x change in X
100/5 = 20
Change in X = 20
I hope that makes sense :) its a bit of an eyesore (I can write it out if you want) but I have no idea how to do that fancy maths input that everyone else uses sorry
There ya go
Post by: hermansia12 on August 02, 2016, 03:32:01 pm
Does anyone here remember how to calculate tax brackets (like in junior financial maths)
I'm having a mind blank at the moment and don't remember how to
Thanks ;D
Hi There,
Tax brackets are a progressive tax (e.g income tax). i.e the tax rate increases as the taxable amount increases. To do this, find out the bracket it is from and then calculate the amount of tax that could be charged like you would normally do
Example:
Income tax rates for 2016-17
Taxable income ll Tax on this income
0 – $18,200 ll Nil
$18,201 – $37,000 ll 19c for each $1 over $18,200
$37,001 – $80,000 ll $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 ll $17,547 plus 37c for each $1 over $80,000
$180,001 and over ll $54,547 plus 45c for each $1 over $180,000
Now suppose you earn $38, 655,
Then to calculate your income tax, you are in the bracket of $37,001 – $80,000. Therefore the calculation is:
$3,572 + [0.325($38, 655 - $37,000)]
Hope this helps :)
Post by: isaacdelatorre on August 02, 2016, 10:59:31 pm
I came across a question and I wasn't sure how I would answer this. Does anyone have any thoughts?
Thank you guys!!!
"Discuss TWO reasons for the convergence of economic growth patterns between different economies" - 4 marks
Post by: isaacdelatorre on August 04, 2016, 12:55:31 pm
If someone could please impart their knowledge regarding topic 4. I would really appreciate it
I was away on camp when my class did fiscal policy and was kind of confused when I tried to learn it myself. Could someone please explain to me how fiscal policy is used and how it effects the economy?
Also what kind of questions they could ask about topic 4, short answer or extended response.
Thanks guy :D
Post by: Klexos on August 04, 2016, 04:26:03 pm
I came across this question in the Tim Riley workbook (Chapter 2 MC Question 16).
Post by: RuiAce on August 04, 2016, 04:28:06 pm
Whats the difference between comparative & absolute advantage? And how is it numerically compared?From my economics course, the party that has a comparative advantage is that of whom has the lowest opportunity cost of partaking a particular action.
I came across this question in the Tim Riley workbook (Chapter 2 MC Question 16).
As opposed to the absolute advantage, which is the party that can perform the action using the least amount of resources.
Numerics wise: Well, if a country has an absolute advantage then the resources required will be the least. That's pretty simple.
Not sure if you've been taught the opportunity cost formula but I learnt it as
OC(Action X) = (Loss in Y)/(Gain in X)
And you want that number to be at the least basically.
Post by: Klexos on August 04, 2016, 04:52:43 pm
From my economics course, the party that has a comparative advantage is that of whom has the lowest opportunity cost of partaking a particular action.
As opposed to the absolute advantage, which is the party that can perform the action using the least amount of resources.
Numerics wise: Well, if a country has an absolute advantage then the resources required will be the least. That's pretty simple.
Not sure if you've been taught the opportunity cost formula but I learnt it as
OC(Action X) = (Loss in Y)/(Gain in X)
And you want that number to be at the least basically.
Could you fill me in on opportunity cost @___@?
Post by: RuiAce on August 04, 2016, 05:06:26 pm
Could you fill me in on opportunity cost @___@?Informally, opportunity cost is basically what you had to forego to get what you chose to get.
A more refined definition is that it is the value of the next best alternate action, to a particular action. This means say you were choosing between producing T-shirts or trousers (and for this example's convenience, say that their price tag were the exact same). It takes you 1 hours to produce a T-shirt but 2 hours to produce a pair of trousers.
So the opportunity cost of producing the T-shirt would be "one half" of a pair of trousers.
Conversely, the opportunity cost of producing the pair of trousers would be two T-shirts.
If their price were the same, you would go for T-shirt production.
(Note: Time was treated as a resource for this question.)
In a one-person economy, well you'd be producing T-shirts.
In a multi-person economy, you'd have to think about who has the comparative advantage in what. Whoever has the comparative advantage (but not necessarily absolute advantage) is whoever should be producing that good/providing that service.
(Note: Comparative advantage has to be determined with a basis. This is because it's valuing the next best alternative. There's not always an alternative.)
Post by: brontem on August 04, 2016, 05:23:35 pm
Whats the difference between comparative & absolute advantage? And how is it numerically compared?
I came across this question in the Tim Riley workbook (Chapter 2 MC Question 16).
watch this: https://www.youtube.com/watch?v=FpTBjRf8lGs its a bit of a weird way of explaining (also try to ignore the background music hahahaha) it but it helped me when I was learning it (I also think its not something that isn't necessary? I just think lots of independent papers use the calculation?)
Basically who has the lowest opportunity cost?
Post by: Spencerr on August 04, 2016, 05:29:23 pm
watch this: https://www.youtube.com/watch?v=FpTBjRf8lGs its a bit of a weird way of explaining (also try to ignore the background music hahahaha) it but it helped me when I was learning it (I also think its not something that isn't necessary? I just think lots of independent papers use the calculation?)
Basically who has the lowest opportunity cost?
Yup, it's all about the opportunity cost. Two countries. Country A can produce either 100 pieces of wheat or 20 pieces of wool. The OC of producing one piece of wool is 5 pieces of wheat. Country B can produce 200 pieces of wheat or 50 pieces of wool. The OC of producing one piece of wool is 4 pieces of wheat.
Therefore, since 5 is larger than 4, Country A has the comparative advantage in wheat. Pretty simple stuff ;) (note absolute advantage is where both items are produced more, country B has absolute advantage in both wheat and wool but that shouldn't stop it from trading with A)
Post by: RuiAce on August 04, 2016, 05:37:05 pm
Post by: conic curve on August 04, 2016, 05:50:18 pm
Whilst you guys talk about countries I just talk about shops...
What difference is there if you're talking about them both in terms of economics?
Post by: brontem on August 04, 2016, 05:53:59 pm
What difference is there if you're talking about them both in terms of economics?
Basically nothing for comparative advantage, its just who is producing what more efficiently
When you're talking about firms/businesses etc you're obviously not going to call them 'Country A' and 'Country B'
When you're talking about your case study you're not going to call the country 'Kmart' :P
Its just the example you can use
Post by: RuiAce on August 04, 2016, 05:56:00 pm
What difference is there if you're talking about them both in terms of economics?Yeah none whatsoever.
I was merely commenting on the difference in the basis of the analogies. Concept still holds
Post by: hermansia12 on August 04, 2016, 06:16:26 pm
Hey guys,
I came across a question and I wasn't sure how I would answer this. Does anyone have any thoughts?
Thank you guys!!!
"Discuss TWO reasons for the convergence of economic growth patterns between different economies" - 4 marks
Hey There :)
So convergence of economic growth patterns is the similarity in economic growth between different economies due to the effects of globalisation.Now there are many reasons why this can occur:
*Increasing volume of trade (volume of world trade increased 50 times since 1950). Since exports and imports are injections and leakages in the economy -> Any changes in the patterns of trade from mass buyers of our exports (e.g China buying less of Australia's mineral exports due to their economic slow down) will lead to a "infectious" effect of slowing down the other countries' economic growth too (seen with our slowdown of the mining boom leading to our slower growth of only 3%).
*Increasing financial flows between countries: Due to increasing financial deregulation, it has allowed for foreign countries to invest in other countries, financing expensive infrastructure. But this can increase convergence and make economies more volatile due to speculation. Therefore individual economies experiencing currency crises or financial turmoil can have flow-on effects in other countries if they withdraw their investment or demand repayment of debt.
Post by: Klexos on August 04, 2016, 06:49:31 pm
Informally, opportunity cost is basically what you had to forego to get what you chose to get.
A more refined definition is that it is the value of the next best alternate action, to a particular action. This means say you were choosing between producing T-shirts or trousers (and for this example's convenience, say that their price tag were the exact same). It takes you 1 hours to produce a T-shirt but 2 hours to produce a pair of trousers.
So the opportunity cost of producing the T-shirt would be "one half" of a pair of trousers.
Conversely, the opportunity cost of producing the pair of trousers would be two T-shirts.
If their price were the same, you would go for T-shirt production.
(Note: Time was treated as a resource for this question.)
In a one-person economy, well you'd be producing T-shirts.
In a multi-person economy, you'd have to think about who has the comparative advantage in what. Whoever has the comparative advantage (but not necessarily absolute advantage) is whoever should be producing that good/providing that service.
(Note: Comparative advantage has to be determined with a basis. This is because it's valuing the next best alternative. There's not always an alternative.)
So. Just to clarify. Lowest opportunity cost is when the production is not as compromising as an alternate option?
Post by: RuiAce on August 04, 2016, 06:52:35 pm
So. Just to clarify. Lowest opportunity cost is when the production is not as compromising as an alternate option?You do want the number to be low.
Why? Because the formula OC(X) = Loss in Y/Gain in X compares how much you sacrifice of Y to get more of X. Obviously you want to sacrifice less to get more.
The idea is that you want the alternative to never be more valuable than what you choose to do. Otherwise, well, you should've done that.
Post by: hermansia12 on August 04, 2016, 07:05:43 pm
Hey guys,
If someone could please impart their knowledge regarding topic 4. I would really appreciate it
This is a summary of what the syllabus has to say to about Topic 4. Make sure you keep up to date with the policies that could fit into the analysis and that you have both limitations and effects of these policies. You will also need to be able to solve simple multiplier questions (They usually pop up in multiple choice)
Examine economic issues
Analyse the opportunity cost of government decisions in addressing specific economic problems or issues
Fiscal Policy: A macroeconomic policy whereby governments influence economic activity through government spending, taxation and the budget outcome (i.e surplus/deficit)
There are 4 main impacts of Fiscal policy:
- Economic Activity -> Injections and Leakages
- Resource Use -> Infrastructure and Public Goods
- Income Distribution -> Social Welfare
- Savings and CAD -> Servicing the debt
Investigate structural changes in the Australian economy resulting from microeconomic policies
Microeconomic policies = labour market policies
Governments intervene in labour markets in order to influence:
- Inflation: stability in economic growth -> Wage growth
- Productivity: Developing comparative and absolute advantage
- Distribution in income and Wealth -> Fair minimum standards
Example Microeconomic policy: Minimum wage
Price Floor -> Safety net for any employee not covered by an award; Fair work commission sets minimum wages to ensure that workers aren't emploited; This increases productivity -> Higher economic growth in the long run. However, this can lead to a higher rate of unemployment as businesses may reduce the number of workers in order to maintain profit margins.
Apply economic theory to explain how a government could address an economic problem or issue in hypothetical situations
Supply and demand, effects of fiscal policy on economic growth (unemployment, environmental sustainablity, inflation etc.)
Analyse alternative ways to finance a budget deficit
Governments can finance a budget deficit by:
Borrowing from the private sector
This decreases national funds, increasing the interest rate (as the supply of money decreases). However, this can lead to a "crowding out" effect on the private sector. Crowding out means that private sector investors face higher interest rates which limits the accessibility of these funds to the investors.
Borrowing from overseas:
This minimises crowding out effects but can still stimulate economic growth. However, the CAD is widened due to the increase in debt -> stifle long-term growth due to the limited amount the government can spend fiscally on infrastructure.
Selling Assets
e.g shares in Medibank;
Apply economic skills
Explain how governments are restricted in their ability to simultaneously achieve economic objectives:
Governments have to choose between goals (especially if they can conflict -> e.g inflation and unemployment, economic growth and environmental sustainability) and has limited funds to spend. Priorities are important and changes depending on the economic climate.
Hope this helps :)
Post by: conic curve on August 04, 2016, 07:13:22 pm
Post by: RuiAce on August 04, 2016, 07:15:04 pm
When is the law of demand applicable?In general, always.
An exception is what we call a giffen good - something that violates the law of demand. A giffen good is a good that an increase in price is so adversely influencing such that people buy more of it when the price goes up.
If you learnt about the substitution effect and income effect, it is a consequence of the income effect far (overly) exceeding the substitution effect. It's like saying oh shoot the price of rice went up so now I have to eat more rice and give up my meat and vegetables.
I think my lecturer once mentioned a story of how raising the princes at McDonalds or something in the US or somewhere caused this to happen.
Post by: hermansia12 on August 04, 2016, 07:25:29 pm
So. Just to clarify. Lowest opportunity cost is when the production is not as compromising as an alternate option?
So the easiest way to understand opportunity cost, absolute advantage, and comparative advantage is to do a question. This is inspired by the example in the Dixon textbook
Suppose Australia produces 300 tonnes of grapes but France produces 400 tonnes. Or, Australia can produce100 tonnes of cheese and France produces 300 tonnes. Determine the opportunity cost of producing grapes and identify which country has comparative advantage producing this product
Let's get this in a table so its easier to understand:
Country ll Grapes ll Cheese
Aus ll 300 ll 100
France ll 400 ll 300
France definitely has absolute advantage in this market overall. But for comparative advantage, we have to compare the opportunity cost of each of the products separately.
Opportunity cost of grapes
Australia: Cheese / Grapes = 1/3 = 1/3 Tonnes of cheese
France: Cheese / Grapes = 3/4 = 3/4 Tonnes of Cheese
Since Australia gives up less resources (i.e cheese) to produce grapes, we can see that Australia has comparative advantage in producing grapes.
This is probably the hardest question you'll get for opportunity cost. It's usually only a multiple choice question (It wasn't even asked in both my trial and my HSC test). The graph associated with this is the production possiblity curve (From preliminary)
Post by: Essej on August 04, 2016, 10:09:11 pm
So. Just to clarify. Lowest opportunity cost is when the production is not as compromising as an alternate option?
Just to add on with a more visual explanation of the opportunity cost, hermansia alluded to the notion of a 'production possibility curve' which we learned about in year 11. If you'll look in the attachments, the PPF here represents resource allocation of cotton and wine - which is really the main idea opportunity cost references. At points A,B, and C we can see that maximum allocation of resources is employed, however at point A, whilst the economy produces more wine, it sacrifices cotton production (the opportunity cost). This is often a response to comparative advantage; the basis of free trade. Countries will often reduce production in one area, as the theoretical economy has done with cotton in the graph, in order to produce more wine (because obviously the economy is highly efficient in that area e.g. Chinese manufacturing).
Further, at the big red dot X we can see that resources are, in every sense, inefficiently allocated
Inversely, at point Y on the outside of the curve represents a currently unreachable point of output - however alterations to the factors of production(land,labour,capital,enterprise) e.g. technological advancement and upgrade in capital can assist the economy to reach this point.
Hope this helps (and sorry for going on such a huge tangent but trust me it's all relevant albeit very rare to see in HSC exams)
This is a summary of what the syllabus has to say to about Topic 4.
Thanks for putting the time into this! Fantastic resource!
Post by: Deng on August 05, 2016, 07:40:28 pm
Much appreciated
Attached are some examples of MC about MP
Post by: jamie anderson on August 05, 2016, 11:23:19 pm
Also, i attached a quota diagram below and i dont know how to visually read it
thanks guys
Post by: hermansia12 on August 06, 2016, 12:42:00 pm
Hey, can someone help me with monetary policy as in the use of selling/buying CGS on the economy, cash markets and how the RBA's actions influence the economy ( appreciation/depreciation, investment, and whatever else ) (like i know the general gist of monetary, like the RBA lowers the cash rate to stimulate the economy but the multiple choice questions that they ask i can never get right )
Hi Deng,
Ok bear with me here, but we're going to start off with a defination of monetary policy. Monetary policy is actions undertaken by the Reserve Bank on behalf of the government to influence the cost and availability of money and credit in the economy(domestic market operations). Generally, it is used to make economic growth less volatile as it influences other economic issues (economic activity, employment and inflation) Monetary policy in MC basically dials down to how well you know supply and demand.
Now in domestic market operations, RBA uses the Cash Rate to affect the Exchange Settlement accounts (which is basically our money supply in the short term money market). Now think of cash rate this way. The cash rate determines how expensive it is for financial institutions (banks) to obtain funds. Higher the cash rate, harder it is to obtain funds (its literally the "price" of money.
So if we have this way of thinking, we can summarise the domestic market operations in this way:
Economic growth is low -> Loosen Monetary Policy -> Increase the amount of borrowable funds in the short term money market (i.e increase supply) -> Lower Cash rate and interest rates (because there's more supply so lower price)
The way RBA changes the amount of borrowable funds is through the act of buying/selling government securities.
Treat these securities like a object that is traded between the banks and RBA. To decrease money supply, the banks will sell government securities. The banks gives money to RBA for the object so they essentially hold less money. (sort of like you buying a coffee in the morning so you have less money supply in your wallet). They do the reverse to increase money supply. So by buying back the securities, they give money to the banks, increasing money supply. This should kickstart your answer to your Q2 MC.
The FOREX market has a similar concept but at an international level. (Whilst the FOREX market does have an effect on our Economy, RBA does not generally sell currencies as its first course of action to stimulate economy cough Q2). So in Q3, the exchange rate has fallen -> ie supply has increased, but demand has fallen.
If we lower interest rates, economies are more likely to want to borrow from us right? Lower interest to pay so higher the demand. So to lower demand, our interst rates must be raised. Now think about it. If we buy Australian Dollars, we would limit the supply in the international market so A and B are out. So in order to increase supply, we would have to sell $US to put more $AU in the market.
Hope this helps :)
Post by: hermansia12 on August 06, 2016, 12:57:32 pm
Hey, on a AD or AS supply, how would i know by inspection if its increased or decreased e.g it says A --> A1 and the picture shows a shift to the right of the AS curve, dont have a question sorry but i hope this is enough information
Also, i attached a quota diagram below and i dont know how to visually read it
thanks guys
Hi Jamie,
Check out Q3 in Deng's post. So this is just interpretating the graph and using your basic knowledge of supply and demand. So if the supply is shifted to the right (i.e quantity increasing because quantity is always X axis) Then there is an increase in supply -> Lower price of the commodity. If it reverses, then price increases cause less supply. Changes in supply could be due to advances in tech, natural hazards etc.
But for demand, its the opposite. So if it shifts to the left, demand decrease so price decreases. etc.
Now for quota, lets start off with what a quota is. A Quota restricts the volume of certain goods that can be imported. So in your MC question, what is happening? Well the supply is shifted and its increasing i.e Quota has widened -> Government is less restrictive of imports. So we can conclude that there is less protection because there is more competition in the domestic market.
And what happens when we increase supply? Price falls.
Hope this helps :)
Post by: Adriaclya on August 06, 2016, 02:14:07 pm
Hey, can someone help me with monetary policy as in the use of selling/buying CGS on the economy, cash markets and how the RBA's actions influence the economy ( appreciation/depreciation, investment, and whatever else ) (like i know the general gist of monetary, like the RBA lowers the cash rate to stimulate the economy but the multiple choice questions that they ask i can never get right )hello deng! even though hermanasia put a nice explanation, I guess it wouldn't hurt for another style of that explanantion!
okay, so monetary policy is basically the actions taken by the RBA to influence the cash; and hence, concurrently the interest rates in other financial market. Like you said, the predominant monetary policy is the use of domestic market operations : which is essentially just the buying/selling of CGS in the cash market - or otherwise the overnight money market (Note that this is the secondary market we are talking about). As such, there are two stances of monetary policy:
contractionary/tightening
This is when the RBA sells the CGS in order decrease the money supply in the economy. the main reason for this is because they want to slow down economic activity in the case of inflation. In other words, the banks in the cash market buy these government bonds. Now just imagine the RBA as a MASSIVE safe that locks away this money from selling CGS. therefore, there is lower money supply in the economy, thus the rate for borrowing in the cash market increases. the cash rate increases. subsequently, because the banks have to pay more to borrow money which then spills over to the long term money market. aka, the rise in cash rate = rise in interest rates = more saving, less spending, more foreign investment
expansionary/easing
basically the opposite. the RBA buys the CGS to increase the money supply in the cash market = lower cash rate (or borrowing rate in the cash market) = lower interest rates = more spending, less spending, more borrowing to spend etc.
with q3)
I think I disagree with hermanasia?? (I might be wrong)
Quote
If we lower interest rates, economies are more likely to want to borrow from us right? Lower interest to pay so higher the demand. So to lower demand, our interst rates must be raised. Now think about it. If we buy Australian Dollars, we would limit the supply in the international market so A and B are out. So in order to increase supply, we would have to sell $US to put more $AU in the market.From my sources, higher interest rates = higher demand. why? because foreign investors want to lend money to aust in order to receive a higher return. how does this affect demand? when lending money to aust, they have to buy the aust dollars first; thus there is a higher demand for the aust dollar = increased exchange rate. conversely, decreased interest rates = lower demand.
Likewise, to buy US dollars, think of aust as trying to sell goods/services - aust sells stuff and US buys this stuff = aust is essentially buying US dollar = aust converts this USD to AUD in aust = more money in the domestic economy to spend = higher supply.
so yeah, q3) is to buy US dollars and decrease interest rates....I think.
q2) basically, RBA buy securities = more money supply = induce spending etc.
Post by: hinakamishiro on August 06, 2016, 02:20:51 pm
Post by: Adriaclya on August 06, 2016, 03:07:21 pm
Hi guys! I was wondering if anyone could explain the total outlay method to me and how you can determine elasticity from it? Thanks, I've been having issue with this one for quite a while ;Dhey there!
so before anything, elasticity of demand is how responsive the demand of something is to a change in price. ie how much will the change in price of a product affect the demand for the product. If demand is:
ELASTIC, means that even a slight change in price, will incur a greater change in demand for that product. Applying this to the total outlay method/ total revenue method, If T.outlay moves in the opposite direction to change in price, demand is elastic. note: both T.outlay and price can move in whatever direction they choose to - eg decrease or increase. As long as they are in opposite direction, it is demand elastic.
INELASTIC, means that a change in price will essentially have zero impact on the demand. So if T.outlay moves in the same direction, then demand is inelastic. note: again, T.outlay and price can move in any direction. As long as both move in same direction, it is demand inelastic.
UNIT ELASTIC, means that despite a change in price, there is no change in T.outlay.
Given:
PRICE OF APPLES QUANTITY DEMANDED TOTAL REVENUE
$1 80 $80
$2 50 $100
$3 40 $120
$4 30 $120
$5 20 $100
FROM:
PRICE $1 to $2 as well as from $2 to $3, both the total outlay/revenue and price increases . since they both increase, ie move in the same direction, demand is inelastic.
PRICE $3 to $4, since total outlay/revenue is the same despite a change in price, demand is unit elastic.
PRICE $4 to $5, since price increases but revenue decreases, they move in opposite direction, therefore it is elastic.
Post by: Spencerr on August 06, 2016, 03:28:35 pm
Spoiler
hello deng! even though hermanasia put a nice explanation, I guess it wouldn't hurt for another style of that explanantion!
okay, so monetary policy is basically the actions taken by the RBA to influence the cash; and hence, concurrently the interest rates in other financial market. Like you said, the predominant monetary policy is the use of domestic market operations : which is essentially just the buying/selling of CGS in the cash market - or otherwise the overnight money market (Note that this is the secondary market we are talking about). As such, there are two stances of monetary policy:
contractionary/tightening
This is when the RBA sells the CGS in order decrease the money supply in the economy. the main reason for this is because they want to slow down economic activity in the case of inflation. In other words, the banks in the cash market buy these government bonds. Now just imagine the RBA as a MASSIVE safe that locks away this money from selling CGS. therefore, there is lower money supply in the economy, thus the rate for borrowing in the cash market increases. the cash rate increases. subsequently, because the banks have to pay more to borrow money which then spills over to the long term money market. aka, the rise in cash rate = rise in interest rates = more saving, less spending, more foreign investment
expansionary/easing
basically the opposite. the RBA buys the CGS to increase the money supply in the cash market = lower cash rate (or borrowing rate in the cash market) = lower interest rates = more spending, less spending, more borrowing to spend etc.
with q3)
I think I disagree with hermanasia?? (I might be wrong)From my sources, higher interest rates = higher demand. why? because foreign investors want to lend money to aust in order to receive a higher return. how does this affect demand? when lending money to aust, they have to buy the aust dollars first; thus there is a higher demand for the aust dollar = increased exchange rate. conversely, decreased interest rates = lower demand.
Likewise, to buy US dollars, think of aust as trying to sell goods/services - aust sells stuff and US buys this stuff = aust is essentially buying US dollar = aust converts this USD to AUD in aust = more money in the domestic economy to spend = higher supply.
so yeah, q3) is to buy US dollars and decrease interest rates....I think.
q2) basically, RBA buy securities = more money supply = induce spending etc.
Hey there, thanks for the wonderful explanation, i'd just like to add on a bit more to give that extra detail. In terms of domestic market operations, the RBA (which is the banker for the government and the commercial banks) buys and sells CGS to and from the commercial banks. This way, they alter the money supply in the overnight money market by taking cash out of or putting cash into the commercial bank's exchange settlement accounts. By increasing or reducing the supply of cash on the overnight money market, the RBA influences the cash rate through the price mechanism. As the cash rate is changed via this DMO's, the changes are passed onto the rest of the economy through the transmission mechanism i.e. whereas banks choose to pass on the reductions in the cash rate to the interest rates given to consumers (e.g. homeloans, mortgages etc. ). So taking an example recently, the cash rate was reduced by another 25 basis points to 1.5% from 1.75%. Now commerical banks only passed on half of these cuts to their interest rates. E.g. NAB or CAB only reduced their home loan rates by 0.13% instead of the full 0.25%. This is the transmission mechanism in place and hence why collusion between banks is such a big deal. If bank's collude, they can cooperate together and not pass on any of the cuts at all, thereby making a huuuge amount of profit.
On the second issue of the AUD, in theory both is correct. If we have lower interest rates, international borrowers would be inclined to borrow from us leading to higher demand. On the flip side, if we have high interest rates we offer higher returns attracting foreign investment and capital inflow. Now in reality, given the global economy and what's happening in the world, the AUD will usually APPRECIATE with HIGHER INTEREST RATES. This is because of interest rate differentials between Australia and the global economy. If we take a loook at the global economy, there are negative interest rates in Japan, EU, American interest rates aren't that high either. So even if we lower our cash rate to 1.5%, it's still 1.5% higher than advanced economies with 0% or even negative interest rates. It is for this reason (that we have RELATIVELY higher interest rates than the global economy despite having the cash rate being a historic low), that foreign investors continue to demand AUD so they can invest in Australia.
TLDR: Interest rate DIFFERENTIALS and RELATIVITY determine whether the AUD will appreciate or depreciate from changes in the cash rate.
Post by: RuiAce on August 06, 2016, 10:34:00 pm
ELASTIC, means that even a slight change in price, will incur a greater change in demand for that product. Applying this to the total outlay method/ total revenue method, If T.outlay moves in the opposite direction to change in price, demand is elastic. note: both T.outlay and price can move in whatever direction they choose to - eg decrease or increase. As long as they are in opposite direction, it is demand elastic.Is this how they teach it to you guys in HSC Economics? Because elasticity is, by definition, just a measure of the responsiveness to a change in price in the quantity demanded.
INELASTIC, means that a change in price will essentially have zero impact on the demand. So if T.outlay moves in the same direction, then demand is inelastic. note: again, T.outlay and price can move in any direction. As long as both move in same direction, it is demand inelastic.
UNIT ELASTIC, means that despite a change in price, there is no change in T.outlay.
Having done Micro 1 at UNSW I can help you out here.Note: Elasticity < -1 implies elastic
Note that the elasticity of demand is a measure of responsiveness as to a change in price. It is basically the change in quantity demand for a small change in price.
(Keep at the back of your head that according to the law of demand, consumers have a greater willingness to buy more in quantity when the prices are low.)
Elasticity = -1 implies unit elastic
-1 < Elasticity < 0 implies inelastic
The fact that the total revenue increases when you increase the price on a good with inelastic demand is actually a consequence of the formula above, combined with the fact that Total Revenue = Qty Demanded * Price
Post by: Adriaclya on August 07, 2016, 08:56:48 am
Is this how they teach it to you guys in HSC Economics? Because elasticity is, by definition, just a measure of the responsiveness to a change in price in the quantity demanded.yup its kinda weird right??! But then again, this is just a method to know. :)
Post by: Klexos on August 07, 2016, 03:27:20 pm
I was just reviewing my unemployment essay (which I related to EG as an extension) and saw this "rising output gap" comment but unsure to what it means and how it relates to rising unemployment.
Post by: Adriaclya on August 07, 2016, 04:48:53 pm
I was just reviewing my unemployment essay (which I related to EG as an extension) and saw this "rising output gap" comment but unsure to what it means and how it relates to rising unemployment.Hello Klexos!
Basically, the rise in unemployment to 5.8% as a result of the GFC, ultimately lowered the demand for output (as you stated) - which is THEN reflective of lowered economic growth. So in context, the rising out put gap means that the difference in the demand for output, hence production, DURING the GFC and PRE-GFC is increasing.
Gradual increase of unemployment = gradual decrease in demand + production of output = increasing difference/ gap in output before and during/lead up to GFC.
If it helps in any way, think of "rising output gap" as in increasing gap in output rather than rising output in general.
Post by: Klexos on August 07, 2016, 07:44:52 pm
Hello Klexos!
Basically, the rise in unemployment to 5.8% as a result of the GFC, ultimately lowered the demand for output (as you stated) - which is THEN reflective of lowered economic growth. So in context, the rising out put gap means that the difference in the demand for output, hence production, DURING the GFC and PRE-GFC is increasing.
Gradual increase of unemployment = gradual decrease in demand + production of output = increasing difference/ gap in output before and during/lead up to GFC.
If it helps in any way, think of "rising output gap" as in increasing gap in output rather than rising output in general.
Hi! Thanks for your response :D
Post by: Adriaclya on August 07, 2016, 08:03:28 pm
Hi! Thanks for your response :DNo probs! ;D
Post by: jamie anderson on August 07, 2016, 08:57:44 pm
Thanks
Post by: brontem on August 08, 2016, 03:55:25 pm
Hey guys how would i read tariff diagrams? as in how much do consumers spend, government revenue, and all that all i know is the new import level where it contracts to the new S and D curve points
Thanks
It's hard to write out, I recommend watching this: https://www.youtube.com/watch?v=EdkYjeqclys :)
Post by: brontem on August 08, 2016, 04:29:10 pm
Looking at the picture that's attached:
World price is the price before the tariff = $10
Tariff = $5
Price with tariff = $15
Before the tariff:
Demand is 400 but supply is 100 - therefore to meet demand there needs to be 300 units imported. (blue line)
After the tariff:
Demand is 300 but supply is 200 - so only 100 units need to be imported (green line)
Gov. revenue is always the box of size of the tariff x number of imports (yellow)
The size of the tariff is the gap increase from the world price (in this case $15 - $10 = $5)
I hope it makes sense?? If it doesn't just ask :D :D (also if any of it is wrong someone pls correct it)
Post by: jamie anderson on August 08, 2016, 04:53:45 pm
Thanks!!
Post by: brontem on August 08, 2016, 06:21:42 pm
I understand that part of the tariff diagram after spamming yt about it but how would i do this one ?
Thanks!!
Now that the price is $50 not $40, it should be $50 x 700 units demanded = $35 000 so C?
Although the answers for this says D... so I'm not sure hahaha :-\
Post by: hermansia12 on August 08, 2016, 08:26:34 pm
Now that the price is $50 not $40, it should be $50 x 700 units demanded = $35 000 so C?
Although the answers for this says D... so I'm not sure hahaha :-\
Basically its like originally, consumers demand at 800 units (at the $40 world price). But since the government has imposed the tarriff (now at $50) -> The total consumer spending would be 50 * 800 to completely satisfy the original demand.
Thats why the answer is D
:) hope this helps
Post by: Deng on August 14, 2016, 12:01:13 am
Thanks
Post by: Adriaclya on August 14, 2016, 09:11:15 am
Hey, just curious how would i improve my economics essay skills for example in exams my short answer and multiple choice are generally fine however i always seem to bomb my essays. For example in my trials i had an exchange rate stimulus and a unemployment essay where it all went downhill. Part of my issue with essays is not knowing the whole syllabus extensively enough to sustain a strong argument for the whole essay so i guess what are ways to remember/understand the whole syllabus to a high extent ? ( other than continuous study ( already do so ) )Hey there!
I see that you do both advanced english AND extension english! So obviously, your writing is very capable.
However, when it comes to eco, all the airy fairy writing that normally happens in english is pretty much unnecessary. There is more focus at being concise and to the point. In fact, short sentences that don't ramble on are usually the best. Write only whatever gives you marks is the rule of thumb (but don't compromise coherence and synthesis in saying that though).
Additionally, knowing the syllabus extensively is great. But more importantly is how you can make connections between syllabus dotpoints. This is where you:
- know connections between cause and effect. This lets you to ALWAYS be able to BACK UP your statement. This lays foundation for your stronk argument and shows depth of knowledge. In all, knowing just theory in the syllabus is not enough. Question how each dotpoint relates to eachother - be able to apply that knowledge.
-(can't stress enough) take into account of the question verb. This pretty much dictates what your response should be like and what you should write. Eg evaluate = make a judgement on how effective something is. Explain = how and why something works.
- have statistics where necessary. Keep in mind that statistics don't explain anything. Its there to act as evidence to support your argument - it strengthens your argument. You must make connections of this statistic to what it shows, why it shows that and how is it caused.
In all, do not settle for just knowing the theory - know why and how this theory interrelates with eachother. Like, doing this makes it easier for you to remember and forces you to understand concepts than just rote memory. Anyhow, that's all i can offer. Hope this helps!
Post by: brontem on August 14, 2016, 01:28:14 pm
Thanks ;D
Post by: Adriaclya on August 14, 2016, 08:00:53 pm
Can someone help me with these? How do you work out the appreciation/depreciation from its value against another currency?Yo! So to calculate appreciation/depreciation is given by:
current exchange rate minus initial exchange rate / initial exhange rate
So applying to your question,
Its (1.07 - 0.85)/0.85.
So if it gives a positive value, it has appreciated by the answer you get; vice versa for depreciation.
That should give an answer of around 26 ish percent. Ie there has been an appreciation in aust dollar against us dollar by 26 percent!
Also, from the trade weighted rate, you can also tell an appreciation in aust dollar to us dollar by the increase in TWI.
Post by: olivercutbill on August 15, 2016, 07:23:34 pm
Given nominal GDP and the CPI outcome, what is the working to find the real?
Some divide the nominal GDP by the CPI, some reduce nominal GDP by eg. 25% (for a CPI of 125).
Can someone clear this up for me? Thanks
Post by: conic curve on August 15, 2016, 07:57:15 pm
Post by: brontem on August 15, 2016, 09:45:04 pm
Something that confuses me because of notational differences and differences in videos online:
Given nominal GDP and the CPI outcome, what is the working to find the real?
Some divide the nominal GDP by the CPI, some reduce nominal GDP by eg. 25% (for a CPI of 125).
Can someone clear this up for me? Thanks
real GDP = nominal x 100/CPI
(nominal and CPI numbers for the same year obviously) ;D ;D
Post by: Adriaclya on August 16, 2016, 03:20:16 pm
Given nominal GDP and the CPI outcome, what is the working to find the real?Just to add on to brontem 8),
Can someone clear this up for me? Thanks
Yes current real GDP = current nominal GDP x 100/current CPI .
However it can also be expressed such that
Real GDP = nominal GDP / ratio of current CPI to base year CPI (which is usually taken as 100)
As you were saying how some people subtracted 25%, that is incorrect (given a cpi of 125).
Post by: Adriaclya on August 16, 2016, 03:45:33 pm
Explain how non-equilibrium market situations for surfboards can be resolved through the operation of the price mechanism (4 marks)Basically, its saying in a non-equilibrium market situation, where supply does not equal demand, there is either a shortage or a surplus of surfboards.
Now we know that the price mechanism is ultimately the influence of prices on the interaction between the supply and demand of items.
So in a case of
shortage of surfboards (supply <demand at a given price:
You would increase the price of the surfboard to contract demand (since more expensive) and increase supply (since price increase acts as an incentive for production)
surplus of surfboards (supply>demand):
You would decrease the price of it to expand demand and contract supply for the market to be in equilibrium.
Yep.
Post by: Loki98 on August 17, 2016, 05:38:53 pm
which of the following methods of financing an expansionary fiscal policy will be more likely to cause higher inflation?
1. borrowing from the Reserve bank
2. issuing government securities for the sale in the domestic market
3. issuing government securities for sale to foreign investors in a foreign currency.
4. selling government assets
Answer is A
Thanks
Post by: chuckiecheese on August 17, 2016, 06:24:11 pm
This is mad that the economics side of this site has grown, it is great !
Got back our trial paper today and I got 82/100, topped the exam. I know I should be stoked, but I am after a band 6 in the HSC exam, so any ideas on how to bump my way up there?
Post by: Adriaclya on August 17, 2016, 09:46:12 pm
Hey guys,the main points i would give would be to :
This is mad that the economics side of this site has grown, it is great !
Got back our trial paper today and I got 82/100, topped the exam. I know I should be stoked, but I am after a band 6 in the HSC exam, so any ideas on how to bump my way up there?
be concise but do not compromise it for structure and information in your answers
know the connections between syllabus dotpoints
being aware of the question verb
proper jargon
time managment - really depends on what's comfortable to you. i prefer smashing my essays first and then doing mc's and short answers. but at the end, just make sure you have time to double check.
knowing the definitions of specific jargon. dude, this makes it hella easier for understanding differenct concepts
thats probs all i can offer right now (cos router acting up). But going through your paper, knowing exactly what you got wrong and where your weaknesses are, is the best place to start for maximising those marks!
so tell me, where are parts of the exam you lost most marks in and what type of questions were they?
Post by: Essej on August 18, 2016, 01:55:48 pm
Could someone explain this question.
which of the following methods of financing an expansionary fiscal policy will be more likely to cause higher inflation?
1. borrowing from the Reserve bank
2. issuing government securities for the sale in the domestic market
3. issuing government securities for sale to foreign investors in a foreign currency.
4. selling government assets
Answer is A
Thanks
Hi Loki!
So we know that there are 4 types of financing a deficit/expansionary fiscal policy (tap, tender, monetary and overseas).
Elimination isn't really necessary for this as you should be able to single out a which is a form of monetary financing. We know that borrowing from the reserve bank (which amounts to printing money, also known as quantitative easing) increases the money supply. Thus, purchasing power of consumers falls and inflation rises.
Hope this helps !
Post by: chuckiecheese on August 22, 2016, 09:29:47 pm
How to structure
Explain how both labour market policies and fiscal policies can be used to reduce income inequality and wealth inequality.
Post by: lukejohnson on August 29, 2016, 10:23:29 am
Explain how changes in the level of domestic interest rates impact on Australia's balance of payments.
Briefly outline one macroeconomic policy that could be used by government to improve Australia's balance of payments.
Cheers
Post by: Spencerr on August 29, 2016, 06:41:31 pm
Hey wondering if someone could please help with these short answer questions
Explain how changes in the level of domestic interest rates impact on Australia's balance of payments.
- Note that the conduct of monetary policy is geared towards inflation targeting (keeping inflation within the 2-3% band) however changing the IR can impact upon Australia's BoP
- Increases in IR can dampen economic growth and help to lower inflation. Imports are a function of domestic economic growth and so reducing growth will reduce our demand for imports, thereby improving our BoGs should our exports remain unaffected. However interest rate differentials between national economies can result in capital inflows (remember that most of the advanced economies have interest rates near 0% with the EU having negative interest rates, hence increasing IR will lead to greater capital inflow as investors find it more attractive to invest here (due to higher returns)). This results in increased surpluses on our financial account which will lead to an increased CAD as they balance out under the exchange rate mechanism.
- Decreasing IR can stimulate economic growth and can lead to an increase in imports which reduces the size of our net exports, potentially widening our net exports. This is due to the fact that subsequent structural changes in the economy have "hollowed out" many of our manufacturing sectors etc. therefore we rely heavily on overseas to import consumer goods. Decreasing IR can also lead to capital flight if other national economies have higher interest rates which can lead to reduced surpluses on the Financial account.
Briefly outline one macroeconomic policy that could be used by government to improve Australia's balance of payments.
- One macroeconomic policy that the government can use is to achieve fiscal consolidation by achieving consecutive budget surpluses, stabilising debt and reducing the amount of interest the government has to pay on its debt. According to the twin deficits theorem S -I + T - X = X - M. (T - X) being the Public Sector Underlying Deficit (PSUD), if the government maintains fiscal discipline and reduce the PSUD, they can reduce the size of the CAD represented by (X - M). Furthermore, by running budget surpluses, the government increases the pool of national savings, closing the savings investment gap whilst also mitigating the "crowding out effect" that is the government competing with private sectors for national savings, forcing the private sector to borrow overseas which is cheaper.
Cheers
Post by: Deng on August 30, 2016, 02:17:00 pm
My teacher said that inserting figures and quotes from the stimulus isnt actually referring to it and i should use it as the basis of my essay
Thoughts on this ?
Post by: Essej on August 30, 2016, 05:34:52 pm
Hey guys, i got my trial marks back and was wondering how i can improve on "referring to the stimulus".
My teacher said that inserting figures and quotes from the stimulus isnt actually referring to it and i should use it as the basis of my essay
Thoughts on this ?
Hi Deng!
It would be difficult for me to comment unless I actually see your response, but often directly inserting quotes from the stimulus isn't actually showing an understanding of the question. To achieve the high bands, the questions require you to integrate the stimulus into your response.
Say the stimulus (often a paragraph in the HSC trials) said something along the lines of "The RBA posed that the deteriorating inflation rate in Australia, sitting at 1.3%, was a result of both domestic and international factors."
You should never directly insert the quote ie "Inflation is a result of both domestic and international factors. The RBA posed that..."
Instead, what the markers want to see is an understanding of the question and a use of words/small phrases from the stimulus sustained through your response.
This may look like "The recent decline in inflation can be attributed to domestic factors such as a trend lowering of consumer MPC, as well as slower overall global growth. Currently, due to the reduction in effectiveness of monetary policy, the inflation rate now sits outside the targeted band of 2-3% at 1.3%."
Hope this helps - happy to have a look at any of your responses if you need specific clarification (i feel i'm being too general :'( :'()
Post by: Deng on August 30, 2016, 06:43:34 pm
Also, do you know any places where i can get comprehensive timelines of inflation,employment, economic growth etc with the causes or should i make them myself to solidify my knowledge ( kinda lazy haha )
Post by: Essej on August 30, 2016, 07:36:11 pm
Still havent been handed back our exams as our teacher has to photocopy them and whatnot, but i understand what youre saying it echoes that of my teacher.
Also, do you know any places where i can get comprehensive timelines of inflation,employment, economic growth etc with the causes or should i make them myself to solidify my knowledge ( kinda lazy haha )
Definitely!
A site I really recommend is http://www.tradingeconomics.com/ .
It contains trends of all the statistics you mentioned and many more! What I like to do is write out a timeline with trends every 5 years (except in extraordinary circumstances e.g. 2008 GFC) and stick them up on my wall. Having them in your face every day is a really good way to solidify statistical knowledge over time and works for other subjects as well!
Post by: Deng on August 30, 2016, 08:02:34 pm
Post by: Klexos on September 01, 2016, 08:27:52 pm
Just don't know how to link the exchange rate to economic performance (I think I did it insufficiently) and internal stability!
Post by: jamie anderson on September 14, 2016, 07:14:22 pm
Post by: conic curve on September 14, 2016, 07:25:01 pm
Hey guys im wondering if i post a draft essay does it require the 15 posts thing
Well since there's no marker (I don't believe there is a marker) I assume you can post it without needing 15 posts
Post by: Essej on September 14, 2016, 09:38:15 pm
Hey guys im wondering if i post a draft essay does it require the 15 posts thing
You can definitely post a practice essay! But since there are no mods on this thread the feedback may not be as good as the english/math thread + since we students marking may take longer!
Post by: brontem on September 14, 2016, 10:31:24 pm
You can definitely post a practice essay! But since there are no mods on this thread the feedback may not be as good as the english/math thread + since we students marking may take longer!
I'll raise you one with an idea.. I'm willing to share my essays with people if they're willing to post theirs too?? I deliberately picked the options (in the trial) that I knew how to do and I don't know how I'd answer the others/questions from other papers!! (Also might help with the people who want theirs marked too..)
Just an idea ;D ;D I'm also really lazy
Post by: RuiAce on September 14, 2016, 10:35:46 pm
As if my schedule wasn't busy enough, Ying's is 5x worse. I can tell that she's not going to have the time to deal with all of those, at least, not with a reasonable speed. If you guys want to share essays and mutually offer feedback you are more than welcome to. I personally believe that for mutual feedback:
a) Because it's among just yourselves, there will NOT be a required post count to put up an economics essay as of present. I may need to make the moderators aware of my decision.
b) You may seek to have your essay deleted IF nobody offers feedback.
c) You guys are the boss of it. Play fair and offer constructive feedback. lol
Whether you choose to post your essay here or start another thread is up to you. But I'm not going to bug Ying about an essay here because I'm not going to overburden her.
Post by: Essej on September 15, 2016, 08:50:26 am
I'll raise you one with an idea.. I'm willing to share my essays with people if they're willing to post theirs too?? I deliberately picked the options (in the trial) that I knew how to do and I don't know how I'd answer the others/questions from other papers!! (Also might help with the people who want theirs marked too..)bump
Just an idea ;D ;D I'm also really lazy
At this point, I have NOT asked anyone to offer a free essay marking service for economics. Only for help.
As if my schedule wasn't busy enough, Ying's is 5x worse. I can tell that she's not going to have the time to deal with all of those, at least, not with a reasonable speed. If you guys want to share essays and mutually offer feedback you are more than welcome to. I personally believe that for mutual feedback:
a) Because it's among just yourselves, there will NOT be a required post count to put up an economics essay as of present. I may need to make the moderators aware of my decision.
b) You may seek to have your essay deleted IF nobody offers feedback.
c) You guys are the boss of it. Play fair and offer constructive feedback. lol
Whether you choose to post your essay here or start another thread is up to you. But I'm not going to bug Ying about an essay here because I'm not going to overburden her.
Assuming ying is hermansia?
That's completely fine rui, neither you or her have to stress!
This thread started between students and if we've survived this long ;) plus from what i've seen on this thread there are plenty of people capable of writing band 6 level essays and giving band-6 level feedback :)
Post by: birdwing341 on September 15, 2016, 10:01:00 am
I'll raise you one with an idea.. I'm willing to share my essays with people if they're willing to post theirs too?? I deliberately picked the options (in the trial) that I knew how to do and I don't know how I'd answer the others/questions from other papers!! (Also might help with the people who want theirs marked too..)
Just an idea ;D ;D I'm also really lazy
Same!! I don't really have any essays typed up at the moment, but I am happy to give feedback, and when I write some post them up.
Post by: Klexos on September 23, 2016, 05:12:37 pm
Post by: brontem on September 24, 2016, 04:30:57 pm
Really general question here. But I've noticed that the HSC Economics exam is much much harder than the trials (both CSSA & Independent), maybe some of you find it fine (which is good!) - how have you been able to do these papers?I've noticed that too :'( the only way to do it is to do every past paper possible unfortunately. Some of the questions in some HSC papers are really weird, there's always one in there that's just strange or really difficult to answer. I just try to write down everything that I know and then crosscheck with the sample answers, and then list down the things that stump me and go over it.
It's a hard life hahahah :P
Post by: olivercutbill on September 26, 2016, 12:10:29 pm
Budget of 37.1b is -2.2% GDP
CAD of 15.5b is -4.6% GDP
?
Post by: birdwing341 on September 26, 2016, 02:47:28 pm
Something that has always bothered me and I'm not sure how it works:
Budget of 37.1b is -2.2% GDP
CAD of 15.5b is -4.6% GDP
?
I feel the CAD stat is the quarterly or half-annual stat. Maybe if you added up the previous few quarters you would get a bigger number?
Post by: Deng on September 26, 2016, 07:54:19 pm
In 2015, they had a question on Environemntal Sustainabiliy which is specific ( not sure where im going with this tbh ) but yeah was wondering if anyone had a clear idea 'what is enough' or is that something you can't determine
Post by: birdwing341 on September 27, 2016, 09:06:20 pm
Hey i was wondering to what extent we need to know our case studies. The syllabus is very vague in the sense that it doesnt outline specific areas rather just the influences of globalisation on the country and the strats used for EG and ED.
In 2015, they had a question on Environemntal Sustainabiliy which is specific ( not sure where im going with this tbh ) but yeah was wondering if anyone had a clear idea 'what is enough' or is that something you can't determine
Hi!
From what I'm studying, I think it's important to have some specific knowledge regarding the case study, and it is particularly important to recognise the policies of the country. For me, I have separated notes into something along these lines;
- Trade
- Investment
- Growth
- Development (and Income Equality)
- Environment
Then I usually have one or two policies used by the government to address the issue and a sentence-long evaluation (based on the goal of the policy). 'What is enough' depends on whether you think the case study will come as an essay or short answers. If you believe it will come as an essay, then there need to be statistics, trends and diagrams that can be used within the essay, however if you aren't going to select the case study as an essay, then all you probably need are statistics and an evaluation of the policy.
In regards to other possible questions, there's only so much you can memorise and only so much you can write down in 3 hours. So I would focus on gaining a deeper understanding on the areas that are more than possible as essay questions and have a decent knowledge on everything else (equivalent of short answers). If worst comes to worst, you can always chuck the info into a paragraph and make it a content bash :)
Post by: brontem on September 29, 2016, 06:07:12 pm
Just a question to ask all you economics students but is the HSC course funner than the prelim course because to be honest, I dreaded the prelim course to bits as I thought it was very theory dense and quite boring
That's a very subjective question! ;D The hsc is course is way more like things to do with the gov./context/current events/ based, so if you like that, you should like it :) there's not a lot of learning new skills involved, its basically applying all the skills from prelim in different scenarios.
In terms of it being boring... there were a few things that I didn't like - that being said the things I didn't like, others loved (and vice versa) :D
(Liking the entirety of a course is a very fairytale idea - definitely parts of every subject I didn't like, but you just have to deal with it) :P
Post by: isaacdelatorre on October 07, 2016, 11:35:32 pm
I was looking through the ABS analysis of the 2016 March and June QTR BOP, and I was confused by BOGS deficit being larger than NPY deficit as was the 2016 March qtr (-$7996m and -$7160 respectively). Since historically BOGS has always been less than NPY (even in surplus at times), can anyone shed some light as to why this has occurred and what the implications are on the rest of the Australian economy.
Thank you :)
Post by: asd987 on October 11, 2016, 08:59:52 pm
Post by: isaacdelatorre on October 11, 2016, 09:04:10 pm
Hi, i wanted to ask a question about the structure of the economics HSC exam. So is there a specific layout for the exam? e.g. topic 1 will be MC, then topic 2 will be short answer, then topic 3 will be essay question etc. In other humanities subjects like SOR and Legal, there is a strict layout for the hsc exam, is this the same case for economics?
Hey there,
Like most exams, the economics HSC exam has a set layout and it is a very good idea to get an understanding of the layout so you can plan your approach :)
1. Multiple Choice - 20 marks
2. Short Answer - 40 marks
3. Extended Response (usually a stimulus is given) - 20 marks
4. Extended Response - 20 marks
Unlike subjects like legal studies where the extended responses are dedicated to the options topics; any of the 4 topics can be tested in the extended responses
Hope this helps :)
Post by: birdwing341 on October 11, 2016, 09:05:49 pm
Hi, i wanted to ask a question about the structure of the economics HSC exam. So is there a specific layout for the exam? e.g. topic 1 will be MC, then topic 2 will be short answer, then topic 3 will be essay question etc. In other humanities subjects like SOR and Legal, there is a strict layout for the hsc exam, is this the same case for economics?
Yup! Section 1: Multis (20 marks), Section 2: Short Answers (40 marks), Section 3: Stimulus Essay (20 marks), Section 4: Normal Essay (20 marks)
Post by: asd987 on October 11, 2016, 10:06:03 pm
Post by: birdwing341 on October 11, 2016, 10:14:01 pm
Okay thanyou, but what i was supposed to ask was will each section (multiple choice, short answer and essay questions) be a combination of all 4 topics or just one or two topics for each section. e.g. in legal studies, section 1 - 15 multiple choice are dedicated to crime, 5 are dedicated to human rights, then section 2 will will be a few short answers on human rights, then essay on crime, then section 3 will be essays on options. Do we know the topics that will come in the MC, short answer and essays or will it just be a combination of all 4 in each section?
Oh sorry hahaha!! Nope they can ask you anything! Although sometimes people can guess the questions
Post by: isaacdelatorre on October 11, 2016, 10:14:40 pm
Okay thanyou, but what i was supposed to ask was will each section (multiple choice, short answer and essay questions) be a combination of all 4 topics or just one or two topics for each section. e.g. in legal studies, section 1 - 15 multiple choice are dedicated to crime, 5 are dedicated to human rights, then section 2 will will be a few short answers on human rights, then essay on crime, then section 3 will be essays on options. Do we know the topics that will come in the MC, short answer and essays or will it just be a combination of all 4 in each section?
Hey, sorry I must've misread your question. Unlike how legal is split up into the different topics; all economics topics are examinable across every section. However it doesn't always have to be equally spread (5MC for each topic) instead some topics can be examined more than others. So make sure you know all parts of the syllabus :)
Post by: nancy_cc on October 11, 2016, 11:01:19 pm
Hey guys,
I was looking through the ABS analysis of the 2016 March and June QTR BOP, and I was confused by BOGS deficit being larger than NPY deficit as was the 2016 March qtr (-$7996m and -$7160 respectively). Since historically BOGS has always been less than NPY (even in surplus at times), can anyone shed some light as to why this has occurred and what the implications are on the rest of the Australian economy.
Thank you :)
Hey, I'm not sure if this helps but since global interest rates are at their lowest (with some being close to or at 0%) this could have eased pressure on the NPY deficit since repayments on borrowed funds decline. Also during the march-june period terms of trade had been on a downward trend since the end of 2015 which worsens a BOGS deficit. Also from march-april the value of the AUD was appreciating and paired with a historically low cash rates domestic consumers had great incentive to spend which could lead to more imports purchased than exports sold again worsening the BOGS.
Just trying to thing of factors which affect the BOGS and NPY hope something makes sense! Not quite sure about the implications on the rest of the economy though sorry!
Post by: RuiAce on October 17, 2016, 08:47:58 pm
Post by: birdwing341 on October 17, 2016, 09:08:32 pm
Essay marking service may be coming soon. Stay tuned :)
Keeeeeeeeeeeeeen :)
Post by: Deng on October 19, 2016, 05:51:13 pm
Would low wage growth mean consumers have a lower APC/MPC which reduces their confidence in purcahasing goods and services, which puts pressure on firms to reduce their prices to stimulate demand ?
Thanks
Post by: brontem on October 19, 2016, 06:03:03 pm
Hey guys, can someone explain to me the relationship of low wage growth and deflation? and the factors causing low wage growth?
Would low wage growth mean consumers have a lower APC/MPC which reduces their confidence in purcahasing goods and services, which puts pressure on firms to reduce their prices to stimulate demand ?
Thanks
If wages growth is low: there is less cost for businesses to pay for labour, and there will be less of an impact on production costs; wages are a large (the largest?) cost of production. Input costs are low --> Price increases aren't passed on to consumers (because there is no price increase)
Likewise, if there is low inflation, there is no need for wages to increase (no need to accommodate for increase in prices since there is no increase)
As far as I know, low wage growth isn't the reason for prices to change, if thats what you mean? Low wage growth is the result of low growth/inflation/demand (as far as I know..) kind of like the opposite of the wage-price spiral :)
As for what causes low wage growth is usually low inflation, low demand for labour & low labour productivity.. basically there is no increase in wages because there's no need for it :)
Post by: birdwing341 on October 19, 2016, 06:36:58 pm
If wages growth is low: there is less cost for businesses to pay for labour, and there will be less of an impact on production costs; wages are a large (the largest?) cost of production. Input costs are low --> Price increases aren't passed on to consumers (because there is no price increase)
Likewise, if there is low inflation, there is no need for wages to increase (no need to accommodate for increase in prices since there is no increase)
As far as I know, low wage growth isn't the reason for prices to change, if thats what you mean? Low wage growth is the result of low growth/inflation/demand (as far as I know..) kind of like the opposite of the wage-price spiral :)
As for what causes low wage growth is usually low inflation, low demand for labour & low labour productivity.. basically there is no increase in wages because there's no need for it :)
Woah good stuff Brontem :)
Just clarifying - wages are 70% of firms input costs. That's a good stat to drop in essays and stuff.
Hey guys, can someone explain to me the relationship of low wage growth and deflation? and the factors causing low wage growth?
Would low wage growth mean consumers have a lower APC/MPC which reduces their confidence in purcahasing goods and services, which puts pressure on firms to reduce their prices to stimulate demand ?
Thanks
To answer the second part of the question, MPC depends on the state of wage growth in comparison to inflation (as is in the normal situation). Thus when Wage Growth > Inflation, consumers MPC will be lower (because their real incomes are increasing and they don't need to spend as much money on new things), and if Wage Growth < Inflation, consumers MPC will be higher (likewise in this situation real incomes are decreasing and consumers will be more inclined to spend more money on staples).
Please correct me if I'm wrong haha haven't started eco revision yet. But hope it makes sense :)
Post by: Spencerr on October 19, 2016, 06:53:48 pm
Hey guys, can someone explain to me the relationship of low wage growth and deflation? and the factors causing low wage growth?Hey there,
Would low wage growth mean consumers have a lower APC/MPC which reduces their confidence in purcahasing goods and services, which puts pressure on firms to reduce their prices to stimulate demand ?
Thanks
Low wage growth means that incomes are growing slowly and may come as a result of a slowdown in economic growth, as the demand and thus price for labour is derived from the demand for goods and services. In times of slow eocnomic growth, there is always the possibility that deflation could occur if demand for goods and services fall. However, I believe that there is no direct link between wage growth and deflation ceteris paribus because there are too many factors at play. Although on the other hand, high wage growth can prompt inflationary pressures as disposable incomes and consumption (AD) may increase faster than the relatively inelastic productive capacity (AS) of an economy, resulting in more money chasing the same amount of goods/services.
Brontem, gave a clear outline of what affects wages growth but to add on:
- Slowdown in economic growth reducing the demand for goods and services, and thus the demand for labour
- Complacency in workers (less workers are pushing for higher wages because they are comfortable with their current wages. Like the current situation, where wages are growing historically slowly because less people are willing to bargain for higher wages.)
- Increasing supply of labour also reduces the bargaining power of workers for higher wages
- lower productivity of workers in tandem with the increasing relative cost of workers to capital (machinery which is more efficient and cost effective)
In response to APC, MPC. If you consider certeris paribus, birdwing is pretty much on track. However this is also a bit iffy, because higher wage individuals have a greater APS than APC whereas lower income individuals have a higher APC than APS but INFLATION does play a part.
However, I would caution against linking slow wage growth and consumer confidence. Empirically, given the current slow wage growth (2.1% according to the WAGE PRICE INDEX), consumer confidence is on an upwards trend. In fact, slow wage growth would depress inflationary pressures (as evident in the 1.5% underlying and 1% head line inflation), which makes goods and services cheaper, hence spending and consumer confidence would be higher (low inflation = strong consumer and business confidence)
Post by: Deng on October 23, 2016, 01:05:27 pm
Thanks
Post by: brontem on October 23, 2016, 01:17:55 pm
Hey guys, i was wondering for eco what is the minimum knowledge of graphs and theories we need to know for the whole course e.g AD/AS, J-curve, pitchford thesis, twin deficit etcOff the top of my head:
Thanks
Supply/demand for AUD
Phillips curve
Lorenz curve
AS/D curve
Labour market curve (the wage one)
Positive/negative externalities
Tariff/quota/subsidy
(It really does depend on the question; you obviously don't need them if they're irrelevant)
And for theories; pitchford thesis, twin deficit argument, crowding out theory, wage-price spiral, the HDI factors, gini coefficient, and history is good like when the exchange rate was floated, and making the link between changes because of the mining boom, gfc, when certain MER policies happened
Those are all of the "extra" ish ones/easily forgotten ones I can think of.. obviously the business cycle/ demand and supply/how the cash rate works/budget outcomes/calculations are pretty ingrained by now
:)
Post by: hermansia12 on October 23, 2016, 01:28:11 pm
Hey guys, i was wondering for eco what is the minimum knowledge of graphs and theories we need to know for the whole course e.g AD/AS, J-curve, pitchford thesis, twin deficit etc
Thanks
Hi Deng,
Definitely know the supply and demand curves and understand the effects and how the shifts in supply and demand work. Also know how this works with regards to the exchange rate supply and demand. Another vital concept is the injections = Leakages I.e aggregate supply is aggregate demand.
Hsc tests usually throw a few of those questions in the multiple choice. Other popular question is the protection graphs (tariffs, quotas and subsidies) so make sure you have a clear understanding of it as it is usually these question that trips most students up too.
You should also know the basic formulas for unemployment rate,participation rate and Gini coefficient for multiple choice. The Lorenz curve is sometimes asked so know that too.
Another important theory is the Nairu- Non inflating rate of unemployment. This is the necessary amount of unemployment required for sustainable economic growth. It's given as 5-6% for Australia and its relationship with inflation. It can come in useful for the short answers and extended response analysis.
You should also have a good grip on all recent policies(preferably in all 6 of your economic issues) exchange rates, at least 1 trading bloc, 2 free trade policies and key facts from your case study.
This is the minimum as these are generally the most popular questions in the economics exams. However, anything in the syllabus is fair game for bostes so go over the syllabus. The syllabus is usually a copy and paste version of all the questions they will ask.
Furthermore remember everything in economics links so use that to your advantage in the exam.
Good luck :)
Post by: isaacdelatorre on October 23, 2016, 01:41:06 pm
Hey guys, i was wondering for eco what is the minimum knowledge of graphs and theories we need to know for the whole course e.g AD/AS, J-curve, pitchford thesis, twin deficit etc
Thanks
Hey here are some of the basic ones I recommend,
Topic 1:
- International/regional business cycle
- Methods of protection - tariffs, quotas, subsidies
- AD/AS - for both domestic and global - also use for economic issues and policies
- any theories/projections associated with your case study
Topic 2:
- Pitchford thesis
- Twin deficit Thesis
- Debt trap thesis
Topic 3:
- Keynesian general theory of employment, interest and money
- Keynesian cross diagram
- Multiplier theory - for both economic growth and decline
- Philips curve - long and short run
- NAIRU
- Okun's law
- Wage price spiral
- Deflationary spiral
- Lorenz curve
- Gini Coefficient
- Theories on why some demographics are more disadvantaged than others
- Tragedy of commons theory
- Externality theory and diagrams
Topic 4:
- Rationale for Macro and micro reform
- Crowding out theory
- DMO graph
- Theories on productivity growth
There may have been some I missed though so make sure you check textbook and syllabus - but apart from that make sure you know the content and can elaborate and argue for and against most of the dot points. Also have some trends and statistics ready to use in essays and short answers.
Good luck, hope this helps :)
Post by: Nicki on October 25, 2016, 08:54:52 pm
this might by a really silly question but i was just wondering
is there any difference between the 'net foreign debt' that is within the equation 'net foreign debt + net foreign equity = net foreign liabilities'
and the net foreign debt you see by itself e.g. when you have 'net foreign debt as a % of GDP' and 'net foreign liabilities as a % of gdp'
sorry if this doesn't make sense
thanks
Post by: hermansia12 on October 25, 2016, 09:08:50 pm
hey!
this might by a really silly question but i was just wondering
is there any difference between the 'net foreign debt' that is within the equation 'net foreign debt + net foreign equity = net foreign liabilities'
and the net foreign debt you see by itself e.g. when you have 'net foreign debt as a % of GDP' and 'net foreign liabilities as a % of gdp'
sorry if this doesn't make sense
thanks
Hi There!
So like everything in maths and equations, units its important
If you're going to add the foreign debt as a percentage of GDP, you have to ensure that the other half of the equation, foreign equity is also as a percentage of GDP. The resulting net foreign liabilities is also as a percentage of GDP. Likewise if it is the amount of net foreign debt in dollar form, all components of the equation need to hold that unit. Otherwise maths fails and the equation falls apart.
Hope this helps :)
Post by: Deng on October 25, 2016, 10:14:45 pm
Hey here are some of the basic ones I recommend,
Topic 1:
- International/regional business cycle
- Methods of protection - tariffs, quotas, subsidies
- AD/AS - for both domestic and global - also use for economic issues and policies
- any theories/projections associated with your case study
Topic 2:
- Pitchford thesis
- Twin deficit Thesis
- Debt trap thesis
Topic 3:
- Keynesian general theory of employment, interest and money
- Keynesian cross diagram
- Multiplier theory - for both economic growth and decline
- Philips curve - long and short run
- NAIRU
- Okun's law
- Wage price spiral
- Deflationary spiral
- Lorenz curve
- Gini Coefficient
- Theories on why some demographics are more disadvantaged than others
- Tragedy of commons theory
- Externality theory and diagrams
Topic 4:
- Rationale for Macro and micro reform
- Crowding out theory
- DMO graph
- Theories on productivity growth
There may have been some I missed though so make sure you check textbook and syllabus - but apart from that make sure you know the content and can elaborate and argue for and against most of the dot points. Also have some trends and statistics ready to use in essays and short answers.
Good luck, hope this helps :)
The tragedy of common theorys sounds familiar but i cant remember what it was exactly, can you care to clarify ?
Post by: hermansia12 on October 25, 2016, 10:32:15 pm
The tragedy of common theorys sounds familiar but i cant remember what it was exactly, can you care to clarify ?
The tragedy of commons is an economic problem whereby individuals tend to exploit shared goods and/or services (e.g the environment). This can cause a disequilibrium in supply and demand (as demand > supply). Price of the commodity increases above the equilibrium meaning that the market is inefficient since there is an over demand.
Post by: Deng on October 25, 2016, 10:40:32 pm
The tragedy of commons is an economic problem whereby individuals tend to exploit shared goods and/or services (e.g the environment). This can cause a disequilibrium in supply and demand (as demand > supply). Price of the commodity increases above the equilibrium meaning that the market is inefficient since there is an over demand.
Ah, yeah i remember now, environemntal management stuff. Thanks
Post by: onepunchboy on October 26, 2016, 01:15:16 am
Post by: Deng on October 26, 2016, 01:17:23 am
Also the tariff question in the 2011 hsc multiple choice, my laptop cant pull up the paper for some reason, hopefully theres only one, its something about changing the price of the tariff and revenue
Thanks
Post by: Deng on October 26, 2016, 01:18:03 am
How many bilateral and multilateral trade agreements do we need to know? 1 each?
Syllabus says overiew of two each
Post by: isaacdelatorre on October 26, 2016, 09:00:56 am
Hey guys, just some multiple choice which i dont particulary understand and would like some clarification
Also the tariff question in the 2011 hsc multiple choice, my laptop cant pull up the paper for some reason, hopefully theres only one, its something about changing the price of the tariff and revenue
Thanks
Hey Deng,
Here's what I think the answers should be, I might be wrong though so hopefully someone else can shed some light.
18. Growth rate of real GDP in Year 2 - A
For this question you have to calculate real GDP growth for year 1 and 2.
To do this you calculate AD by adding up C + I + G + (X-M) then you times this figure by 100/CPI in order to get the Real GDP for that year then using (Current-Previous)/Previous x 100 you can find the growth rate
Year 1:
Real GDP = (500 + 200 + 300 + 100 - 100) x 100/CPI
= 1000 x 100/100
= 1000
Year 2:
Real GDP = (550 + 250 + 300 + 200 - 200) x 100/CPI
= 1100 x 100/110
= 1000
Therefore Real GDP growth is 0%
7. Best policy response - D
From the table we can see that GDP growth has increased by 0.5%, inflation has increased by 1.1% and unemployment has decreased by 0.5% - through short run Philips curve, we know that economic activity is high and is reaching full capacity, so contractionary measures are necessary
The question also tells us that the inflation target is 2-3%, since the economy's inflation rate is .8% above the target; it must tighten economic activity in order to dampen spending and reduce inflation - this can be achieved through contractionary fiscal and contractionary monetary policy
14. Account for changes - D (not sure about this one)
For these types of questions, I suggest looking only at half and then narrowing your choices.
So looking at the first column "Reason for change in unemployment rate" we can see that the unemployment rate has decreased.
A is wrong as a global recession would increase unemployment since labour is a derived demand
B is wrong as fewer incentives to hire the l/t unemployed would result in an increase in unemployment since there is no reason to hire
Looking at the second column - the participation rate has decreased showing that either the labour force has decreased and/or the working population age has increased as participation rate = labour force/working age pop.
C is wrong as an increase in childcare subsidy payments would encourage stay at home mothers/fathers to rejoin the labour force thus increasing the participation rate
D is the right answer (I think) as an increase in consumer confidence would increase Consumption and AD thus increasing the demand for labour and decreasing unemployment. Increasing school retention rates would mean that there would be more students and less people dropping out and joining the workforce in the short/term. As students are not counted in the labour force the size of the labour force decreases whilst the working age population is the same.
17 - Monetary Policy - C
When the RBA purchases Commonwealth Government Securities they are increasing the supply of money in the overnight money market and effectively decreasing the cash rate of which banks should decrease interest rates (eventually). Through loosening monetary policy, Australian GDP rises as it is cheaper to borrow money and thus consumption and investment should increase.
On the other hand, a lower interest rate would deter overseas investors from putting their funds into Australian banks as there is a lower rate of return thus decreasing the demand for the Australia and causing a depreciation. Further increasing consumption and availability of credit could increase Import spending, increasing the supply of AUD on the FX market and causing a depreciation.
Hope this helps, not sure if these are right so hopefully someone else can give their view :)
Post by: hermansia12 on October 26, 2016, 10:09:56 am
How many bilateral and multilateral trade agreements do we need to know? 1 each?
Hey,
One each would be the minimum. I would know 2 just in case. Its usually a 4-6 marker question they ask with regards to free trade agreements.
Post by: hermansia12 on October 26, 2016, 10:29:40 am
Hey Deng,
Here's what I think the answers should be, I might be wrong though so hopefully someone else can shed some light.
18. Growth rate of real GDP in Year 2 - A
For this question you have to calculate real GDP growth for year 1 and 2.
To do this you calculate AD by adding up C + I + G + (X-M) then you times this figure by 100/CPI in order to get the Real GDP for that year then using (Current-Previous)/Previous x 100 you can find the growth rate
Year 1:
Real GDP = (500 + 200 + 300 + 100 - 100) x 100/CPI
= 1000 x 100/100
= 1000
Year 2:
Real GDP = (550 + 250 + 300 + 200 - 200) x 100/CPI
= 1100 x 100/110
= 1000
Therefore Real GDP growth is 0%
7. Best policy response - D
From the table we can see that GDP growth has increased by 0.5%, inflation has increased by 1.1% and unemployment has decreased by 0.5% - through short run Philips curve, we know that economic activity is high and is reaching full capacity, so contractionary measures are necessary
The question also tells us that the inflation target is 2-3%, since the economy's inflation rate is .8% above the target; it must tighten economic activity in order to dampen spending and reduce inflation - this can be achieved through contractionary fiscal and contractionary monetary policy
14. Account for changes - D
For these types of questions, I suggest looking only at half and then narrowing your choices.
So looking at the first column "Reason for change in unemployment rate" we can see that the unemployment rate has decreased.
A is wrong as a global recession would increase unemployment since labour is a derived demand
B is wrong as fewer incentives to hire the l/t unemployed would result in an increase in unemployment since there is no reason to hire
Looking at the second column - the participation rate has decreased showing that either the labour force has decreased and/or the working population age has increased as participation rate = labour force/working age pop.
C is wrong as an increase in childcare subsidy payments would encourage stay at home mothers/fathers to rejoin the labour force thus increasing the participation rate
D is the right answer (I think) as an increase in consumer confidence would increase Consumption and AD thus increasing the demand for labour and decreasing unemployment. Increasing school retention rates would mean that there would be more students and less people dropping out and joining the workforce in the short/term. As students are not counted in the labour force the size of the labour force decreases whilst the working age population is the same.
17 - Monetary Policy - C
When the RBA purchases Commonwealth Government Securities they are increasing the supply of money in the overnight money market and effectively decreasing the cash rate of which banks should decrease interest rates (eventually). Through loosening monetary policy, Australian GDP rises as it is cheaper to borrow money and thus consumption and investment should increase.
On the other hand, a lower interest rate would deter overseas investors from putting their funds into Australian banks as there is a lower rate of return thus decreasing the demand for the Australia and causing a depreciation. Further increasing consumption and availability of credit could increase Import spending, increasing the supply of AUD on the FX market and causing a depreciation.
Hope this helps, not sure if these are right so hopefully someone else can give their view :)
Good work isaacdelatorre! :) I had the same answers to those multiple choice too.
The only question that I had a different answer to was 14, I got B. The unemployment rate is lower as a result of a decrease in participation rate, rather than more people getting hired (which would increase participation rate). This is actually happening currently in the Australian Economy (I summarised a recent news article on it in the minute statistics thread just now actually). It means that there are more people leaving the work force which leads to increased rates of hidden unemployment, people unable to find a suitable job giving up. This means that the economy not utilizing its labour resources and a cause of this could be that businesses are unwilling to hire long term unemployed. So to fix this, governments could invest in re-training programs to re-train workers into streams with structural unemployment so that we are utilising the workforce more efficiently.
Post by: onepunchboy on October 27, 2016, 12:12:59 am
Post by: isaacdelatorre on October 27, 2016, 12:26:50 am
anyone know how to do this q ? thanks !!
Hi there,
I think that the answer is A as inflation makes the general level of prices go up. Thus assets like cars, houses, shares or material possessions suddenly have an increased net worth and can sell their assets for higher prices.
Whereas those on fixed incomes or pensions are worse off as inflation erodes real incomes since they cannot buy as many goods and services, thus their living standards decrease.
Hope this helps - hopefully hermansia can give her insight though :)
Post by: onepunchboy on October 27, 2016, 01:04:59 am
Post by: hermansia12 on October 27, 2016, 08:12:25 am
yea it is A :))) thanks that helped, also for this Q i picked A because i thought when the currency is appreciating it means that foreign investors are investing in australia thus there wud be net foreign liabilities would increase as australia would need to pay back foreign countries through interest. The ANS is B and not quite sure why.. anyone help clarify? THANKS
Hi onepunchboy,
So you're right in the first aspect, that it is in a current account deficit as there is more foreign investment therefore increased foreign liabilities. As the currency depreciates, the economy's level of debt increases because our currency is worth less compared to foreign currencies. Increased level of foreign debt, increases our liabilities. Yes, foreign investors are more likely to invest if the currency is appreciating in order to capitalize on gains, but that amount is significantly small compared to the potential increase of debt if the currency depreciates.
Hope this helps :)
Post by: hermansia12 on October 27, 2016, 08:14:09 am
Hi there,
I think that the answer is A as inflation makes the general level of prices go up. Thus assets like cars, houses, shares or material possessions suddenly have an increased net worth and can sell their assets for higher prices.
Whereas those on fixed incomes or pensions are worse off as inflation erodes real incomes since they cannot buy as many goods and services, thus their living standards decrease.
Hope this helps - hopefully hermansia can give her insight though :)
That's a perfect answer isaacdelatorre :)
Post by: Deng on October 27, 2016, 02:18:56 pm
Post by: kevin217 on October 27, 2016, 02:30:14 pm
Would it be likely that our case study will be in the short answers again since it was in the 2015 ?Well predictions are that the case study will be an extended response this year.
Post by: onepunchboy on October 27, 2016, 02:35:56 pm
Post by: Deng on October 27, 2016, 02:44:08 pm
Anyone explain this Q please? thank you so much :))))
By inspecting the graph, the dollar has appreciated so the factors causing an appreciation can include increased investment into Australia. By increasing investment, investors have to convert their dollars into AUD which reduces the supply of the Australian dollar putting upward pressure on the currency causing an appreciation.
So, i believe the answer is B ( i could be wrong )
Post by: hermansia12 on October 27, 2016, 02:48:50 pm
Anyone explain this Q please? thank you so much :))))
I think the answer is B -
Supply of the $AU has decreased, causing the $AU to appreciate. So which one would cause the supply of the $AU to decrease? There must be more foreign investment, foreign economies buying Australian currency (foreign currency exchanged into $AU). This causes less supply of $AU in the global market.
The other options are more likely to increase the supply of $AU in the global market as $AU is exchanged for foreign currency.
Hope this helps :)
Post by: onepunchboy on October 27, 2016, 02:53:15 pm
Post by: kevin217 on October 27, 2016, 03:08:03 pm
Anyone explain this Q please? thank you so much :))))TBH, B doesn't really pop up as the answer for me. Yes increased investment into Australia causes an appreciation of the AUD. But this is because there is increased demand not through reduced supply. My thinking as to why the answer is C is because there is a deficit in the income component on the current account ie income debits > income credits. This means that more AUD is supplied by Australians in the foreign exchange market so they can obtain foreign currencies and pay off foreign loans or investments. A reduction in this income deficit would mean that there is less income debits and thus less AUD being supplied in the market.
Post by: Deng on October 27, 2016, 03:09:26 pm
Post by: Deng on October 27, 2016, 08:08:43 pm
Thanks
Post by: kevin217 on October 27, 2016, 08:50:53 pm
For macroeconomic policies and more specifically fiscal, would it be more relevant for me to talk about fiscal policy during mining boom etc since i think from 14(?) onwards most fiscal policy has been rarely implemted due to political constraints i.e Hockey's zombies measuresNo, I don't think focusing strictly on macro/fiscal policy a decade ago is a good idea. If anything, if the question asks you to evaluate the effectiveness of recent macro polices, you'll be set in criticising the crap out of the recent budgets. So i definitely think you should include current conditions of the economy in your extended response.
Thanks
Post by: Deng on October 27, 2016, 08:54:24 pm
No, I don't think focusing strictly on macro/fiscal policy a decade ago is a good idea. If anything, if the question asks you to evaluate the effectiveness of recent macro polices, you'll be set in criticising the crap out of the recent budgets. So i definitely think you should include current conditions of the economy in your extended response.
The only issue is they havent exactly been implemented or to my knowledge have been, which means you cant exactly evaluate them because you would be hypothesising the effects which may or may not be occurring.
Post by: isaacdelatorre on October 27, 2016, 09:06:13 pm
For macroeconomic policies and more specifically fiscal, would it be more relevant for me to talk about fiscal policy during mining boom etc since i think from 14(?) onwards most fiscal policy has been rarely implemted due to political constraints i.e Hockey's zombies measures
Thanks
Hey Deng,
I'm not too sure what you mean; but from my understanding, fiscal policy is the government's use of taxation and expenditure, commonly through the budget. Since the budget is an annual thing, I'm not sure what you mean, by "been rarely implemented." E.g. This year's fiscal stance is mildly contractionary, and there have been major proposals to decrease funding in areas such as healthcare. As well as plans to increase expenditure and implement programs like Youth PaTH. So you could definitely talk about things that have happened now and even a few years ago.
Post by: kevin217 on October 27, 2016, 09:15:50 pm
The only issue is they havent exactly been implemented or to my knowledge have been, which means you cant exactly evaluate them because you would be hypothesising the effects which may or may not be occurring.I see what you mean there. But I guess maybe some things markers will look at is your hypothesising. If you can analyse aspects of the budget and their affect on the economy, I'm pretty sure even though you are hypothesising, you are expressing your economic knowledge. Of course, your essay should include items a few years back and if you want even during the mining boom.
Post by: Deng on October 27, 2016, 09:17:02 pm
Post by: hermansia12 on October 27, 2016, 09:37:05 pm
What i mean is that they are planned, but they arent necessarily put into place yet for example if they fail to pass through senate and its increasingly harder now since they only have 1 seat majority. Best example is Joe Hockey's budget and most of his reforms such as family tax benefits and other welfare stuff have failed to pass the senate, which we can speculate the impacts on distrubtion of income but it would become speculative. Also, economic theory doesnt always hold true ( cant remember exactly but my teacher once showed us an example where economic theory didnt occur in real life application hence me being hesitant on writing about things that may not happen )
In this regard you can talk about why they would want to implement it. Like link back to economic concepts and why such a policy was proposed as well as its potential impacts. You can also use it to discuss positives and negatives depending on the essay. However don't have all the policies be in the pending range as economics is all about trends and analysing the impacts of policies. That way you have examples ready for any curve ball bostes throws at you.
Post by: Giraffes are tall on October 27, 2016, 10:18:16 pm
This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?
Thanks in advance!
Post by: Deng on October 27, 2016, 10:29:34 pm
Heeey,
This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?
Thanks in advance!
Fiscal policy itself is a form of macroeconomic policy and the other arm of maco being monetary policy. Not sure bout the tax thing, but the budget itself is a form of fiscal therefore its macro still. Automatic stabilisers are imbedded into the budget automatically acting as counter cyclical measures so gov doesnt deliberately implement them , the two are tax receipts and welfare payments. Period of high growth means more people are paying tax which helps government increase revenue and period of low economic growth means government has to pay more transfer payments which both help stabalise the economy to an extent. I believe it falls under fiscal policy --> budget outcomes
Post by: nimasha.w on October 27, 2016, 11:12:45 pm
Post by: hermansia12 on October 27, 2016, 11:18:24 pm
Heeey,
This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?
Thanks in advance!
Hi Tall giraffe! Welcome to the atarnotes forum :)
A good rule of thumb my teacher taught me was that macro usually affects all of Australia but micro affects the labor market
Taxes are generally macro because they do with fiscal policy and are the government's main source of financing the budget. Automatic stabilisers like Deng said is generally taxes and welfare payments; both are aspects of fiscal policy (gov. decides what taxes and welfare payments, depending on their stance of the budget) therefore are macro.
Hope this helps :)
Post by: RuiAce on October 27, 2016, 11:40:19 pm
heyy! can i please have some help with this, and tariff diagrams in general :)For Q19:
Of course, from a societal point of view, the total surplus is maximised when there is no tariff. But being realistic we need the tariff there so that the producers get some surplus.
(http://i.imgur.com/meZ7nrt.png)
Note that the tariff of $15 on top of the world price essentially forces the production up to the intersection of the demand and supply curves. At a tariff of $15, there is zero tax revenue generated from its implementation. This is because the tariff now makes it pointless for the country to participate in international trade; instead it may as well produce all the goods by itself. The government has basically forced the price up so high to the point that they only need to rely on domestic production, because recall that the intersection of the supply and demand curves is the point of market equilibrium in a closed economy.
Which generates a massive deadweight loss from a societal perspective (given that trade is still an option), however is probably the best that a producer can ever get.
By reducing the tariff back to $10, the balance is shifted back in favour of the consumers by a bit. The supply graph analysis now looks like this. (Note that a bit of consumer surplus was increased.)
(http://i.imgur.com/4oEnX5N.png)
The blue area is the tariff revenue as we first note that the price per unit is $20, so we work across from there. What's between the supply and demand curves will give us the number of units imported from the world. It would appear that we import (60-40) million, i.e. 20 million units from the world.
Of course, we must not forget that the world price was initially $10, but we added a tariff of $10.
So our answer is 20 million * $10 = $200 million.
(Note: I did this from university economics. Might be a bit advanced.)
Post by: hermansia12 on October 27, 2016, 11:45:07 pm
heyy! can i please have some help with this, and tariff diagrams in general :)
First off a tarriff is a price imposed by the government on imports in order to restrict the amount of imports in an economy and a quota is a limit on the amount of imports
In question 19:
If the tariff is reduced to $10, it is $10 more than the world price (i.e $20 on market price) then the economy is in disequilibrium as there is an overdemand of 20 million. Therefore the tariff revenue= amount overdemand* tariff = 20 million *10 = $200 million therefore the answer is B
In question 20:
If the tariff is $5 then the market price is at $15; That means an overdemand of 40 million. So to have the same effect, if we limit 40 million, (effectively move from $25 (equilibrium) amount of 50 to 30 in supply and 50 to 70 in demand) then the market price would be $15 i.e $5 tariff so the answer is C
Hope this helps :)
Post by: hermansia12 on October 27, 2016, 11:48:38 pm
(Note: I did this from university economics. Might be a bit advanced.)
RuiAce that's perfect! Thank you :) i was a bit stuck on how to get the graphs like those in there. Great Insight!
Post by: Deng on October 27, 2016, 11:50:34 pm
Post by: RuiAce on October 27, 2016, 11:54:26 pm
on the note of tariffs, how would i do this one, its different from the usual onesHere you just need to consider what the change is.
Without the tariff: The world price is set at $10, so reading along the line P=10 we see that the amount of shirts imported is 400-100 = 300
With the tariff: The tariff moves the price up to $15, so reading along the line P=15 we see that the amount of shirts imported is 300-200 = 100
So observe, that the implementation of the tariff reduces the amount of shirts imported by 300 - 100 = 200
200 * $10 = $2000
Post by: hermansia12 on October 27, 2016, 11:55:13 pm
on the note of tariffs, how would i do this one, its different from the usual ones
Just follow the same procedure;
So if the tariff increases to $15, at the demand there is only 300 demand as opposed to 400 at world price. Therefore there has been a decrease of 100 due to the tariff. -> Less sales
Then the loss of profit would = (15*300)-(400*10) = $500
Post by: Deng on October 27, 2016, 11:56:27 pm
Post by: RuiAce on October 27, 2016, 11:57:25 pm
Wait, Rui has 2000 and Hermansia has 500 ?Which is scaring me...
Except I dug up the paper and checked my answer with BOSTES's...
It came from 2011.
Post by: hermansia12 on October 28, 2016, 12:00:01 am
Which is scaring me...
Except I dug up the paper and checked my answer with BOSTES's...
It came from 2011.
No use Rui's answer. I made a mistake because I used my old answers from when I did this one and its wrong. Sorry about the confusion! I remember this question got my economics class arguing for the whole lesson and I haven't changed it from my old notes
You definitely multiply via the world price because its what the world would've earned on the goods- not the added tariff market price
Post by: birdwing341 on October 28, 2016, 01:09:24 pm
Can someone please explain the process of a sterilised intervention in the foreign exchange market and why the sale/purchase of foreign currency needs to be offset by a purchase/sale of CGS?
Post by: Giraffes are tall on October 28, 2016, 02:59:19 pm
Post by: Deng on October 28, 2016, 03:53:54 pm
Post by: isaacdelatorre on October 28, 2016, 04:14:58 pm
Hello :)
Can someone please explain the process of a sterilised intervention in the foreign exchange market and why the sale/purchase of foreign currency needs to be offset by a purchase/sale of CGS?
Hey there birdwing,
A sterilised intervention in the foreign exchange market is basically "dirtying the float" it is a direct intervention of the RBA who enters the forex market and buys and sells currency in order to alter the exchange rate. This requires reserve assets in other currencies in order to buy and sell AUD.
E.g. In 2008, when the AUD depreciated against the USD, the RBA purchased $3.3bn of AUD to appreciate the dollar
Although I'm not exactly sure what you mean by "why the sale/purchase of foreign currency needs to be offset by a purchase/sale of CGS?" using monetary policy is an indirect way of influencing the exchange rate. I don't think that they are meant to be used concurrently to offset each other; but I might be wrong here
Hope this helps :)
Post by: birdwing341 on October 28, 2016, 04:33:23 pm
Hey there birdwing,
A sterilised intervention in the foreign exchange market is basically "dirtying the float" it is a direct intervention of the RBA who enters the forex market and buys and sells currency in order to alter the exchange rate. This requires reserve assets in other currencies in order to buy and sell AUD.
E.g. In 2008, when the AUD depreciated against the USD, the RBA purchased $3.3bn of AUD to appreciate the dollar
Although I'm not exactly sure what you mean by "why the sale/purchase of foreign currency needs to be offset by a purchase/sale of CGS?" using monetary policy is an indirect way of influencing the exchange rate. I don't think that they are meant to be used concurrently to offset each other; but I might be wrong here
Hope this helps :)
Hey Isaac,
Thanks for your reply, but I may not have been clear enough in my original post. Let me try to clarify further :) This is what Riley Textbook says.
Direct intervention by the RBA in the foreign exchange market has potential implications for domestic liquidity and the stance of monetary policy. Intervention by the RBA in the foreign exchange market can be ‘sterilised’ to offset its effects on domestic liquidity and interest rates, or ‘unsterilised’, with the intervention allowed to affect domestic liquidity, interest rates and the stance of monetary policy:
Sterilised foreign exchange market intervention occurs when the Reserve Bank offsets its transactions by buying or selling the equivalent amount of government securities, leaving the monetary liabilities of the Reserve Bank unchanged. For example, a sterilised sale of foreign currency involves the RBA selling foreign currency, which takes Australian dollars out of the financial system, but it then buys sufficient government securities to inject the same amount of Australian dollars back into the financial system. There is thus no change in the domestic money supply or domestic interest rates.
I'm confused about the second section, where it says 'the RBA sells foreign currency, which takes dollars out of the financial system', as I don't quite understand why that's the case :( I did some research and thought I understood it, but then I read over this and it didn't make sense to me.
My question, then, is why does the RBA take dollars out of the financial system when it sells foreign currency?
Sorry for the confusion (and thanks for your help)
Post by: hermansia12 on October 28, 2016, 06:24:31 pm
Sterilised foreign exchange market intervention occurs when the Reserve Bank offsets its transactions by buying or selling the equivalent amount of government securities, leaving the monetary liabilities of the Reserve Bank unchanged. For example, a sterilised sale of foreign currency involves the RBA selling foreign currency, which takes Australian dollars out of the financial system, but it then buys sufficient government securities to inject the same amount of Australian dollars back into the financial system. There is thus no change in the domestic money supply or domestic interest rates.[/i]
I'm confused about the second section, where it says 'the RBA sells foreign currency, which takes dollars out of the financial system', as I don't quite understand why that's the case :( I did some research and thought I understood it, but then I read over this and it didn't make sense to me.
My question, then, is why does the RBA take dollars out of the financial system when it sells foreign currency?
Sorry for the confusion (and thanks for your help)
Hi Birdwing,
The RBA has a reserve of assets (such as foreign currency) which it uses in sterilized intervention. If the RBA sells its foreign currency, then the buyers will give $AU to RBA in exchange for the foreign currency. This means that the supply of $AU is reduced in the world market which is akin to taking dollars out of the financial system which will have an indirect effect on the exchange rate.. The acquired $AU can be used in its normal method of implementing monetary policy (Buying/selling gov. securities)
Hope this helps :)
Post by: onepunchboy on October 28, 2016, 07:53:47 pm
Can anyone help explain the concept of NAIRU to me? its still a bit confusing... I get that its the point where there are no cyclical unemployment and only structural etc... but what does it mean when unemployment is " BELOW" the NAIRU and why does a lower NAIRU increase the economys capacity to grow without increasing inflation?
Post by: hermansia12 on October 28, 2016, 08:44:10 pm
hey!
Can anyone help explain the concept of NAIRU to me? its still a bit confusing... I get that its the point where there are no cyclical unemployment and only structural etc... but what does it mean when unemployment is " BELOW" the NAIRU and why does a lower NAIRU increase the economys capacity to grow without increasing inflation?
NAIRU is the non-accelerating inflation rate of unemployment, it just explains that even at full employment, there is still structural, seasonal and frictional employment (like you mentioned). This rate of unemployment is known as the natural rate of unemployment.
There is also a relationship between unemployment and inflation. If the unemployment rate is above the natural rate of unemployment (i.e unemployment has increased) then consumers will have less propensity to spend, therefore prices will go down as aggregate demand falls. This means that inflation and economic growth will fall (there is also a fall in wages as there is a lot more supply of labour but less demand). However, if the unemployment rate has improved (i.e moved below the NAIRU) then the consumers will have more to spend so aggregate demand increases and economic growth occurs. However, due to this effect inflation also grows generally as suppliers raise prices. I think your article was talking about how wages also increase if unemployment is below the NAIRU as there is a higher demand for labour but less supply (overdemand to meet increased consumer demand). Suppliers will raise wages in order to attract more employees so the wage growth will dampen domestic inflation.
Hope this helps :)
Post by: onepunchboy on October 28, 2016, 09:11:54 pm
Post by: birdwing341 on October 28, 2016, 09:31:31 pm
Hi Birdwing,
The RBA has a reserve of assets (such as foreign currency) which it uses in sterilized intervention. If the RBA sells its foreign currency, then the buyers will give $AU to RBA in exchange for the foreign currency. This means that the supply of $AU is reduced in the world market which is akin to taking dollars out of the financial system which will have an indirect effect on the exchange rate.. The acquired $AU can be used in its normal method of implementing monetary policy (Buying/selling gov. securities)
Hope this helps :)
Ahhhh so the taking AUD out of the world market is equivalent to taking money out of the financial system (is that just an assumption for high-school economics or does it hold true in real world as well?) That makes much more sense - was just confused about what is counted as the financial system :) Thanks!!
Post by: Deng on October 28, 2016, 09:35:05 pm
Ahhhh so the taking AUD out of the world market is equivalent to taking money out of the financial system (is that just an assumption for high-school economics or does it hold true in real world as well?) That makes much more sense - was just confused about what is counted as the financial system :) Thanks!!
Random chime this may be wrong, but i think the financial markets are like integrated now ( globalisation ), and exchange rate markets are spot markets where money just moves with ease.
Post by: Deng on October 28, 2016, 09:36:25 pm
Post by: hermansia12 on October 28, 2016, 10:04:08 pm
What are the strutural and cyclical issues of Australia's economy? Would structural refer to low national savings, high CAD and narrow export base and cyclical issues be ?
The issues you named are definitely structural issues. Structural issues are generally ones that have been long term problems with the economy. I would probably also add that environmental issues, inequality and high wages also fall under this category. Generally, lots of structural issues contribute to the behavior of economic growth and the business cycle. Anything to do with the business cycle is generally cyclical issues. This includes the associated higher unemployment rate due to higher economic downturn etc. I would also argue that lots of structural issues combined contribute to cyclical issues faced in society.
Hope this helps :)
Post by: Deng on October 28, 2016, 10:25:53 pm
The issues you named are definitely structural issues. Structural issues are generally ones that have been long term problems with the economy. I would probably also add that environmental issues, inequality and high wages also fall under this category. Generally, lots of structural issues contribute to the behavior of economic growth and the business cycle. Anything to do with the business cycle is generally cyclical issues. This includes the associated higher unemployment rate due to higher economic downturn etc. I would also argue that lots of structural issues combined contribute to cyclical issues faced in society.
Hope this helps :)
Ah yeah, thats what i assumed for cyclical i just couldnt think of any"big ones" like high CAD etc,
also for fiscal policy how can we check what has been implemented from budgets ?
Post by: hermansia12 on October 28, 2016, 10:58:02 pm
Ah yeah, thats what i assumed for cyclical i just couldnt think of any"big ones" like high CAD etc,
also for fiscal policy how can we check what has been implemented from budgets ?
That one is just googling it or looking it up in the news unfortunately. If I was unsure, I just analysed it in the form: economic issue => response to economic issue => gov. proposed policy in budget => How it would have helped/ combat issue
Post by: bdesouza on October 29, 2016, 10:23:35 am
Just wanted to know whether is acceptable to use headings/titles (somewhat report style) for section 3 and 4?
Or does it have to be essay style
Thanks
Post by: hermansia12 on October 29, 2016, 10:46:41 am
Hey,
Just wanted to know whether is acceptable to use headings/titles (somewhat report style) for section 3 and 4?
Or does it have to be essay style
Thanks
I don't think Bostes out-rightly states that it must be in essay form though it is what most students write. The marking guidelines for these sections in the band 6 range is just:
-Synthesises own knowledge and understanding with the information provided, to develop a sustained, logical and cohesive response
-Integrates relevant economic terms, concepts, relationships and theories
-Demonstrates a clear and comprehensive understanding
So I would argue that you can use subheadings within the writing. It really is dependent on your writing style. The most important thing about essays is just making sure that it is structured and that the analysis is logical and clear.
Hope this helps
Post by: bdesouza on October 29, 2016, 11:33:17 am
I don't think Bostes out-rightly states that it must be in essay form though it is what most students write. The marking guidelines for these sections in the band 6 range is just:
-Synthesises own knowledge and understanding with the information provided, to develop a sustained, logical and cohesive response
-Integrates relevant economic terms, concepts, relationships and theories
-Demonstrates a clear and comprehensive understanding
So I would argue that you can use subheadings within the writing. It really is dependent on your writing style. The most important thing about essays is just making sure that it is structured and that the analysis is logical and clear.
Hope this helps
Thanks!
Post by: kevin217 on October 29, 2016, 04:20:21 pm
Post by: brontem on October 29, 2016, 04:42:21 pm
For 2012 subsidy question how do we read the graph. For 2011, how is c the answer?
For question 18, the answer is A. The size of the subsidy is the vertical distance between the two supply curves -S1 price is $10, and and S2 price is 8, so the price per towel is a subsidy of $2 :)
For 2011, you can go through the process of elimination. The terms of trade has declined, so to counteract this economic growth needs to be boosted another way (I'm assuming domestically as well?? Someone correct me if I'm wrong)
A would do the opposite, and contract the economy
B would also contract (Taxation is a leakage)
D would make the price of imports more expensive, and wouldn't do much in terms of the domestic economy
C is the right answer because an increase in discretionary spending can boost particular areas of the economy (employment etc) and boost growth. And Government expenditure is an injection, so this increase would stimulate the economy, reducing the impact of the deteriorating terms of trade :)
Hope that makes sense :) :)
Post by: kevin217 on October 29, 2016, 04:48:30 pm
Post by: Deng on October 29, 2016, 04:55:10 pm
For the subsidy question, the answer is A. But brontem, for the 2011 question haven't the terms of trade improved?
Terms of Trade is calculated by export price index / import price index
Post by: brontem on October 29, 2016, 04:56:23 pm
For the subsidy question, the answer is A. But brontem, for the 2011 question haven't the terms of trade improved?
I calculated the terms of trade by export price index/import price index
Year 1 110/100 * 100 = 110
Year 2 105/100 * 100 = 105
So it deteriorated from 110 to 105
That's how I got the answer, unless it's done another way??
Post by: kevin217 on October 29, 2016, 04:57:43 pm
I calculated the terms of trade by export price index/import price indexahh my bad. I thought year 1 had 100/100. You are very much correct
Year 1 110/100 * 100 = 110
Year 2 105/100 * 100 = 105
So it deteriorated from 110 to 105
That's how I got the answer, unless it's done another way??
Post by: Deng on October 29, 2016, 05:09:57 pm
Thanks
Post by: birdwing341 on October 29, 2016, 05:49:25 pm
Just wondering, would knowing policy responses to economic issues be enough for knowing budgets or should i have knowledge of budgets that had relate to globalisation ( not sure if this question makes sense )
Thanks
Hi Deng,
Not sure if this is going to be the answer you want haha, but please clarify if I haven't got to the crux of it. The questions are not going to ask you to critically evaluate the budget outcomes of anything beyond the term 'recent' (which to my understanding is usually 4 years, but in the case of the budget, closer to 2), so I think it's wise to have a decent knowledge of recent budgets (probably only one tbh). You shouldn't need to have knowledge of budgets beyond this, although it is good to have knowledge of specific policies from within these budgets (e.g. introduction of superannuation etc.) and perhaps knowledge of the trend in the budget outcome (e.g. increasing budget deficits, although recent promise to engage in fiscal consolidation).
Hope this is kind of what you were going for :)
Post by: Deng on October 29, 2016, 06:10:24 pm
Post by: hermansia12 on October 29, 2016, 06:11:02 pm
Just wondering, would knowing policy responses to economic issues be enough for knowing budgets or should i have knowledge of budgets that had relate to globalisation ( not sure if this question makes sense )
Thanks
For globalisation definitely know the organizations such as World Bank, UN etc. And their policies and aims.You also need to know free trade agreements and blocs.
Generally economic issues will have an effect on world economy due to the increasing integration of global economies. I would definitely know the budget and why certain policies are proposed.
I think that's what you're asking, hope this helps :)
Post by: hermansia12 on October 29, 2016, 06:13:26 pm
Thanks Birdwing, yeah that makes sense to me. Also, was wondering how much of the topic 4 microeconomic reform stuff do we need to know - NCP, Deregulation, Regulation, Product/Factor Markets, Labour market reforms etc because im just looking at it right now and im dreading going over this
Hi Deng,
The 2015 paper had a macroeconomic question as the essay so you should be prepared for all aspects of that topic just in case.
Post by: birdwing341 on October 29, 2016, 06:19:08 pm
Thanks Birdwing, yeah that makes sense to me. Also, was wondering how much of the topic 4 microeconomic reform stuff do we need to know - NCP, Deregulation, Regulation, Product/Factor Markets, Labour market reforms etc because im just looking at it right now and im dreading going over this
2015 was a microeconomic reform essay, so it remains unlikely that there'll be an essay on this stuff. However, it's quite likely you'll come across it in the short answer section of the paper, so I would focus your knowledge of NCP, Deregulation, Regulation, product/factor markets to addressing those questions. Labour market is slightly different, and is more likely to be asked as an essay question although it is still quite unlikely that it will.
But if you can study it, it's in your best interests to do it :) Maybe look at the textbook and do the short answers at the end of this section as practice :)
Post by: hermansia12 on October 29, 2016, 06:55:22 pm
2015 was a microeconomic reform essay, so it remains unlikely that there'll be an essay on this stuff. However, it's quite likely you'll come across it in the short answer section of the paper, so I would focus your knowledge of NCP, Deregulation, Regulation, product/factor markets to addressing those questions. Labour market is slightly different, and is more likely to be asked as an essay question although it is still quite unlikely that it will.
But if you can study it, it's in your best interests to do it :) Maybe look at the textbook and do the short answers at the end of this section as practice :)
With the Labor market, some important concepts include the decentralization of labour, awards, enterprise agreements, dispute resolution and casualisation of the workforce. I feel like they may throw in a casualisation and decentralization question due to the recent activity in unemployment in Australia.
Post by: Deng on October 29, 2016, 08:51:49 pm
Post by: Deng on October 29, 2016, 09:35:12 pm
Can someone tell me if these multiple choice question solutions are wrong ?
Post by: isaacdelatorre on October 29, 2016, 10:11:15 pm
http://www.acehsc.net/wp-content/uploads/Trial%20Papers%202015/2015/Economies/2015%20Economics%20-%20QATS%20Trial%20with%20Solutions.pdf
Can someone tell me if these multiple choice question solutions are wrong ?
Hey Deng,
I'm pretty sure they are wrong.. Unless I really need to revise every section ;)
Some of the answers didn't seem right at all, what did you get for 12 - I didn't think any of them were correct.
The short answer guidelines are ok though :)
Post by: hermansia12 on October 29, 2016, 10:26:34 pm
If we are given a subsidy diagram how would we find the total cost of the subsidy, e.g subsidy amount * X ( how do we know how much is being subsidised )
In a subsidy graph (Like the one attached), the supply is shifted to the right from S to S1 as domestic supply increases. This is due to the nature of subsidies whereby it's payments by the government to make an industry more competitive and productive. Thus, increasing supply and lowering the market price. The area of the box in the attachment would be the size of the subsidy.
Hope this helps :)
Post by: Deng on October 29, 2016, 10:35:18 pm
In a subsidy graph (Like the one attached), the supply is shifted to the right from S to S1 as domestic supply increases. This is due to the nature of subsidies whereby it's payments by the government to make an industry more competitive and productive. Thus, increasing supply and lowering the market price. The area of the box in the attachment would be the size of the subsidy.
Hope this helps :)
My bad, i dont think i explained myself properly, say for example i knew the price of the subsidy was $5, but it asked me to find the total cost of this to the government i.e what is the quantiative amount of goods being subsidised. So on the graph, it would be 5* Q but im not sure how to find Q. I would post the question but i managed to lose it :/
Hey Deng,
I'm pretty sure they are wrong.. Unless I really need to revise every section ;)
Some of the answers didn't seem right at all, what did you get for 12 - I didn't think any of them were correct.
The short answer guidelines are ok though :)
Hey Deng,
I'm pretty sure they are wrong.. Unless I really need to revise every section ;)
Some of the answers didn't seem right at all, what did you get for 12 - I didn't think any of them were correct.
The short answer guidelines are ok though :)
Okay thats good, i was seriously worried that i got complete shit in the MC
Post by: hermansia12 on October 29, 2016, 10:59:51 pm
Hey Deng,
I'm pretty sure they are wrong.. Unless I really need to revise every section ;)
Some of the answers didn't seem right at all, what did you get for 12 - I didn't think any of them were correct.
The short answer guidelines are ok though :)
I agree- I had completely different answers:
1. C
2. A
3. C
4. D
5. A
6. D
7. A
8. B
9. A
10. D
11. A
12. I feel like 12 is asking for marginal propensity to save because I got 0.8 for MPC
13. C
14.D
15.B
16.C
17.A
18.B
19.C
20.A
These are the answers I got for MC. I could be wrong though so please message if you find a wrong answer.
Post by: hermansia12 on October 29, 2016, 11:04:14 pm
My bad, i dont think i explained myself properly, say for example i knew the price of the subsidy was $5, but it asked me to find the total cost of this to the government i.e what is the quantiative amount of goods being subsidised. So on the graph, it would be 5* Q but im not sure how to find Q. I would post the question but i managed to lose it :/
Hi Deng,
Sorry, I'm still not very sure what the Q you're after is because the subsidy isn't really a payment to goods directly, it is a payment to the industry. Are you after the amount of increased production the subsidy has caused?
Post by: Deng on October 29, 2016, 11:09:48 pm
Post by: isaacdelatorre on October 29, 2016, 11:16:42 pm
I agree- I had completely different answers:
1. C
2. A
3. C
4. D
5. A
6. D
7. A
8. B
9. A
10. D
11. A
12. I feel like 12 is asking for marginal propensity to save because I got 0.8 for MPC
13. C
14.D
15.B
16.C
17.A
18.B
19.C
20.A
These are the answers I got for MC. I could be wrong though so please message if you find a wrong answer.
For question 9 - could you please explain it to me?
I got B, increase in consumer confidence, because to if consumer confidence increased then people would buy more hence increasing consumption and the marginal propensity to consume. When the MPC increases, the value of the multiplier increases, right?
I didn't think it was A because an increase in investment would only have a multiplied effect, not increase the multiplier itself; unless investment was used to become more efficient and decrease prices, and thus encourage consumption.
Post by: hermansia12 on October 29, 2016, 11:22:07 pm
Um okay, from memory the question was asking how much the total subsidy would be costing the government overall. For example if quanity was 400 and subsidy was 2$ then it would cost the government 800$ however for the question i had to work out the quantity except im not how to work it out looking at a grap
Ahh ok, In that case, I'm pretty sure the gap you're talking about would just be Q1-Q from the graph that I previously included. If suppose they said that the subsidy costed $1000 in total and that before the subsidy they were supplying 50 units at $10. The subsidy will shift supply to right as the price falls to $5, find the quantity that the economy can now supply (I'm just making this question up I have never actually seen this in a practice paper)
Subsidy is the area of the rectangle caused by the shift, so the width would be $10-$5 =$5;
Then dividing by $1000 gives 200 (the length) = the new quantity that the economy can supply
i.e economy can now supply 200 units of the good -> Increasing by 150 units from the 50 units of the good pre-subsidy
I hope this is what you're asking- sorry about the confusion
Post by: hermansia12 on October 29, 2016, 11:29:05 pm
For question 9 - could you please explain it to me?
I got B, increase in consumer confidence, because to if consumer confidence increased then people would buy more hence increasing consumption and the marginal propensity to consume. When the MPC increases, the value of the multiplier increases, right?
I didn't think it was A because an increase in investment would only have a multiplied effect, not increase the multiplier itself; unless investment was used to become more efficient and decrease prices, and thus encourage consumption.
I think you're right - I was thinking about how investment lowering prices for consumers as industry becomes more productive so consumers spend more. Your answer is more direct and would be the right one.
Post by: Deng on October 30, 2016, 01:01:08 am
Post by: nancy_cc on October 30, 2016, 01:06:53 am
I agree- I had completely different answers:
1. C
2. A
3. C
4. D
5. A
6. D
7. A
8. B
9. A
10. D
11. A
12. I feel like 12 is asking for marginal propensity to save because I got 0.8 for MPC
13. C
14.D
15.B
16.C
17.A
18.B
19.C
20.A
These are the answers I got for MC. I could be wrong though so please message if you find a wrong answer.
Hey for 5 I had D, because an increase in early retirement reduces the size of the labour force and since unemployment rate is calculated by number of unemployed persons/labour force, a decrease in labour force will increase unemployment. And its short term because the jobs previously filled by retirees will need time to be replaced? Was just wondering whether my approach is completely wrong and im overthinking it hahaha, can you explain how the answer is A? Thanks! :)
Post by: hermansia12 on October 30, 2016, 01:11:16 am
Just wondering how are people remembering stats and trends etc because ive been trying since friday and they arent sticking for me :/
When I did my exam, I was sticking the snapshot trends all over the house and had them written on my arm so that even if I was doing the dishes I would have to look at them and remember them visually.My friends all found it odd that my arm was always full of numbers and facts but it worked really well because I would associate that fact with that place on the hand/arm so that I would remember in the test. Although scrubbing numbers off your arm night before the test made my family reconsider my sanity.>.<
Another method was that I would associate the statistic with the economic issue when I did practice papers so that like the BBC version of Sherlock, when I was writing an answer about that specific economic issue, it jogged my memory of the stat in my "mind palace".
Hopes this helps :)
Post by: kevin217 on October 30, 2016, 01:11:42 am
Just wondering how are people remembering stats and trends etc because ive been trying since friday and they arent sticking for me :/Yep that is what I'll be doing. For me to remember the trends, I try to analyse them by writing mock-up essays. I feel like once I can analyse, I can understand and thus remember and be able to morph if need be during the exam.
Post by: hermansia12 on October 30, 2016, 01:47:54 am
Hey for 5 I had D, because an increase in early retirement reduces the size of the labour force and since unemployment rate is calculated by number of unemployed persons/labour force, a decrease in labour force will increase unemployment. And its short term because the jobs previously filled by retirees will need time to be replaced? Was just wondering whether my approach is completely wrong and im overthinking it hahaha, can you explain how the answer is A? Thanks! :)
Generally an increase in retirement will be compensated by the high amount of youth unemployment in Australia. As people retire, people enter the workforce. We actually have problems in the Australian economy with retirement age increasing as people are holding onto their jobs longer making it more difficult for young people to find a job.
However, those in hidden unemployment are usually those returning to the workforce after being long term unemployed so they may find it difficult to find a job immediately upon entering the workforce. This increases the unemployment rate. Until they are retrained into jobs with high structural unemployment which will eventually see the unemployment rate decrease and participation rate increase. Hence, leading to a short term increase on unemployment
Post by: Giraffes are tall on October 30, 2016, 01:32:21 pm
Is it possible for you guys to check out 2009 HSC Economics question 7 (multiple choice), and explain how it works?
It has a tables so i didn't type it down.
Thanks in advance!
Post by: isaacdelatorre on October 30, 2016, 01:35:55 pm
I'm a bit confused as to what the " overall positive correlation between CPI, Earnings and Cash Rate (besides
during GFC) " is - when explaining the effects of inflation. This was in the suggested answers for 2014 extended response question 26.
Can someone please give me a hand?
Post by: birdwing341 on October 30, 2016, 01:47:56 pm
Hi there,
I'm a bit confused as to what the " overall positive correlation between CPI, Earnings and Cash Rate (besides
during GFC) " is - when explaining the effects of inflation. This was in the suggested answers for 2014 extended response question 26.
Can someone please give me a hand?
I think what it's trying to get at, is that in general, as CPI increases, so do average earnings (as it is during a period of economic growth). During this time the government will also desire to use counter-cyclical policy to smooth out the trends in the business cycle, and in order to maintain a set level of inflation, as CPI increases, cash rate also increases.
Does that seem right?
Post by: Giraffes are tall on October 30, 2016, 01:57:39 pm
Thanks
Post by: isaacdelatorre on October 30, 2016, 02:00:20 pm
Hiii,
Is it possible for you guys to check out 2009 HSC Economics question 7 (multiple choice), and explain how it works?
It has a tables so i didn't type it down.
Thanks in advance!
Hi Giraffes are tall,
What question were you looking at? question 7 doesn't have a table, question 7 is about implementation and impact of economic policies...
Are you sure it was 7?
Post by: isaacdelatorre on October 30, 2016, 02:01:11 pm
I think what it's trying to get at, is that in general, as CPI increases, so do average earnings (as it is during a period of economic growth). During this time the government will also desire to use counter-cyclical policy to smooth out the trends in the business cycle, and in order to maintain a set level of inflation, as CPI increases, cash rate also increases.
Does that seem right?
Oh, that does make sense, although is that a "positive correlation" not sure what it means by positive...
Post by: birdwing341 on October 30, 2016, 02:04:25 pm
If there is a change in a specific tax bracket, let's say the marginal tax rate increases for the highest bracket of income earners, is this considered a discretionary fiscal policy, or a micro economic reform (tax reform).
Thanks
I could be wrong here, but you can count it as both. Personally, I'd be more inclined to talk about marginal tax rate increases as discretionary fiscal policy, but you could do either :)
Oh, that does make sense, although is that a "positive correlation" not sure what it means by positive...
I think it just means that as one goes up, so does the other...kinda badly worded but I guess that's what it is :)
Post by: isaacdelatorre on October 30, 2016, 02:07:11 pm
If there is a change in a specific tax bracket, let's say the marginal tax rate increases for the highest bracket of income earners, is this considered a discretionary fiscal policy, or a micro economic reform (tax reform).
Thanks
Hey there,
If the government directly changes the tax rate for a tax bracket this is a discretionary change to fiscal policy (since they are changing the taxation/expenditure plans of the economy), I wouldn't consider it a microeconomic reform or talk about it in a micro essay as it isn't really increasing efficiency in any way - so it would b pretty ineffective as a reform. It is mainly creating a more equitable distribution of income
Hope this helps :)
Post by: itsAnuu on October 30, 2016, 02:12:09 pm
Post by: isaacdelatorre on October 30, 2016, 02:14:37 pm
Is the total size of the subsidy paid by the government the vertical distance between the supply curves times by the 2nd equilibrium point, or the 1st equilibrium point?
Hey Anuu,
The value of the subsidy is the vertical distance between the 2 supply curves times by the total domestic production. This is because the government subsidises every unit of production domestically produced. It is not always the equilibrium price, because if there is a world price lower than equilibrium, then domestic supply is where the world price intersects the domestic supply graph.
Hope this helps :)
Post by: onepunchboy on October 30, 2016, 02:16:30 pm
THANKS :)
Post by: isaacdelatorre on October 30, 2016, 02:18:38 pm
Can anyone give me a list of graphs that i should include in my essays and just know in general??
THANKS :)
hi there,
Someone asked this question a few days ago, it's on page 9, post 122
:D
Post by: itsAnuu on October 30, 2016, 02:18:58 pm
Post by: isaacdelatorre on October 30, 2016, 02:22:05 pm
So its the price per unit times by the NEW QUANTITY which they produce on the x-axis yeah? Cause this question lol... no answers btw
Hey there,
So since the price of the subsidy is the vertical distance between the 2 curves, i.e. $5
The new price is $7, the quantity supplied by the domestic market is 100 as this is the quantity where the new price intersects the domestic supply curve. Thus, the cost to the government is the price of the subsidy x the quantity domestically supplied.
Hence the answer should be A - $500m
Post by: isaacdelatorre on October 30, 2016, 02:32:38 pm
Will there be a guide for 24 hours til the HSC Economics exam??
I am kind of struggling to get through the content and need a bit of direction as I am unsure what is the best way to go about studying for it - statistics, articles, notes, RBA charts, past papers, essay plans???
Any help is appreciated :)
Post by: birdwing341 on October 30, 2016, 02:35:04 pm
So its the price per unit times by the NEW QUANTITY which they produce on the x-axis yeah? Cause this question lol... no answers btw
Aaaaah this question - had a sustained discussion with mates in my year about it :) Isaac is right when the answer is A - $500, but I personally believe that the question makes little sense, because technically you have to assume that the government has imposed a $2 tariff, because otherwise the economy would be operating at the world price of $5. In this case (the $7 becomes a $5), the quantity increase is the same, just a different size of subsidy.
Post by: isaacdelatorre on October 30, 2016, 02:37:54 pm
Aaaaah this question - had a sustained discussion with mates in my year about it :) Isaac is right when the answer is A - $500, but I personally believe that the question makes little sense, because technically you have to assume that the government has imposed a $2 tariff, because otherwise the economy would be operating at the world price of $5. In this case (the $7 becomes a $5), the quantity increase is the same, just a different size of subsidy.
OMG wow, good pick up birdwing, I didn't even read the first bit, lol that is soo weird, how can the price be $7 if the world price is $5... It doesn't tell us what the quantity is at $5
Post by: hermansia12 on October 30, 2016, 03:59:53 pm
Hey guys,
Will there be a guide for 24 hours til the HSC Economics exam??
I am kind of struggling to get through the content and need a bit of direction as I am unsure what is the best way to go about studying for it - statistics, articles, notes, RBA charts, past papers, essay plans???
Any help is appreciated :)
No worries :) check it out on this page: Last minute prep for HSC exams
Post by: hermansia12 on October 30, 2016, 05:17:53 pm
OMG wow, good pick up birdwing, I didn't even read the first bit, lol that is soo weird, how can the price be $7 if the world price is $5... It doesn't tell us what the quantity is at $5
The graph is very misleading in this regard. I personally don't think you will get a question like this where you would have to assume things in the HSC
Post by: onepunchboy on October 30, 2016, 05:50:16 pm
Post by: hermansia12 on October 30, 2016, 06:32:56 pm
hey can anyone help explain how borrowing from private sector leads to the " crowding out " effect? im abit confused... THANKS
First off, the government borrows money from the private sector in order to finance their fiscal policies. Thus, it limits the supply of money in the private sector which will put pressure on interest rates to increase. This is known as the crowding out effect as households will find it harder to borrow with the higher interest rates. (more income needed to repay debt).
Hope this helps :)
Post by: isaacdelatorre on October 30, 2016, 06:44:55 pm
What is your preferred structure for an essay?
How do you also structure your paragraphs and use reading/planning time?
Also, if a question is two parts, or double barrel - do you integrate the two parts or deal with them separately (e.g. explain recent changes in the level of unemployment and the effect on unemployment)
Thank you :)
Post by: hermansia12 on October 30, 2016, 07:46:02 pm
Hi there,
What is your preferred structure for an essay?
How do you also structure your paragraphs and use reading/planning time?
Also, if a question is two parts, or double barrel - do you integrate the two parts or deal with them separately (e.g. explain recent changes in the level of unemployment and the effect on unemployment)
Thank you :)
In reading time, I always turned to the essays first and figure out which essay I am going to do and process the stimulus questions. Those were the ones that I needed more time on to think about. I don't immediately plan, I just define the topics (e.g in the question you gave I would go unemployment is number of people supplying labor but are underutilized by labour market). Then I move onto the short answer and see if any stump me before finally moving on to MC. This way it gives me more time to ponder potential economic concepts I can include in the question and see if there are any other extra info given in the MC which I had not thought about.
Unfortunately my weakest part of my game was MC so I would spend double the amount of time on it before flying through SA and the essay. How you attack the time is dependent on your weaknesses. Generally try to keep to the recommended times BOSTES gives you
In essays, I would structure it with economic concept -> policy to combat -> why that policy work/didnt work-> further suggestions if need improving. In 2 barrel questions, one always relates to the other so do it together( another reason why econ. is integrated and you can't tell prelim from hsc). In your question the level and changes of unemployment rates ->will be impacted by types of unemployment -> impact economic growth -> effects of unemployment etc. So I usually do it together. In your question i would structure it economic concept (rates of changes in unemployment rate e.g hidden unemployment increasing) -> Impact to unemployment rate -> policy to combat. (pardon all the flow charts its just how I explain how my brain works when I write)
Before I write I'd scribble down all the concepts that relate to the question beforehand and then each paragraph tackles that one point.
e.g in your question:
-cyclical unemployment (Business cycle)
-hidden unemployment (Falling participation rates)
-underemployment and casulisation of the workforce (increasing part-time jobs)
-Structural unemployment (Manufacturing)
-Infrastructure; boost of foreign investment due to globalization funding -> comparative advantage-> job creation lower growth
This would see me through the essay pretty much and makes the writing flow better I found
Hope this helps :)
Post by: isaacdelatorre on October 30, 2016, 08:01:09 pm
In reading time, I always turned to the essays first and figure out which essay I am going to do and process the stimulus questions. Those were the ones that I needed more time on to think about. I don't immediately plan, I just define the topics (e.g in the question you gave I would go unemployment is number of people supplying labor but are underutilized by labour market). Then I move onto the short answer and see if any stump me before finally moving on to MC. This way it gives me more time to ponder potential economic concepts I can include in the question and see if there are any other extra info given in the MC which I had not thought about.
Unfortunately my weakest part of my game was MC so I would spend double the amount of time on it before flying through SA and the essay. How you attack the time is dependent on your weaknesses. Generally try to keep to the recommended times BOSTES gives you
In essays, I would structure it with economic concept -> policy to combat -> why that policy work/didnt work-> further suggestions if need improving. In 2 barrel questions, one always relates to the other so do it together( another reason why econ. is integrated and you can't tell prelim from hsc). In your question the level and changes of unemployment rates ->will be impacted by types of unemployment -> impact economic growth -> effects of unemployment etc. So I usually do it together. In your question i would structure it economic concept (rates of changes in unemployment rate e.g hidden unemployment increasing) -> Impact to unemployment rate -> policy to combat. (pardon all the flow charts its just how I explain how my brain works when I write)
Before I write I'd scribble down all the concepts that relate to the question beforehand and then each paragraph tackles that one point.
e.g in your question:
-cyclical unemployment (Business cycle)
-hidden unemployment (Falling participation rates)
-underemployment and casulisation of the workforce (increasing part-time jobs)
-Structural unemployment (Manufacturing)
-Infrastructure; boost of foreign investment due to globalization funding -> comparative advantage-> job creation lower growth
This would see me through the essay pretty much and makes the writing flow better I found
Hope this helps :)
Thank you!!
This is very helpful :)
With the essay, would you have an example or statistic in each paragraph? I have tried to get as many stats to cover all aspects of the syllabus, hence why my trends are 17 pages long as I thought I had to have some sort of trend in each paragraph (i.e. cyclical unemployment 1st paragraph, structural 2nd, long-term 3rd...)
Also, what are the positive and negative effects of both low and high inflation - I can't think of more than one for some of them...
And also, when it says Analyse the effects of protection policies on the Australian economy - does this mean protectionist policies of o/s trading partners on the Australian economy, or of Australian protection on our economy??
Sorry for the spam of questions!!!
Post by: Deng on October 30, 2016, 08:03:15 pm
Post by: Deng on October 30, 2016, 08:06:20 pm
Thank you!!
This is very helpful :)
With the essay, would you have an example or statistic in each paragraph? I have tried to get as many stats to cover all aspects of the syllabus, hence why my trends are 17 pages long as I thought I had to have some sort of trend in each paragraph (i.e. cyclical unemployment 1st paragraph, structural 2nd, long-term 3rd...)
Also, what are the positive and negative effects of both low and high inflation - I can't think of more than one for some of them...
And also, when it says Analyse the effects of protection policies on the Australian economy - does this mean protectionist policies of o/s trading partners on the Australian economy, or of Australian protection on our economy??
Sorry for the spam of questions!!!
Not sure what you have right now, but benefits of high inflation would be higher government revenue as inflation increases revenue for government from GST ( rising prices + tax receipts ), real interest rates would be lower as nominal interst rates - rising inflation = lower servicing costs , increasing investment in real assets since inflation lowers the value of monetary assets faster than it lowers the value of real assets, lower risk of deflation
Not sure about low
Post by: hermansia12 on October 30, 2016, 08:30:34 pm
Thank you!!
This is very helpful :)
With the essay, would you have an example or statistic in each paragraph? I have tried to get as many stats to cover all aspects of the syllabus, hence why my trends are 17 pages long as I thought I had to have some sort of trend in each paragraph (i.e. cyclical unemployment 1st paragraph, structural 2nd, long-term 3rd...)
Its good that you have that- I was never really any good at memorising the statistics like that so I worked on connecting the stats. I did know to the question.
Those topics that I listed I I would pretty much know that:
cyclical unemployment -> based on current trends in data -> supply demand
high structural unemployment -> mining boom -> low exports base
infrastructure -> Projected growth of population
hidden unemployment -> falling participation rate -> Long term growth and reduction of UE
etc.
Everything I knew in statistics was basically in the news that last week before the economics test (like the summaries I gave to the news) and then I just linked it in different ways.
e.g if question was on role of Foreign investment in econ growth:
Projected growth of pop. -> Increased need of infrastructure -> Need investment for future growth
Narrow export base -> under-utilization of labor -> high structural unemployment -> low econ growth therefore despite effect of CAD and how beneficial it has been for econ. growth
etc.
Post by: hermansia12 on October 30, 2016, 08:42:38 pm
In reference to the crowding out effect, how would you talk about it in an essay? In the sense that due to the deregulation of global financial markets, the government can borrow from overseas markets and consumers can also use overseas financial market
Yeah I would use it in that way- Only use it if it makes sense to in the essay
Post by: hermansia12 on October 30, 2016, 09:14:41 pm
And also, when it says Analyse the effects of protection policies on the Australian economy - does this mean protectionist policies of o/s trading partners on the Australian economy, or of Australian protection on our economy??
You can use them both! This is a classic example of how the world economy is integrated (globalisation) so that if something impacts one country -> many other countries are impacts due to to loss of export buyers and imports. E.g EU had a major effect on shifting trade flows in Aus even though we weren't part of the trade bloc
Post by: hermansia12 on October 30, 2016, 09:58:21 pm
Also, what are the positive and negative effects of both low and high inflation - I can't think of more than one for some of them...
High Inflation:
-Distort consumers' decisions to spend or save disposable income -> More likely not to spend therefore lower growth
-Employees seeks higher wages as propensity to spend decreases -> Wage price inflationary spiral (Higher wages tend to stay high -> higher prices and never ending cycle)
-Distribution of income -> Lower income will see their propensity to spend decrease at a more rapid rate than those with higher wages (More affected)
-Unemployment -> Direct link with NAIRU
-Increased price of our exports -> uncompetitive therefore less aggregate demand
-High inflation can cause exchange rates short term appreciation of $AU- speculation that RBA will raise cash rate in contraction of monetary policy leading to increased financial flows
(However in long term, sustained low inflation leads to greater confidence in Aus economy strengthening the dollar in the long term)
Then low inflation impacts are pretty much the opposite that of higher inflation
Hope this helps :) Sorry about staggering your questions I had a lot on my plate in the last 2 hours so I couldn't address all aspects of your question in one go.
Post by: Deng on October 30, 2016, 10:33:57 pm
Post by: hermansia12 on October 30, 2016, 11:08:19 pm
What would be the mininal statistics we would need to know for economics exam e.g inflation/unemployment/cash rate/EG/ avg cad/ part rat etc
Minimum for Band 6 I would say is that you can link statistics in essays in all 5 economic issues, globalisation, microeconomics and your case study. The RBA snapshot gives a good glance at the state of the economy:
http://www.rba.gov.au/snapshots/economy-snapshot/
This would be the absolute basic minimum I would say.
Side note: When I went into the exam, I didn't know anything about the CAD amounts in each category - only that it was 5% of GDP
Post by: Deng on October 30, 2016, 11:17:15 pm
Post by: hermansia12 on October 30, 2016, 11:29:14 pm
What would the higest mark be in an essay with minimal stats or trends ? Because i feel i might get a question i wont have stats for and i have to juggle my legal stuff which is causing me headaches
I can't give a definite answer on that - It depends on how well you link back to the question and how well your stats and trends match as well as your writing skills. If it makes you feel better in my trials I misread the time and only had 20 min to complete section 4. (no joke this is actually what happened I was in tears after the exam) I only used mining boom, gfc, falling cash rate to address the question on economic growth as well as what I remembered of the RBA snapshots off the top of my head in the 20 min adrenaline rush. Don't know how it happened but I still managed to score a 18/20.
I know how stressed you guys are feeling with the statistics and the anxiety of worrying about getting blindsided in essays. BOSTES is generally really nice and the questions they give have about 2 pages of topics you could have talked about in the marking guidelines. Just think about the concepts that link towards the topic and what policies and trends you know that will go towards attacking that question.
Hope this helps :) Good luck in your exams!
Post by: MagmaMeerkat on October 31, 2016, 08:59:41 am
Because the 2015-16 Budget deficit was $29.8bn, and 2016-17 is forecasted a deficit of $37bn
Post by: AFix on October 31, 2016, 09:46:55 am
Is the 2016-17 Budget contractionary or expansionary?
Because the 2015-16 Budget deficit was $29.8bn, and 2016-17 is forecasted a deficit of $37bn
It's still a contractionary stance nonetheless (My teachers said to put that) - but someone else could come and clarify if need be.
Post by: Deng on October 31, 2016, 10:36:01 am
Post by: Essej on October 31, 2016, 10:39:59 am
Is the 2016-17 Budget contractionary or expansionary?
Because the 2015-16 Budget deficit was $29.8bn, and 2016-17 is forecasted a deficit of $37bn
Hi Magma
Is that information correct? I thought the 2015/16 budget deficit was closer to $37.4 b (http://www.abc.net.au/news/2015-12-15/budget-deficit-increased-as-myefo-released/7029472).
In any case, it is definitely expansionary as long as the budget is in deficit. The government right now is attempting to get us back to a surplus, hence the 'forecasts' that show declining figures over the next 5-6 years. So whilst it may seem like the deficit is declining, you must remember that G>T for a deficit budget and thus they are all expansionary.
Hope this helps!
Post by: birdwing341 on October 31, 2016, 10:46:43 am
Hi Magma
Is that information correct? I thought the 2015/16 budget deficit was closer to $37.4 b (http://www.abc.net.au/news/2015-12-15/budget-deficit-increased-as-myefo-released/7029472).
In any case, it is definitely expansionary as long as the budget is in deficit. The government right now is attempting to get us back to a surplus, hence the 'forecasts' that show declining figures over the next 5-6 years. So whilst it may seem like the deficit is declining, you must remember that G>T for a deficit budget and thus they are all expansionary.
Hope this helps!
Just to add on to what Essej has said. While the outcome of the budget is expansionary, the policies within the budget are actually contractionary (as well as the government's overall aim of fiscal consolidation). I think if you get a question on this, it's good to distinguish between the outcome and the actual content :)
Post by: itsAnuu on October 31, 2016, 12:04:53 pm
Post by: isaacdelatorre on October 31, 2016, 12:10:27 pm
How to do?
Hey there,
To work this out, we firstly need to find the Marginal Propensity to Consume - in this economy, we are assuming that there is no taxation; thus Income = Savings + Consumption
Hence the MPC = change in consumption / change in income
MPC = 4/5
We know that the multiplier (k) = 1/(1-MPC)
therefore k = 5
Since change in income = k x change in AD
A change in income of 1000 = 5 x change in AD
Therefore the change in AD = $200
Sorry, had it wrong before :)
Post by: birdwing341 on October 31, 2016, 12:12:25 pm
Hey there,
To work this out, we firstly need to find the Marginal Propensity to Consume - in this economy, we are assuming that there is no taxation; thus Income = Savings + Consumption
Hence the MPC = change in consumption / change in income
MPC = 4/5
We know that the multiplier (k) = 1/(1-MPC)
therefore k = 5/4
Since change in income = k x change in AD
A change in income of 1000 = 5/4 x change in AD
Therefore the change in AD = $800
I think your multiplier should be 5 (you accidentally calculated 1/MPC) but the method looks good :)
Post by: itsAnuu on October 31, 2016, 12:13:48 pm
Post by: isaacdelatorre on October 31, 2016, 12:14:08 pm
I think your multiplier should be 5 (you accidentally calculated 1/MPC) but the method looks good :)
Wait, your right - ahahha sorry - good pick up :) I'll fix it now
Post by: itsAnuu on October 31, 2016, 12:17:25 pm
Post by: AFix on October 31, 2016, 12:41:49 pm
May haved asked this before, but i cant seem to find the old post but how would i find consumer consumption on a tariff diagram
Do you know the answer? Is it C?
Post by: Deng on October 31, 2016, 12:47:44 pm
Do you know the answer? Is it C?
Sadly i dont have the solutions to the question, i was just going through some questions i saved to do for later
Post by: kevin217 on October 31, 2016, 01:03:11 pm
Do you know the answer? Is it C?That's what I think the answer is as well
Post by: Deng on October 31, 2016, 01:13:29 pm
That's what I think the answer is as well
Do you know the answer? Is it C?
Can one of you please explain how it is C ?
Post by: kevin217 on October 31, 2016, 01:20:25 pm
Can one of you please explain how it is C ?When the price is at $50, the demand is 700 units. Therefore 700 x 50 = 35 000
Post by: kevin217 on October 31, 2016, 02:03:13 pm
Post by: hermansia12 on October 31, 2016, 02:07:55 pm
May haved asked this before, but i cant seem to find the old post but how would i find consumer consumption on a tariff diagram
I believe the answer is C - consumer consumption is generally calculated by demand*price so 50*700
Post by: hermansia12 on October 31, 2016, 02:10:55 pm
When there is a rise in the minimum wage, there will be an increase in the supply of labour. This means that the participation rate has risen right?
Yes-more people will be inclined to work so will enter into the workforce increasing participation rate. However, the unemployment rate will increase as employers are less inclined to demand labour (law of demand).
Post by: isaacdelatorre on October 31, 2016, 02:44:41 pm
High Inflation:
-Distort consumers' decisions to spend or save disposable income -> More likely not to spend therefore lower growth
-Employees seeks higher wages as propensity to spend decreases -> Wage price inflationary spiral (Higher wages tend to stay high -> higher prices and never ending cycle)
-Distribution of income -> Lower income will see their propensity to spend decrease at a more rapid rate than those with higher wages (More affected)
-Unemployment -> Direct link with NAIRU
-Increased price of our exports -> uncompetitive therefore less aggregate demand
-High inflation can cause exchange rates short term appreciation of $AU- speculation that RBA will raise cash rate in contraction of monetary policy leading to increased financial flows
(However in long term, sustained low inflation leads to greater confidence in Aus economy strengthening the dollar in the long term)
Then low inflation impacts are pretty much the opposite that of higher inflation
Hope this helps :) Sorry about staggering your questions I had a lot on my plate in the last 2 hours so I couldn't address all aspects of your question in one go.
Hey there, thank you soo much for answering my questions; don't worry about the staggering, not fussed at all. Altho what exactly are the benefits of inflation - most of those effects were negative,.
Also what are the causes of underemployment especially now since it is increasing???
Thank you :)
Post by: onepunchboy on October 31, 2016, 02:55:03 pm
Does anyone know if for the essay Q for your case study, if they can ask for all 3 components ; economic growth, environmental sustainability and economic development?
Post by: Giraffes are tall on October 31, 2016, 03:21:25 pm
Thanks!
Post by: hermansia12 on October 31, 2016, 03:28:03 pm
Hey there, thank you soo much for answering my questions; don't worry about the staggering, not fussed at all. Altho what exactly are the benefits of inflation - most of those effects were negative,.
Also what are the causes of underemployment especially now since it is increasing???
Thank you :)
Underemployment is those workers who wish to work more hours but are unable to do so. This increase is reflective of the growing casualisation of the workforce as more employers are preferring to hire more part time and casual workers than full time.
Inflation is necessary in the economy as it shows that the economy is growing: inflation needs to be in target band of 2-3% for sustainable growth to occur.
It also prevents deflation which can slow down economic growth as consumers speculate that prices will fall further therefore will spend less.
Overall - inflation needs to be within target band for it to be positive. There aren't too many positives with regards to inflation generally but economic growth will generally Trump any negatives associated
Post by: hermansia12 on October 31, 2016, 03:31:44 pm
Hey guys!
Does anyone know if for the essay Q for your case study, if they can ask for all 3 components ; economic growth, environmental sustainability and economic development?
I have never seen all 3 at once specifically but in any case I would still link them together anyway. Economic development affects the economy's long term growth and the environment -> the environment will impact the ability for the economy to grow ( relationship with its resources impacting productivity) etc.
Post by: hermansia12 on October 31, 2016, 03:41:43 pm
Could someone have a look at HSC Economics 2009 21a and explain how the table works.
Thanks!
The table is pretty straight forward -
It is just the weighting of each good towards inflation in the economy.
e.g food will count 15% towards overall CPI , housing 20% towards overall CPI and Health 5%. Therefore the group that contributed most would be food.
Post by: Bedelle on October 31, 2016, 03:53:05 pm
Post by: hermansia12 on October 31, 2016, 04:03:28 pm
May I ask why the answer to this question (HSC 2011 Paper - Question 17) is $2000? Thank you!
Foreign producers earn at the world price - $10.
When the price increases to $15 due to the tariff, the quantity supplied has increased by 100 and the demand has decreased by 100. This means that there is 100+100=200 units of the good that could've been met at the world price. (but is lost due to the tariff)
This means that the total revenue decreased = 200*10=$2000
Post by: onepunchboy on October 31, 2016, 04:23:12 pm
can anyone explain what happens to the australian dollar when you buy/sell foreign currency?? THANKSSS
Post by: nancy_cc on October 31, 2016, 04:28:56 pm
HEYYY
can anyone explain what happens to the australian dollar when you buy/sell foreign currency?? THANKSSS
Hey, when you sell foreign currency that means you convert the foreign currency into AUD. That means there is a lower supply of AUD in the market which can lead to an appreciation of the AUD. (law of supply and demand) Buying foreign currency is essentially the opposite, when you buy a foreign currency you supply AUD to the FOREX market and hence there is now greater supply and can lead to a depreciation of the AUD.
Post by: hermansia12 on October 31, 2016, 04:42:44 pm
HEYYY
can anyone explain what happens to the australian dollar when you buy/sell foreign currency?? THANKSSS
Think about foreign currency and $AU as goods. If you sell foreign currency you receive $AU in return. This means that there is less $AU floating around but more foreign currency in the economy now. Since there is less supply of $AU in the economy- then it will appreciate the dollar (increasing the price as supply of the dollar is shifted to the left)
Hope this helps :)
Post by: isaacdelatorre on October 31, 2016, 05:16:59 pm
Can someone please explain to me how micro economic reform creates dynamic efficiency?
thank you
Post by: hermansia12 on October 31, 2016, 05:32:52 pm
Hey,
Can someone please explain to me how micro economic reform creates dynamic efficiency?
thank you
Dynamic efficiency is generally the productivity of the firm overtime.
Now in macroeconomic reform we are interested in making our industries more competitive and efficient to develop comparative advantage. Therefore by making our industries more efficient and productive through infrastructure upgrades (technology) and improving processing methods, firms will be more efficient in the long term. (IE dynamic efficiency)
Post by: hermansia12 on October 31, 2016, 05:37:17 pm
Post by: isaacdelatorre on October 31, 2016, 05:43:57 pm
Dynamic efficiency is generally the productivity of the firm overtime.
Now in macroeconomic reform we are interested in making our industries more competitive and efficient to develop comparative advantage. Therefore by making our industries more efficient and productive through infrastructure upgrades (technology) and improving processing methods, firms will be more efficient in the long term. (IE dynamic efficiency)
Wait, I thought dynamic efficiency was the ability of an economy to adjust to changing economic circumstances and changing levels of demand.
Isn't technical efficiency the productivity and efficiency of the firm to maximise it's output with given level of input?
Post by: birdwing341 on October 31, 2016, 05:45:48 pm
Dynamic efficiency is generally the productivity of the firm overtime.
Now in macroeconomic reform we are interested in making our industries more competitive and efficient to develop comparative advantage. Therefore by making our industries more efficient and productive through infrastructure upgrades (technology) and improving processing methods, firms will be more efficient in the long term. (IE dynamic efficiency)
That's kind of different to the way I've learnt it. I thought improvements in technology would be counted under technical efficiency, because they help increase the firm's output for a set amount of inputs.
I thought dynamic efficiency measured the ability of a firm to react to the changing pattern of consumer demand. In order to influence this, microeconomic reform can encourage innovation, which allows firms to develop new goods more quickly. It's all about the time taken, so if firms are able to respond to technological changes by becoming innovative, they'll improve dynamic efficiency.
There's not too much micro can do here (other than maybe for PTEs where they can privatise)...
Post by: hermansia12 on October 31, 2016, 05:52:24 pm
Wait, I thought dynamic efficiency was the ability of an economy to adjust to changing economic circumstances and changing levels of demand.
Isn't technical efficiency the productivity and efficiency of the firm to maximise it's output with given level of input?
Haha I just picked up that my spell check changed micro to macro. In my first post.
Sorry I'm a little rusty on my efficiency definitions because I haven't used it in a while. Go with the one you are taught although I do find it strange that the one online is a little different. http://www.businessdictionary.com/definition/dynamic-efficiency.html
In that case microeconomic policies ensures that the economy will be more efficient in more than one industry. This means that it's not reliant on that one industry so that even if the demand for that specific industry falls (e.g mining). Therefore the economy is less volatile as there will still be other industries to fall back on.
Post by: Giraffes are tall on October 31, 2016, 06:07:53 pm
Sorry hermansia, im still not quite sure how the two columns correlates with each other.
There's a similar type of question in 2010 multiple choice question 7. It'll be great if you could explain it again, if not that's ok!
Thanks
Post by: itsAnuu on October 31, 2016, 06:58:48 pm
Post by: itsAnuu on October 31, 2016, 06:59:55 pm
Hey,
Sorry hermansia, im still not quite sure how the two columns correlates with each other.
There's a similar type of question in 2010 multiple choice question 7. It'll be great if you could explain it again, if not that's ok!
Thanks
Times the expenditure group in percent (i.e. 30 for food would be 0.3) by the change in CPI from the base year. The highest value when you do all corresponds to the highest contributing
Post by: Giraffes are tall on October 31, 2016, 07:32:33 pm
List of graphs we need to know for tmrw please
From the top of my head, there's:
-Short and long run Phillip's Curve
-Lorenz Curve
-J Curve
-PPF curve
-General supply and demand graphs
Hope this helps
Post by: hermansia12 on October 31, 2016, 08:36:03 pm
Hey,
Sorry hermansia, im still not quite sure how the two columns correlates with each other.
There's a similar type of question in 2010 multiple choice question 7. It'll be great if you could explain it again, if not that's ok!
Thanks
I have never seen a question of that type ask you anything more than greatest contributor to CPI. However this is a more in depth analysis into questions of that type:
It can be used to find the weighted average of the prices of the basket of goods used to measure inflation.
Using the 2010 paper's table, the weighted average of prices would be:
(0.3*110)+(0.1*130)+(0.15*125)+(0.2*120)
Then 100*weighted average current/weighted average base year ( usually the previous year) will give the CPI. It will give an indication on the purchasing power of consumers
Post by: hermansia12 on October 31, 2016, 08:41:37 pm
List of graphs we need to know for tmrw please
This question has come up quite a few times.
-shifts in supply and demand (includes exchange rate graphs)
-Gini Coefficient from the Lorenz curve
-tariff, subsidy, quota graphs
-phillips curve (inverse relationship with unemployment and inflation)
This would be the minimum I would say.
Hope this helps :)
Post by: Giraffes are tall on October 31, 2016, 09:10:33 pm
Could i get some pointers on what they might do and the effects it will have?
Thanks
Post by: itsAnuu on October 31, 2016, 09:23:12 pm
"Analyse the federal government's macroeconomic policy mix to address inflation and unemployment in the Australian economy"
Could i get some pointers on what they might do and the effects it will have?
Thanks
WOW. I literally had the 2009 year open and was looking at the exact question, I closed the tab and refreshed this atarnotes page and I see you post the same question. Wow...
Post by: nimasha.w on October 31, 2016, 09:24:49 pm
Post by: MagmaMeerkat on October 31, 2016, 09:30:12 pm
hi why is this A and not C
Hi Nimasha.w
I believe the answer would be A, because when more foreign assets are demanded, domestic companies need to pay for these assets in foreign currency, thus exchanging $A for $foreign, and as a result increasing the supply of $A available in the money market.
Hope that makes sense haha
Post by: hermansia12 on October 31, 2016, 09:31:07 pm
"Analyse the federal government's macroeconomic policy mix to address inflation and unemployment in the Australian economy"
Could i get some pointers on what they might do and the effects it will have?
Thanks
Hi there :)
Here is a potential plan of what you could write about with regards to this essay:
Macroeconomic policies affect the economy as a whole -> Fiscal and Monetary
Inflation needs to be in target band of 2-3% for sustainable economic growth.This can be done through monetary policy (selling and buying of government securities). However, monetary policy has been relatively ineffective in recent years so must turn towards fiscal policy.
Governments use taxation (Leakage) and expenditure (injections). Expansionary stance (more injections than leakages) will increase economic growth which will lead to an increased demand for labour (as aggregate demand increases). This will decrease unemployment as cyclical unemployment decreases. Producers may wish to take advantage of the increased propensity to spend raising prices causing inflation
Retraining programs is a fiscal policy -> helps decrease structural unemployment
Allocating spending in the budget on infrastructure will lead to long term economic growth as productivity increases. Increase job creation -> decrease unemployment
Post by: hermansia12 on October 31, 2016, 09:33:21 pm
WOW. I literally had the 2009 year open and was looking at the exact question, I closed the tab and refreshed this atarnotes page and I see you post the same question. Wow...
Hahaha that is some really scary coincidence! Channelling the Pre- economics exam halloween spookiness ;)
Post by: AFix on October 31, 2016, 09:34:22 pm
"Analyse the federal government's macroeconomic policy mix to address inflation and unemployment in the Australian economy"
Could i get some pointers on what they might do and the effects it will have?
Thanks
Fiscal [Inflation]
- Automatic stabilizers -> counter-cyclical role in reducing aggregate demand when inflationary pressures may be high through increasing tax on higher end of income bracket
Fiscal [Unemployment]
- Government expenditure on employment programs etc - like the new Youth PaTH Plus program
- Gov exp on childcare subsidies to promote more couple households into entering the workforce
Monetary [Inflation]
- Tightening MP will reduce access to cheap funds for consumption/investment by households and businesses -> This will reduce the level of AD in the economy -> reduction in AD will reduce inflationary pressures as demand for goods will increase -> will hold back inflation
Monetary [Unemployment]
- Expansionary MP will increase AD in the economy -> Increase in AD will stimulate increased production -> Will lead to firms demanding more labor in order to produce these goods -> will stimulate employment in the economy
However (can link to inflation), increased spending in the economy may result in firms increasing prices as they think they will get more profits by exploiting this demand -> increase in prices may be accompanied by wage pressures by employees as they find their wages are not rising as fast as prices -> can talk about the whole 'wage-price spiral' concept
TBH This is just random stuff, does anyone actually have a good way to approach this?
Post by: Deng on October 31, 2016, 09:34:42 pm
Post by: birdwing341 on October 31, 2016, 09:40:26 pm
I cannot fathom it :(
Post by: AFix on October 31, 2016, 09:45:33 pm
Question is: Calculate the increase in domestic quantity produced after the subsidy.
I cannot fathom it :(
500 -> 600 so an increase in quantity of 100?
Post by: Giraffes are tall on October 31, 2016, 10:24:14 pm
Thanks
Post by: isaacdelatorre on October 31, 2016, 10:33:48 pm
Effects of inflation on exchange rate?
Thanks
High inflation relative to overseas means that our exports lose international competitiveness which decreases the demand for our exports and hence decreases the demand for the AUD = depreciation. Also, o/s goods and services may be cheaper than our own, increased import spending increases the supply of AUD = depreciation. Converse is true if inflation is lower :)
Post by: Giraffes are tall on October 31, 2016, 10:37:30 pm
RIP
Post by: hermansia12 on October 31, 2016, 10:38:46 pm
Effects of inflation on exchange rate?
Thanks
Speculation- If in high inflation, speculators will predict that the RBA will raise the cash rate in order to slow economic growth and lower inflation. This will lead to an short term appreciation in exchange rate (higher demand of $AU due to increased financial flows into Australia).
If sustain long term low inflation, there will be greater confidence in the economy therefore will lead to an appreciation of the $AU due to increased investment
Post by: hermansia12 on October 31, 2016, 10:42:01 pm
"3. Memorising statistics: Don’t memorise these the night before! These will become your downfall if you do cram. The trick to memorising statistics is reading/watching the news daily (weekly at the very least). When you’re watching the news, use the psychological trick by noting down key points and statistics as interesting. TRENDS ARE MORE IMPORTANT THAN SPECIFIC STATISTICS!!! Your data should always reflect the effects/impacts of policies and economic issues relevant to the question."
RIP
Love how you're reading the tips :) Although worse thing you can do to yourself right now is to drown in negativity. Stay positive! You can do it! :)
Post by: hermansia12 on October 31, 2016, 10:46:45 pm
500 -> 600 so an increase in quantity of 100?
Yep this is exactly what I was thinking. :)
Post by: onepunchboy on November 01, 2016, 01:46:28 pm
Post by: itsAnuu on November 01, 2016, 01:48:22 pm
Hey guys in the exam there was a q asking about the disadvantages of international agreements, i wasnt sure what to write. Can anyone suggest answers? Thanks!!!
Kyoto and Montreal
Post by: Essej on November 01, 2016, 01:49:47 pm
Hey guys in the exam there was a q asking about the disadvantages of international agreements, i wasnt sure what to write. Can anyone suggest answers? Thanks!!!
I assume you mean the one about environmental agreements? Jamon is uploading the exam soon, don't fret :)
I talked about the Kyoto Protocol and the disadvantage of state sovereignty - nations aren't obliged to follow the set targets for reductions in greenhouse emissions.
Hope this helps!
Post by: hermansia12 on November 01, 2016, 01:52:22 pm
Hey guys in the exam there was a q asking about the disadvantages of international agreements, i wasnt sure what to write. Can anyone suggest answers? Thanks!!!
Hey there!
I'll be going over the exam and doing suggested answers as soon as its up but for that question,
International trade agreements can be very exclusive in its nature (favours developed nations more). This means that poorer countries may find it harder to enter into the market and cause a poverty gap spiral where the "richer get richer and the poor get poorer".
It can also cause retaliation effect which can damage the Economy's level of exports and reduce external stability (As the CAD increases in the BOGS)
Post by: isaacdelatorre on November 06, 2016, 03:47:37 pm
doing a case study on malaysia, would it be considered a developing, developed or emerging economy.
Hey Chloe,
You should be aware that there is no set criteria of what constitutes an emerging, developed and developing economy; there are basic indicators that are very subjective, however I do think that it is an emerging economy. Especially since the IMF (most reputable source I could find) classifies it in many of it's publishings as an "emerging market that trades with advanced economies"
Although, Malaysia's GDP growth is not as high as some of the other emerging economies, the rest of the indicators point towards an emerging economy rather than an advanced or developing economy
Hope this helps :)
Post by: Iminschool on January 10, 2017, 03:36:34 pm
'Compare and contrast international and regional business cycles' (3 lines given)
Post by: birdwing341 on January 11, 2017, 10:29:25 pm
Simple question here:
'Compare and contrast international and regional business cycles' (3 lines given)
Yup although compare and contrast seems a little extravagant for 3 lines (lol) - would imagine that being at least a 2-3 marker. Anyway, given it's a one marker, I'd probably answer it in one sentence, something that follows on from below (hopefully a little better worded).
The international business cycle refers to the increase in coordination of and cooperation between economies across the globe, whereas the regional business cycle refers to the integration of local economies within the same geographical area.
Post by: Iminschool on January 11, 2017, 11:44:57 pm
Yup although compare and contrast seems a little extravagant for 3 lines (lol) - would imagine that being at least a 2-3 marker. Anyway, given it's a one marker, I'd probably answer it in one sentence, something that follows on from below (hopefully a little better worded).
The international business cycle refers to the increase in coordination of and cooperation between economies across the globe, whereas the regional business cycle refers to the integration of local economies within the same geographical area.
Thanks for your reply,
FYI this question was from the 'Dotpoint Economics' WorkBook.
I must add though that in your answer i see that there was no comparison made. I am by no means experienced or great at answering questions but in an exam i'm guessing it'd be a 2 marker as you are both comparing and contrasting international and regional business cycles, but what would i know anyways... lol
Post by: birdwing341 on January 13, 2017, 07:46:43 pm
Thanks for your reply,
FYI this question was from the 'Dotpoint Economics' WorkBook.
I must add though that in your answer i see that there was no comparison made. I am by no means experienced or great at answering questions but in an exam i'm guessing it'd be a 2 marker as you are both comparing and contrasting international and regional business cycles, but what would i know anyways... lol
Mm well I personally think it's a stupid question - but tbh I'm not sure what there is to compare. Maybe you could add in a sentence about volumes? And the only similarity here that I can see is the increased integration of economies (arisen from the process of globalisation) which I have kind of mentioned. It's probably not as clear as it should be, and I've already lost much of the specific vocab for each question, but does that kind of make sense?
Also, please don't say you don't know anything - trust me, even though you might feel like you know nothing you'll always be able to provide a new perspective on something (and you've probably got the vocab down more than me anyway). And asking questions is the right thing so keep it up :) I'm sure whoever's on the forum will be down to help out!
Post by: tissue on January 25, 2017, 11:23:20 am
• positive and negative effects
Are the positive and negative effects of inflation talking about high/low inflation? I'm not sure if i make much sense here, I think what I mean is would positive effects of inflation be talking about low inflation while negative effects be talking about high inflation? If someone could provide another perspective(and maybe some points on positive effects of inflation?) that would be great, thank you!
Post by: Spencerr on January 25, 2017, 09:43:18 pm
Simple question here:
'Compare and contrast international and regional business cycles' (3 lines given)
To answer such a question. You'd need to post a similarity and a difference. What Birdwing mentioned "The international business cycle refers to the increase in coordination of and cooperation between economies across the globe, whereas the regional business cycle refers to the integration of local economies within the same geographical area." was a contrast statement highlighting the fact that all nations in the global economy are involved in the IBC whereas only nations within a geographic region are affected by the RBC.
Some similarities between the two include:
- Both involve fluctuations of economic activity (upswing, downswing, recovery etc)
- Both cycles can be strengthened by trade, investment, financial flows etc.
- Both can be weakened by use of different gov. policy, interest rates, structural differences between economies
- Both capture the performance of more than one economy, reflecting the fact that economies are becoming increasingly interdependent amongst each other.
Hi guys, just needed some clarification on a dotpoint in the syllabus about inflation(Topic 3: Economic Issues)
• positive and negative effects
Are the positive and negative effects of inflation talking about high/low inflation? I'm not sure if i make much sense here, I think what I mean is would positive effects of inflation be talking about low inflation while negative effects be talking about high inflation? If someone could provide another perspective(and maybe some points on positive effects of inflation?) that would be great, thank you!
Hey there, you would be able to talk about the positive and negative effects of both high and low inflation. Here are some pointers to guide you:
High inflation
Positives
- Allows assets to increase in value and so will improve the wealth of individuals holding those assets e.g. House prices will increase due to high inflation
- Acts as a cushion for nominal wage decreaes and wage cuts in times of slow economic growth. Real = Nominal - Inflation. Hence if inflation is high, real wages are already decreasing and so the real costs to firms and producers are decreasing. This means that employers don't have to cut the nominal wages of workers which is a really hard thing to do.
- Prevents deflation from happening
Negatives
- Distorts the reallocation of resources from productive assets to speculative assets
- Creates an unstable business environment which deters further investment and also consumption as producers are uncertain about future economic costs and will withhold investment projects until costs are certain.
- Reduces the purchasing power of consumers as their money is worth less resulting in less material consumption and happiness!
- To contain high inflation, the RBA may use contractionary monetary policy which will dampen the overall level of economic activity resulting in higher unemployment levels.
Low inflation
- Swap the positives and negatives of high inflation.
I hope this helps!
Post by: Aaron12038488 on January 25, 2017, 10:06:54 pm
Thanks,
Post by: sophiegmaher on January 27, 2017, 09:44:51 pm
Post by: jamonwindeyer on January 28, 2017, 11:48:44 am
Hey guys! I read the information that was posted in how to get a band 6, and it was mentioned that we should keep up to date with the news at a weekly minimum. Are there any phone/news apps that can be downloaded that give specific regular economic updates and notifications?
Hey Sophie, welcome to the forums!! ;D the ones I know of for iOS (probably on Android too) are Bloomberg (though it's got 1 star reviews at the moment, must have gone bad, lol) and CNBC :) no personal experience, but perhaps give them a go! ;D
Post by: maddier288 on January 28, 2017, 12:17:58 pm
Should we memorise a few for important dot points or?
Post by: Spencerr on January 28, 2017, 04:39:58 pm
Hey guys! I read the information that was posted in how to get a band 6, and it was mentioned that we should keep up to date with the news at a weekly minimum. Are there any phone/news apps that can be downloaded that give specific regular economic updates and notifications?
Hey there, I only used facebook (mostly) to keep updated with the news. You can go on Facebook and LIKE all the major news sites including "bloomberg, wall street journal, financial times, reuters, sydney morning herad, BBC, financial times, Harvard Business Review". Easiest way to have fun whilst keeping updated on contemporary issues!
Post by: chloe9756 on January 30, 2017, 09:48:29 pm
How would you answer this question? More specifically what would your evaluation be, and how would this defer for different organisations such as IMF, World Bank, etc.
Post by: QC on January 30, 2017, 10:32:41 pm
Discuss and evaluate the effectiveness of the WTO in promoting global free trade.The effectiveness of the WTO is contingent on two things, firstly, what their impact and ability is in promoting free trade and secondly how free trade would work had the WTO not existed.
How would you answer this question? More specifically what would your evaluation be, and how would this defer for different organisations such as IMF, World Bank, etc.
On the first thing, talk about the actual uses and roles of the WTO and how it goes about doing these things such as dispute resolution and the implementation of new free trade agreements. However, mention its ineffectiveness in multiple ways as it allows many countries to use "anti dumping" as a loophole for many countries. Also, rich countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries and the maintenance of high protection of agriculture in developed countries while developing ones are pressed to open their markets.
You can then say however, if the GATT and WTO hadn't existed then the consequences would be...
Post by: Spencerr on January 31, 2017, 11:22:33 pm
Discuss and evaluate the effectiveness of the WTO in promoting global free trade.
How would you answer this question? More specifically what would your evaluation be, and how would this defer for different organisations such as IMF, World Bank, etc.
On Top of what aroon mentioned (which is really good theoretical stuff), to really impress your markers, draw upon examples that have happened. The WTO holds negotiation rounds where member countries come together to negotiate the creation of multilateral trade agreements which unlike preferential free trade agreements create trade instead of diverting it. These multilateral agreements are very useful in promoting global free trade. The WTO was effective at negotiating the Uruguay round which brought about one of the largest reforms to multilateral trade since the WTO was founded. (research a bit on Uruguay). more recently, the WTO has declined in significance due to breakdown in negotiations regarding the Doha Round (also known as the development round). This is because advanced economies are refusing to compromise with low income countries and reduce their protectionist barriers on agricultural goods. As such, more countries have resorted to preferential free trade agreements which further divert global trade and complicate the negotiation process of multilateral trade agreements.
Post by: tissue on February 04, 2017, 01:47:19 am
Discuss the effects of economic growth on unemployment and inflation in Australia
For an essay question like this, how would you structure your essay? How many paragraphs does a 'good' economics essay have? Also, regarding the actual question, what actual content would be included in the essay? For example, would I just write about the effects of economic growth on unemployment and inflation or would I go more in-depth and actually say what the effects of unemployment and inflation are?
Thanks in advance!
Post by: QC on February 04, 2017, 11:01:55 am
Hey guys,Did your school do topic 3 first? Or are you just ahead cos I don't think that is in the first two chapters?
Discuss the effects of economic growth on unemployment and inflation in Australia
For an essay question like this, how would you structure your essay? How many paragraphs does a 'good' economics essay have? Also, regarding the actual question, what actual content would be included in the essay? For example, would I just write about the effects of economic growth on unemployment and inflation or would I go more in-depth and actually say what the effects of unemployment and inflation are?
Thanks in advance!
Post by: parthie on February 04, 2017, 03:24:41 pm
Post by: tissue on February 04, 2017, 07:39:18 pm
Did your school do topic 3 first? Or are you just ahead cos I don't think that is in the first two chapters?
yeah our school did topic 3 first, kinda weird ::)
Post by: QC on February 04, 2017, 09:04:50 pm
I had an economics essay and I got the mark back and wasn't too happy with it even tho I did a lot of study and preparation and worked really hard on it. Essays have always been my weak point in economics. I was wondering if anyone had any advice about how to improve my essay writing in economics. Because I am really struggling and considering dropping the subject if I can't improveFrom my experience (I think I'm pretty good at short answers/MC where it is about knowledge but not amazing at essay, got 17/20 in case study) you need to do 3 things: Answer the question, show connection to theory and use relevant statistics and make reference to trends rather than just dropping stats. Also, if worse comes to worst and you only get 2 16s or something in HSC, you can still quite easily get a 90 raw (tends to align ~95 exam) since MC and SA can be prepared for very accurately, if you study hard. Also, if you want to do well make sure you get essays reviewed BEFORE you write them as that can be the difference between a B6 and a B5, there are excellent resources here and I'm sure in your school/even your friends. I'm not going to lie, economics is not going to be one of those subjects that you can just walk in and sit the exam after reading your notes. You have to have elaborate knowledge of many things that are occurring in the world of economics around you. I recommend even making a book of notes and every week or so reading the finance section of a newspaper/watch the news and write notes on what is happening in the world.
Answering the question
This is usually what draws people down in essays in pretty much all subjects, if you want a B6 you HAVE to answer the q. Even if you have a 20/20 essay, if it is focused on the wrong thing, you will lose the criterion for being concise.
e.g Discuss the advantages of free trade and the role of international organisations and free trade agreements in promoting trade in the global economy.
From Isaac's compilation of q. Firstly, you have to look at the verb. Discuss which means provide reasons for and against. So when you plan, first you to have an intro and conclusion then think about what points for and against the adv free trade and the effect of international organisations in PROMOTING TRADE in the global economy will have. E.g Free trade allows goods and services to be bought for a cheaper price as foreign countries can produce goods more cheaply due to comparative adv. Although this is the case, it can also cause dumping which can ruin domestic competition in a nations markets. You must ALSO talk about the effect of free trade agreements (make sure to use examples like the EU, NAFTA and bilaterals like ANZCERTA). Although they provide a lot more trade for nations inside the agreement such as in the EU in which labour and goods and services are moved very freely, it also means that many nations are forced to apply tariffs against nations not in the agreement which are majorly developing nations and LDCs, and therefore lock them out of the global economy and trade. You must also do this for organisations such as WTO, IMF etc. Ie, The WTO has allowed for major increases in international trade growth as they have removed a lot of protectionist policies in the Uruguay round (if possible mention some). However, they have poor enforcement on their standards and have allowed countries to use dumping as an excuse for protectionist policies. Then you must have a conclusion. Make sure you don't ramble on unnecessary stuff and have a structure detailed in the intro i.e pros/cons of free trade then agreements then organisations.
show connection to theory
This is usually required in the criterion "uses appropriate economic terms" or smth. The key here is to take something that has occurred in real life and explain how it works using what you have learnt in the course. e.g use things like graphs of demand and supply, use terms like comparative advantage, CAD, ToT, use equations like C+I+G=Y etc. The example above is relatively easy here as free trade can easily be related to effects on economic growth etc.
use relevant statistics and make reference to trends rather than just dropping stats
Statistics are like the quotes of economics. If you don't have evidence then what does it matter what you say. Like quotes in economics, you can't just drop the quote and move on. You must do two things: reference a trend and explain the impact of the statistic. Firstly, quotes are no good on its own. What is the point in saying Australia's GDP is $1.34 trillion in 2015. Saying this has literally no meaning at all. Is this high or low? What is it compared to the rest of the world? In order to use the stat it could be better to compare it to 1980 then 2000. In 1980 it was close to $200 b and it 2000 it was close to $400 b. Although this doesn't take into account economic occurrences such as the GFC, it plants a much better way of explaining what is happening. To add to this, you can't just say a quote like "Australia's GDP was $1.34 t in 2015 compared to 200b in 1980". Instead, you have to talk about the effects of this and why this happened. You could relate it to increased globalisation and the removal of protectionist policies or changes in exports from Japan to the industrious and higher population China who have purchased "UGE" quantities of our exports. You should also reference the impact of increased GDP, are the people benefitting, is the government using wealth efficiently to improve economic development?
Hope this helps you improve, one mark isn't going to end you especially if you take it the right way and endeavour to improve :)
Post by: parthie on February 05, 2017, 06:41:48 pm
From my experience (I think I'm pretty good at short answers/MC where it is about knowledge but not amazing at essay, got 17/20 in case study) you need to do 3 things: Answer the question, show connection to theory and use relevant statistics and make reference to trends rather than just dropping stats. Also, if worse comes to worst and you only get 2 16s or something in HSC, you can still quite easily get a 90 raw (tends to align ~95 exam) since MC and SA can be prepared for very accurately, if you study hard. Also, if you want to do well make sure you get essays reviewed BEFORE you write them as that can be the difference between a B6 and a B5, there are excellent resources here and I'm sure in your school/even your friends. I'm not going to lie, economics is not going to be one of those subjects that you can just walk in and sit the exam after reading your notes. You have to have elaborate knowledge of many things that are occurring in the world of economics around you. I recommend even making a book of notes and every week or so reading the finance section of a newspaper/watch the news and write notes on what is happening in the world.
Answering the question
This is usually what draws people down in essays in pretty much all subjects, if you want a B6 you HAVE to answer the q. Even if you have a 20/20 essay, if it is focused on the wrong thing, you will lose the criterion for being concise.
e.g Discuss the advantages of free trade and the role of international organisations and free trade agreements in promoting trade in the global economy.
From Isaac's compilation of q. Firstly, you have to look at the verb. Discuss which means provide reasons for and against. So when you plan, first you to have an intro and conclusion then think about what points for and against the adv free trade and the effect of international organisations in PROMOTING TRADE in the global economy will have. E.g Free trade allows goods and services to be bought for a cheaper price as foreign countries can produce goods more cheaply due to comparative adv. Although this is the case, it can also cause dumping which can ruin domestic competition in a nations markets. You must ALSO talk about the effect of free trade agreements (make sure to use examples like the EU, NAFTA and bilaterals like ANZCERTA). Although they provide a lot more trade for nations inside the agreement such as in the EU in which labour and goods and services are moved very freely, it also means that many nations are forced to apply tariffs against nations not in the agreement which are majorly developing nations and LDCs, and therefore lock them out of the global economy and trade. You must also do this for organisations such as WTO, IMF etc. Ie, The WTO has allowed for major increases in international trade growth as they have removed a lot of protectionist policies in the Uruguay round (if possible mention some). However, they have poor enforcement on their standards and have allowed countries to use dumping as an excuse for protectionist policies. Then you must have a conclusion. Make sure you don't ramble on unnecessary stuff and have a structure detailed in the intro i.e pros/cons of free trade then agreements then organisations.
show connection to theory
This is usually required in the criterion "uses appropriate economic terms" or smth. The key here is to take something that has occurred in real life and explain how it works using what you have learnt in the course. e.g use things like graphs of demand and supply, use terms like comparative advantage, CAD, ToT, use equations like C+I+G=Y etc. The example above is relatively easy here as free trade can easily be related to effects on economic growth etc.
use relevant statistics and make reference to trends rather than just dropping stats
Statistics are like the quotes of economics. If you don't have evidence then what does it matter what you say. Like quotes in economics, you can't just drop the quote and move on. You must do two things: reference a trend and explain the impact of the statistic. Firstly, quotes are no good on its own. What is the point in saying Australia's GDP is $1.34 trillion in 2015. Saying this has literally no meaning at all. Is this high or low? What is it compared to the rest of the world? In order to use the stat it could be better to compare it to 1980 then 2000. In 1980 it was close to $200 b and it 2000 it was close to $400 b. Although this doesn't take into account economic occurrences such as the GFC, it plants a much better way of explaining what is happening. To add to this, you can't just say a quote like "Australia's GDP was $1.34 t in 2015 compared to 200b in 1980". Instead, you have to talk about the effects of this and why this happened. You could relate it to increased globalisation and the removal of protectionist policies or changes in exports from Japan to the industrious and higher population China who have purchased "UGE" quantities of our exports. You should also reference the impact of increased GDP, are the people benefitting, is the government using wealth efficiently to improve economic development?
Hope this helps you improve, one mark isn't going to end you especially if you take it the right way and endeavour to improve :)
Thankyou so much!! This really helped!!
Post by: Iminschool on February 08, 2017, 07:55:02 pm
From what i understand, debt refers to the borrowing or lending of funds and equity involves ownership. Is it possible for anyone to expand on my current understanding?
Thanks
Post by: RuiAce on February 08, 2017, 08:18:14 pm
2 marker here: 'Distinguish between the financial flows of debt and equity'This would be easy for me to answer from my knowledge from accounting but I doubt that's what you'd want, so I asked a friend to see if there was anything worth mentioning. (Given that I did not do economics in the HSC myself.)
From what i understand, debt refers to the borrowing or lending of funds and equity involves ownership. Is it possible for anyone to expand on my current understanding?
Thanks
You could contrast that:
Debt is subject to interest - when your financing is from a third party they'd want their funds back, so the longer you have the money on hand the more you have to pay in return
Gain/Loss in equity is only realised at the point of a transaction; you don't have it until the sale occurs.
Although, he didn't recall equity getting mentioned in HSC economics. For the sake of curiosity, mind pointing out which topic this is under?
Note: I'm well aware that I've probably only provided little information. Would much prefer a current/past HSC economics student to provide further insight.
Post by: jamonwindeyer on February 08, 2017, 09:24:17 pm
Not sure if HSC cover the AS/AD model (although I assume it does) but I have a few questions about long-run and short-run changes in equilibrium at the full employment level (first year university subject)
...
Any help would be fantastic!
Hey Aqualim! I didn't do HSC Economics, but I did do first year Economics - Your question looks similar to stuff I've done but not quite the same, and I've never heard of that model. Perhaps you could elaborate on its purpose/what it consists of? I (or HSC Economics students) might have learned it under a different name, fingers crossed ;D
Post by: Iminschool on February 08, 2017, 10:01:30 pm
This would be easy for me to answer from my knowledge from accounting but I doubt that's what you'd want, so I asked a friend to see if there was anything worth mentioning. (Given that I did not do economics in the HSC myself.)
You could contrast that:
Debt is subject to interest - when your financing is from a third party they'd want their funds back, so the longer you have the money on hand the more you have to pay in return
Gain/Loss in equity is only realised at the point of a transaction; you don't have it until the sale occurs.
Although, he didn't recall equity getting mentioned in HSC economics. For the sake of curiosity, mind pointing out which topic this is under?
Note: I'm well aware that I've probably only provided little information. Would much prefer a current/past HSC economics student to provide further insight.
Module 2 (Australia's place in the global economy) - Balance of Payments
Great contrast btw, appreciated :)
Post by: jamonwindeyer on February 08, 2017, 10:07:21 pm
AD/AS Model is just changes in aggregate demand and aggregate supply. Basically I'm asking about the effects of the events I listed above on either the Keynesian aggregate demand equation, AD=C+I+G+(X-M), where C=Consumption Spending, I=Investment Spending, G=Government Spending, (X-M)=net exports, where X=exports and M=imports and the Aggregate supply equation i.e. changes in nominal wages (cost of production) + import prices (cost of raw materials) and productivity (investment in new technology).
I just had a quick look at the HSC Economics Stage 6 syllabus and it says this sort of stuff is covered under the "Economic Issues in the Australian Economy' aspect of the course. However I'm not quite sure if you covered it in terms of changes in the curve of a graph with regard to short-run and long-run perspectives.
Whilst I'm here, I have another two questions which hopefully someone can help with;
1) Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to lower tax rates for the goods that have very high price elasticities of demand (exceeding one).
2) Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to raise tax rates for the goods that have very low price elasticities of demand (less than one).
Thank you :)
Hmm, all sounds beyond what I learned in my course, and without knowing for sure I'd say it could be for HSC Economics too. HSC courses tend to be a bit 'wishy washy' in terms of how they approach the content - They don't analyse consequences in depth, but instead offer a more general qualitative approach :P
Hopefully I'm wrong and someone who did HSC Economics can help you - Although I'm clicking with bits of what you're saying it sounds a bit beyond me, sorry! :(
Post by: RuiAce on February 08, 2017, 10:19:37 pm
AD/AS Model is just changes in aggregate demand and aggregate supply. Basically I'm asking about the effects of the events I listed above on either the Keynesian aggregate demand equation, AD=C+I+G+(X-M), where C=Consumption Spending, I=Investment Spending, G=Government Spending, (X-M)=net exports, where X=exports and M=imports and the Aggregate supply equation i.e. changes in nominal wages (cost of production) + import prices (cost of raw materials) and productivity (investment in new technology).Briefly brushing up on my basics
I just had a quick look at the HSC Economics Stage 6 syllabus and it says this sort of stuff is covered under the "Economic Issues in the Australian Economy' aspect of the course. However I'm not quite sure if you covered it in terms of changes in the curve of a graph with regard to short-run and long-run perspectives.
Whilst I'm here, I have another two questions which hopefully someone can help with;
1) Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to lower tax rates for the goods that have very high price elasticities of demand (exceeding one).
2) Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to raise tax rates for the goods that have very low price elasticities of demand (less than one).
Thank you :)
Quote
Price elasticity of demand is a measure of responsiveness of the market's demand to a change in price. It is defined as "the percentage change in quantity demanded resulting from a very small percentage change in price". (Dobrescu, 2015) The formula isNow what's the deal with a tax?
Where P = Price of goods at a specific point, and Q = Quantity demanded at that point.
(This implies that depending on where you are on the curve, in general the elasticity changes.)
By consequence if the price were increased whilst the demand was inelastic (not so responsive), the revenue for the producer would be increased. If the price were increased for an elastic demand (quite responsive), the revenue would be decreased.
In this GeoGebra simulation, the supply curve is the fixed line y=x. The demand curve has a fixed y-intercept, however the gradient is variable (slider). The tax imposed is just $3, and the supply curve with the tax is shown.
By playing around with the slider, it is clear that elasticity causes the TAX revenue to decrease.
A tax forces the price to increase. The market is not Pareto efficient, and a deadweight loss is imposed. But of course, the increase in tax isn't appealing to the producer for this reason - instead, it is appealing to the government. The government is the one generating tax revenue out of it (to which the area of the rectangle reflects the tax revenue. This is because tax revenue = tax ($3) * quantity produced.)
The intuitive explanation is, perhaps, the fact that what would happen to the producer, is simply happening to the government now. The government chooses to target the market with least responsiveness. Once the market is considered elastic, the tax will cause consumers to buy so much less that the negative impact on the quantity demanded outweighs the positive impact on the price for the government.
If the market is inelastic, whilst it will inevitably be affected, the quantity demanded is not affected as significantly. Hence, the government will be able to exploit as much of this as possible.
(I did my best trying to explain bits and pieces. It might not puzzle up, but I hope you can take something out of it.)
Post by: CiaraO on February 13, 2017, 07:58:23 am
Post by: isaacdelatorre on February 13, 2017, 08:16:39 am
Can somebody please explain the balance of payments? Thank you x
Hey CiaraO,
The Balance of Payments is a record of the financial transactions between Australia and the rest of the word over a given period.
It basically shows money that flows out of Australia i.e. debits (through purchase of imports, non reversible transactions such as sending dividend profits to overseas shareholders, loans taken out by people overseas) as well as money that flows in to Australia i.e. credits (o/s buying our exports, Australian's receiving loans from overseas banks etc.)
That is the general gist of the balance of payments, feel free to ask any further questions. I know this topic gets quite tricky and confusing, so we are all happy to help :)
Post by: CiaraO on February 13, 2017, 09:58:16 am
Hey CiaraO,
The Balance of Payments is a record of the financial transactions between Australia and the rest of the word over a given period.
It basically shows money that flows out of Australia i.e. debits (through purchase of imports, non reversible transactions such as sending dividend profits to overseas shareholders, loans taken out by people overseas) as well as money that flows in to Australia i.e. credits (o/s buying our exports, Australian's receiving loans from overseas banks etc.)
That is the general gist of the balance of payments, feel free to ask any further questions. I know this topic gets quite tricky and confusing, so we are all happy to help :)
Thank you :) I'm a bit confused as to the differences between the current account, capital and financial account, primary income and secondary income. I'm not sure how to categorise different credits and debits - how do you identify what goes into which account? Thanks for your help x
Post by: tissue on February 13, 2017, 10:46:26 pm
can anyone please help outline what i should be aiming to write for this essay question, i have no idea where to even start
Post by: kneehaha on February 15, 2017, 09:26:19 pm
Could i please have some tips for an economics exam? HY are just around the corner
Post by: Luke799 on February 15, 2017, 09:37:28 pm
Explain the causes of recent trends in the distribution of income and wealth in Australia
can anyone please help outline what i should be aiming to write for this essay question, i have no idea where to even start
Well first I would identify some trends. One being an increase in household income. Then you explain why. Some reasons are: Increased growth in labour force earnings, arising from employment growth, more hours worked (by part-time workers) and increased hourly wages.
Post by: kiwiberry on February 22, 2017, 09:21:12 pm
I would appreciate a few pointers on what I could write about for this essay, I'm very lost atm :(
Post by: strawberriesarekewl on February 23, 2017, 10:10:02 pm
On this list here: https://atarnotes.com/forum/index.php?topic=166305.msg934197#new which essay questions require you to know your stats and which dont?
Post by: iStudent on February 23, 2017, 10:24:37 pm
Examine the effects of changes in trade and financial flows on Australia’s economic performance
I would appreciate a few pointers on what I could write about for this essay, I'm very lost atm :(
A good idea is to look at the syllabus and find the relevant dot point the essay is trying to refer to.
In this case, it is under "trends in Value, composition and direction of Australia’s trade and financial flows
- trends in Australia’s trade pattern
- trends in financial flows – debt and equity"
There should be information on it if you check out the textbooks :)
Then you need to link it to "Australia's economic performance", which broadly speaking includes Australia's trades (exports/imports), financial flows, exchange rate, eco growth, unemployment, inflation rate, external stability and *maybe* distribution of income and wealth/environment.
This is a curveball essay - that part of the syllabus is rarely tested and probably won't be asked again but hopefully that gives an idea of what to write :)
Also, make sure you explain clearly the causative effects since this question asks you to "examine".
e.g.
floating of exchange rate in 1970s -> opened Australia's financial markets by shifting finance easier. Allowed FDI to double by 1980s. Then talk about how increased investment led to:
- increased eco growth (AD = C + G + I + X - M)
- increased employment
- inflation
- comment on borrowing/overseas loans
- explain how it changed exchange rates
etc
You should also focus on BOTH trade and financial flows so try to balance it out.
Oh just to sum it up - in case you're still struggling, the relevant information includes (but not limited to)
- directions of trade (UK -> Japan -> ASEAN etc)
- composition of trade (export less agriculture more minerals; in the future more services). Could comment on changing employment (e.g. less farmers, more people in the mining industry). I think Dutch Disease could be relevant (read more of it from Dixon's textbook)
- technology changes, floating of exchange rates, dereg of financial markets, increase in TNCs, globalisation - these all increased financial flows
Post by: iStudent on February 23, 2017, 10:27:26 pm
Hey guys
On this list here: https://atarnotes.com/forum/index.php?topic=166305.msg934197#new which essay questions require you to know your stats and which dont?
You need to know stats for all of them. However, some stats are more relevant to some questions than the others.
Stats are like the backbone of your argument - without stats, you can't really backup what you are saying.
Post by: kiwiberry on February 23, 2017, 10:29:05 pm
A good idea is to look at the syllabus and find the relevant dot point the essay is trying to refer to.
In this case, it is under "trends in Value, composition and direction of Australia’s trade and financial flows
- trends in Australia’s trade pattern
- trends in financial flows – debt and equity"
There should be information on it if you check out the textbooks :)
Then you need to link it to "Australia's economic performance", which broadly speaking includes Australia's trades (exports/imports), financial flows, exchange rate, eco growth, unemployment, inflation rate, external stability and *maybe* distribution of income and wealth/environment.
This is a curveball essay - that part of the syllabus is rarely tested and probably won't be asked again but hopefully that gives an idea of what to write :)
Also, make sure you explain clearly the causative effects since this question asks you to "examine".
e.g.
floating of exchange rate in 1970s -> opened Australia's financial markets by shifting finance easier. Allowed FDI to double by 1980s. Then talk about how increased investment led to:
- increased eco growth (AD = C + G + I + X - M)
- increased employment
- inflation
- comment on borrowing/overseas loans
- explain how it changed exchange rates
etc
You should also focus on BOTH trade and financial flows so try to balance it out.
Oh just to sum it up - in case you're still struggling, the relevant information includes (but not limited to)
- directions of trade (UK -> Japan -> ASEAN etc)
- composition of trade (export less agriculture more minerals; in the future more services). Could comment on changing employment (e.g. less farmers, more people in the mining industry). I think Dutch Disease could be relevant (read more of it from Dixon's textbook)
- technology changes, floating of exchange rates, dereg of financial markets, increase in TNCs, globalisation - these all increased financial flows
You're amazing, thank you so much!! :)
Post by: dradford on March 04, 2017, 06:27:05 pm
Post by: isaacdelatorre on March 09, 2017, 10:40:41 pm
Hey, was wondering if someone could explain monetary policy (as simply as can be said), ever since preliminary I've been totally confused with this ???
Hey Dradford,
So for the stage of where you are at, monetary policy is just a macroeconomic policy by which the RBA changes the cash rate (the rate that the RBA lends to banks) which is passed onto consumers and businesses in order to increase or decrease consumption/investment.
I.e. if the RBA increases the cash rate, banks will increase their interest rates to customers (because they have to pay more to borrow from the RBA so they don't want to lose any money), if interest rates are higher, people are less likely to take out loans to buy new things, i.e. consumption falls. Likewise, businesses are less likely to take out loans to invest into research and development or expansion, i.e. investment falls --> thus Aggregate demand will fall and economic growth decreases. The process is the same for decreasing the cash rate.
That's a basic explanation of how monetary policy works - in topic 4 you will learn how the RBA changes the cash rate, but the principle still stands. Let me know if you need further explanation!
Good luck :)
Post by: chloe9756 on March 10, 2017, 02:49:53 pm
Post by: sophiegmaher on March 12, 2017, 12:37:52 pm
Post by: chloe9756 on March 14, 2017, 01:00:06 am
Post by: sjzorilla7 on March 16, 2017, 12:33:33 pm
Thanks in advance. :D
Post by: 12070 on March 16, 2017, 05:04:00 pm
Post by: Iminschool on March 16, 2017, 06:21:55 pm
Post by: tissue on March 19, 2017, 11:25:42 am
Post by: jamonwindeyer on March 19, 2017, 12:25:48 pm
Is making notes suggested or is understanding the textbook enough in studying for an exam?
Didn't do Economics, but I'd imagine understanding the textbook is enough! Notes are basically just a way of synthesising information into something easier to digest!
You could even just download some of the stuff in our free notes section and use that? I can't remember if there is much for Eco but it could be of help?
Post by: yvette.rosa on March 19, 2017, 09:42:49 pm
Tips on extended responses, particularly in regards to structure?
Just some things that helped for me:
Before writing an extended response, take note of what verb is being used in the question. You can not write an effective response without addressing the verb - and this is true for all subjects. I also find that making a plan about how you're going to structure your essay helps a lot in making a cohesive and logical response which is of upmost importance in economics.
What I like to do with the question is make the key terms that I need to address in red, so it's clear to me what the question is asking me to write about. Also while i'm writing the essay I make sure the key terms are red too just so I know that i'm answering the question.
In your introduction, ensure that you answer the question by having a thesis. Also introduce to the reader what your main points are that you're going to be talking about in your body.
Sometimes, depending on the question, you might have a second "introduction" paragraph. This is where you can define key terms.
In your body paragraphs, just follow the general TEEL structure and that whenever you have economic terms relating to the question make sure you define it after stating it.
Post by: asd987 on March 20, 2017, 07:09:58 pm
the answer is B btw.
Post by: kiwiberry on March 20, 2017, 07:20:00 pm
Hi, how would I calculate this:
the answer is B btw.
The balance on current account = 500 - 540 - 70 -115 + 85 = -140 (net income is the old name for net primary income and net current transfers is the old name for net secondary income)
Because current account + capital/financial account = 0, there must be a surplus of $140 billion on the capital and financial account, so B is the answer :)
Post by: isaacdelatorre on March 20, 2017, 10:20:53 pm
Really sorry that i've been so inactive recently, started uni - trying to figure out wtf I'm doing as well as just coming back from camp where there was 0 reception.
Hey, so in doing research for recent trends of balance of payments, the current account deficit has been at its lowest ($-3.9bn) since 2001. How does this work in conjunction with the recent fallings of commodity prices? Don't they contradict each other? I want to use recent stats in my long responses, but I can't seem to make this fit.
Hey Chloe,
I asked this same question last year and was super ocnfused about it - but the way to sort of get around this is to realise tha tmany things are happening in the world at each point in time. It isn't as simple as 'x' leads to 'y' and this leads to 'z' because m happens. It's more like 'z' happens because 'x' and 'y' are both occurring but 'f' is also affecting it contradictorily.
This is the answer an amazing economics student gave me last year when I asked him - sorry for the weird formatting but it was over facebook.
"Lower terms of trade at 81 means that we are receiving lower prices for exports than imports. Hence export revenue has declined despite the fact that our depreciating aud has bolstered the ic of our tradeable sector.
More importantly the bogs reflects how we no longer produce consumer goods due to the hollowing out of our manufacturing sector as we can not compete with the low cost producers in the industrialist ng economies of China
Further we are heavily reliant on importing capital equipment e.g. from america
This is why our bogs has dipped into a deficit
Why is it higher than the npi
Well global ir are low due to slow global economic growth with many of the advanced economies having 0 or 1 percent economic growth
E.g. America cash rate us only 0.5 percent
Interest payments on our foreign debt is thus much lower. Interest payments make up the bulk of our npi
Hence it's been lower"
Hope this helps you :)
What are the effects of a depreciation/appreciation on the Australian government?
Hmm, that's a tough one because there is no explicit effect on the Australian government. But off the top of my head, the Australian government is definitely affected in the way that they would have to use macro and micro economic policies in order to curb the effects of exchange rate fluctuations on the rest of the economy. E.g. an appreciation of the AUD would make exports less internationally competitive, the gov could (aside from affecting the exchange rate themselves) incentivise export programs such as Austrade as well as offering grants to specific industries or businesses in order to foster innovation which could increase productivity/efficiency and cause a decrease in the cost of production which can make exports more internationally competitive. Other examples do exist and maybe you could have a think about how the government could use policies to curb the effects of exchange rate fluctuations on other parts of the economy; or in response to other effects of fluctuations.
Hi, so I have to write an essay on protection's effect on economic development and growth, but I'm not sure what the most effective way to structure it would be. I was thinking of structuring based on methods of protection and discussing its effects, but I'm a bit skeptical. Anybody know what the most effective structure would be?
Thanks in advance. :D
Hey sjzorilla7,
well i definitely can't say there is a right or wrong way to structure it because in reality there is a billion ways you could structure it.
what are your current ideas for the effects of protection on economic growth and development. Are you talking about just Australia, or different countries, or the global economy? Structuring it by type of protection is definitely one way you could do it as it lends itself easily to examples - e.g. this specific tariff caused a decrease in exports and thus a decrease in AD and then decrease in GDP thus decrease in economic growth
Hope this helps :)
I have been given four possible essay questions for the upcoming mid-course (Two of which, the teacher selects for the actual exam). How would you suggest remembering all four?
Hey there,
I would never go into an exam with prepared essays - however instead i would go into the exam with plans and statistics/trends that could lend themselves to each question and topic. Since you have 4 possible questions, you could definitely plan out each structure with each example and statistic/trend you would use for each. and then I would rewrite each plan a few times so you knew exactly what you would say for each. When you go into the exam and see the question, you have a really good indication of the direction you're going without knowing it word for word (i highly recommend against this for economics). If you can't really remember statistics very well.. What i did was I drew a business cycle diagram since 1990 and for each section, 1990, pre gfc, gfc, post gfc, current - i would have the stat for each topic in a different colour and drew this diagram out 7 times before the hsc (the day before because i procrastinated) - that's how i would go about remembering the points of your essay
hope this helps :)
How exactly do you calculate this?
Hey there,
so this is how i'm assuming there are doing it
GDP = Consumption + Investment + Government + Exports - Imports
600 = 420 + 60 + 90 + X - 10
50 = X
Since exports equals 40 and imports equals 10 - the balance on goods and services equals 30 which would result in a $30 surplus.
Is making notes suggested or is understanding the textbook enough in studying for an exam?
Hey there,
I am of the opinion that there is no one correct way to study. You have to find the way that suits you the best. For some that involves making notes, using flash cards, highlighters, memorising, past papers, saying things aloud there are a million and one ways to study. So if you think notes is good for you then go with that - however if you think that you are fully comfortable just reading the textbook and being able to recite the concepts/ideas/cause and effect then by all means go for that. If you are totally lost, then the best way is to read the textbook, highlight the main points and then summarise them into your own notes --> advocate this definitely.
Hope this helps :)
Post by: chloe9756 on March 21, 2017, 11:43:03 pm
Post by: K9810 on March 23, 2017, 08:00:51 pm
Was just wandering, is there a diagram for a revaluation of the $A?
Post by: caitlinjovanovska on March 24, 2017, 12:28:14 pm
Thanks!
Post by: K9810 on March 25, 2017, 10:37:57 am
What is the difference between the net secondary income in the current account and the capital transfers in the capital account?
Post by: soha.rizvi1 on March 25, 2017, 06:14:00 pm
Just had a question ? what factors determine the appreciation and depreciation of the exchange rate?
thanks
Post by: Vinnnnnnyyyyyy on March 26, 2017, 01:46:02 pm
How exactly do you calculate this?
Is the answer B? I would assume since it's asking for the current account balance you would just need to find the difference between exports and imports since goods and services go under the CA. So just by doing simple maths, the X would be $40. Since imports are negatives: 40 - 10 = $30 surplus.
Post by: ciaradoyle00 on March 27, 2017, 05:38:44 pm
Help with this would be great..
Explain the impact of higher interest rates on the Aus economy.
I've already got
- increased foreign investment in Aus
- decreased import expenditure as people's loans become more expensive
- more domestic saving
- appreciation of the $AU
Anything else to add?
Post by: carolinewang206 on March 28, 2017, 04:31:38 pm
Hey!!
Help with this would be great..
Explain the impact of higher interest rates on the Aus economy.
I've already got
- increased foreign investment in Aus
- decreased import expenditure as people's loans become more expensive
- more domestic saving
- appreciation of the $AU
Anything else to add?
If that is the question I'd assume it means an increase in GLOBAL interest rates in general and not just those of the australian economy unless it specifies an increase in australian interest rates.
If its referring to global interest rates-
- Higher interest rates will lead to an increase of the debt-servicing ratio hence increasing what needs to be payed back on australian loans worsening the NPY account and the CAD
- Increased interest rates will lead to higher savings, hence increasing leakages from the economy and causing a contraction in the economy
- Increased interest rates increases the repayments on individual loans, hence increasing loan repayments and decreasing disposable income, leading to less consumption and decreasing AD
-Increased interest rates overseas relative to AUS would lead australian consumers to place their savings in overseas accounts--> increases supply of funds --> depreciation of AUD
if referring to Australian-
- make sure you specify that its investment in australian banks, --> link to how this increases savings in the economy, allows more potential for investment by filling savings & investment gap- hence less borrowing, less debt repayments and improvement of NPY deficit and CAD
- increased savings from overseas- increased demand of AUD, appreciation
- increased savings, hence increased MPS, lower MPC, decreases AD and causes a contraction
- increased loan repayments, less disposable income, less consumption, again decreasing AD and causing a contraction in the economy
hope this helps! xx
Post by: Vinnnnnnyyyyyy on April 01, 2017, 08:58:27 pm
Can anyone explain to me what service costs are and why, when there is a high level of KAFA surpluses, the CAD will widen because of these service costs?
Post by: emmacmeyer on April 01, 2017, 09:51:54 pm
Post by: mylinh-nguyen on April 02, 2017, 04:19:41 pm
Post by: Mathew587 on April 03, 2017, 09:03:04 pm
Hi!
Can anyone explain to me what service costs are and why, when there is a high level of KAFA surpluses, the CAD will widen because of these service costs?
Hey mate,
Service costs or servicing costs as they are better known is simply any cost incurred from the debits section on the NPY. It refers to any interest and costs incurred from foreign investment and loans.
I hope you remember that CAFA= -CA. This is because the CAFA account shows all "inflows" per say into the economy including FDI, direct and portfolio investment etc. And quite obviously, no ones gonna lend to us or invest in us without us paying them back the principal and interest.
This is recorded as debits in the NPY, which I also hope you know is the largest contributing part to the CAD.
Therefore that larger the CAFA, the larger the inflows, the larger the outflows due to servicing costs meaning the CAD will WORSEN.
i.e. ^ CAFA = -CAD v
Hope you got that. :)
Post by: Mathew587 on April 03, 2017, 09:08:33 pm
Hi,
What is the difference between the net secondary income in the current account and the capital transfers in the capital account?
Use logic and reasoning cos everything in economics is connected.
Post by: isaacdelatorre on May 03, 2017, 09:30:10 pm
How does expectations of increases in US interest rates affect Australian exchange rates and balance of payments?
Hey Chloe,
Sorry for the late reply but if you or anyone is still interested; if people in Australia expect that US interest rates will increase, relative to domestic interest rates, then Australians will be more likely to put their savings into US banks in order to gain a higher return on investment (higher interest than if they put savings into domestic banks). In the short term, this will increase the supply of Australian dollars in the fx market as people convert AUD into USD; thus causing a depreciation of the exchange rate. In the long term, US banks pay interest and principal back to Australians who will convert USD into AUD and thus cause an increase in demand and an appreciation.
For Americans, they are less likely to take out loans from their banks and instead may take out loans from Australian banks because the interest rate is relatively less than their own. To do this, they will take out the loan and convert AUD to USD for them to use, thus increasing the supply of AUD and causing a depreciation. Conversely, when the loan is paid back with interest, Americans will have to convert USD into AUD. In doing so, will increase the demand for AUD and cause an appreciation.
These transactions will inevitably affect the balance of payments because the two accounts balance to form equilibrium in a floating exchange rate situation. (money flowing into Australia + money flowing out). Depending on what the the transaction was, it will affect different accounts (loans taken out of australian banks by americans will decrease the capital and financial account - specifically portfolio investment in the financial account. In the future when it is repaid, servicing costs of interest will be paid on the current account.)
Hope this helps :)
Hi,
Was just wandering, is there a diagram for a revaluation of the $A?
Hey there,
I'm not too sure what you mean by "revaluation" if you could elaborate a bit more, that would help me give a better answer.
But my understanding of your question is that instead of having a floating exchange rate the government would interfere in the fx market and would evaluate the AUD value itself, in which case it would manipulate the demand for/supply of the AUD by buying and selling foreign currency. The graph for this is the same as an appreciation - it can be used to demonstrate multiple valuations of the AUD by ensuring that each curve is labelled correctly.
Hope this helps, let me know what you meant by revaluation though please ;)
Does anyone know an easier-ish way to remember whether factors cause the AUD to appreciate/depreciate?
Thanks!
Hey Caitlin,
So firstly I would understand what causes an appreciation (increase in demand for AUD and a decrease in supply) as well as a depreciation (decrease in demand and increase in supply). Then it's not so much as memorising, but understanding, so ask yourself - what would cause an increase in demanda for the AUD, which translates to "why would overseas people swap their currency for AUD?" the first thing that comes to my head is they want our goods and services - then I think why would they want ours? maybe it's because we are internationally competitive in that market, maybe world growth is outstripping domestic growth making our imports cheaper?" this train of thought for a few other reasons is what solidifies the theory in my head, it might work for you, if not - I would try to make a list of reasons that is succinct and easy to memorise that prompts thought on the reasons why.
Hope this helps, please let me know if you need more clarification :)
Hi,
What is the difference between the net secondary income in the current account and the capital transfers in the capital account?
Hey there, sorry for the incredibly long wait for an answer!!
In the balance of payments, it's split into 2 sides, the current account which records all the non-reversible transactions (won't need to be paid back) and the capital and financial account recording reversible transactions. The net secondary income account is in the current account and records "net current transfers" i.e. non-market transactions. This essentially means things like unconditional aid and pensions --> things that arent a result of a previous exchange or transaction. Whereas the capital account in the capital and financial account records "capital transfers." this can be understood in a few ways; firstly capital as in funds to contribute to a project/business --> in this way it means conditional/tied aid grants. The other definition is that of non-produced, non-financial assets; including copyrights, trademarks, franchises (basically intellectual property rights.)
Hope this helps :)
HI,
Just had a question ? what factors determine the appreciation and depreciation of the exchange rate?
thanks
Hi Soha,
Just in terms of clarity I will just dot point them - if you need clarification as to how or what they are, please don't hesitate to ask :)
Appreciation - caused by an increase in demand for the AUD or decrease in supply in the fx market:
Depreciation - caused by a decrease in demand for the AUD or increase in supply in the fx market:
AUD interest rates relative to overseas interest rates
AUD investment opportunities
Market expectations
Demand for AUD exports (further affected by TOT, international competitiveness, global economic growth, tastes and preferences)
Corporate transactions
Im hoping that you might be able to extrapolate and infer the combinations of the above reasons which would cause an appreciation or depreciation - i.e. a high demand for exports because of internationally competitive exports would increase the demand for exports, increase demand for AUD and cause an appreciation.
Hope this helps :)
Post by: 12070 on May 12, 2017, 03:21:37 pm
Assess at least TWO of the key problems and issues facing the Australian economy and analyse the effectiveness of fiscal policy (in the recent budget) to address economic objectives.
I was thinking of doing economic growth and distribution of income and wealth. I'm not sure as to how to set it out and where to start and how to get everything I need with it still being concise. Anything under 100% is literally not an option though so can someone help me to plan what I need assuming I am doing economic growth and distribution of income and wealth.
Would be a great help :)
Post by: hanaacdr on May 22, 2017, 04:43:14 pm
thank you
Post by: dradford on May 25, 2017, 07:39:03 pm
Could you please explain Okun law
thank you
Hey!
I'm not a moderator but I can offer some information on this law.. So Okun's law refers to the relationship between the U.S' economy's unemployment rate and its GNP. It states that in the situation when unemployment falls by 1%, GNP rises by 3%. However, this law only relates to the U.S economy and only applies when the unemployment rate falls between 3 and 7.5%.
Hope this helps!
Post by: TheFreeMarketeer on May 29, 2017, 08:16:59 pm
(http://i67.tinypic.com/20pzm81.png)
(http://i66.tinypic.com/2rmqluw.png)
Post by: sudodds on May 29, 2017, 08:37:18 pm
Hey could someone help:
(https://www.upload.ee/image/7060764/Screen_Shot_2017-05-29_at_6.27.55_pm.png)
(https://www.upload.ee/image/7060759/Screen_Shot_2017-05-29_at_6.32.05_pm.png)
heya! So economics wasn't my strongest subject, but I think I might be able to help you out here :)
For question (c) you need to consider how an upswing (or an expansion) in the international business cycle will impact domestic economic growth. What are some things that happen when the international business cycle experiences an upswing? Well;
- increase in global productivity and productive capacity
- increase in global trade activity
How do these two things impact domestic economy growth? Well;
- An increase in global productivity and productive capacity in turn results in an increase in domestic productivity, which further results in a decrease in the unemployment rate! When unemployment decreases, consumers in turn spend more (as more are now able to), injecting money into the economy and thus fuelling economic growth :)
- Increase in global trade activity also results in a decrease in the unemployment rate (as more people are hired to satisfy the increased demand for an economies exports). Along with this, an increase in global trade activity results in an increased demand for an economies exports, which in turn leads to increase in national output and may become an engine of growth. The expansion of a country’s foreign trade may "re-invigorate" an otherwise stagnant economy, which can lead in turn increase economic growth :)
For question (d) one massive cost that I can think of is increased inflation! This has a critical impact on both governments and households;
- Governments: Inflation implies an increase in the budget deficit.
- Households: Unmanaged inflation can increase the cost of living dramatically, as their purchasing power parity has decreased.
Inflation also can result in a rise in the unemployment rate, which has a critical impact on both governments and households, as for governments it can result in declining confidence and popularity (a high unemployment rate never looks good at campaign time), and for households - well that's pretty self explanatory!
Hope this helps! Can't 100% guarantee that this is all correct because I am no economics expert (if I have made an error hopefully someone smarter that me will be able to point it out!), however this is what I can remember from last year :)
Susie
Post by: ana321 on May 29, 2017, 09:14:02 pm
Thanks :)
Post by: sudodds on May 29, 2017, 09:24:09 pm
HI! for "impacts of microeconomic policies on structural change in the Australian economy", would you know of any recent microeconomic policies I could talk about??
Thanks :)
heya! Again, no expert here, but perhaps you could mention the recent proposed reforms to medicare, and university funding?
Post by: kiiaaa on June 03, 2017, 02:15:54 pm
In relation to this years budget are there any policies on external stability
thank you :)
Post by: Lumenoria on June 12, 2017, 07:45:33 pm
Post by: chloe9756 on June 12, 2017, 09:34:24 pm
Describe and explain the trends in Australia’ economic growth over the past 5 years (6 marks)
Post by: isaacdelatorre on July 02, 2017, 10:26:44 pm
Could you please explain Okun law
thank you
Hey there Hanaacdr,
Really sorry for the late reply; but if you are still interested Okun's law is a relationship between economic growth and unemployment which states that for the government to reduce unemployment, the rate of economic growth needs to exceed the growth in labour productivity plus the growth in the labour force through new entrants. If you think about it, what this says is that economic growth must be enough to drive an increase in demand for goods and services and thus labour; greater than the increase of people into the work force as well as the increase to productivity as people will begin to become more efficient.
In practice, this number is around 3.5% on average in Australia - so economic growth must be above this number to reduce cyclical unemployment.
Hope this helps :)
Post by: isaacdelatorre on July 02, 2017, 10:45:50 pm
HI! for "impacts of microeconomic policies on structural change in the Australian economy", would you know of any recent microeconomic policies I could talk about??
Thanks :)
Hey there ana,
For microeconomic policy, you wanna be talking mainly about competition, deregulation and industry policy - mainly done throughout the 90s. This is because in an essay talking about policies back then will allow you to assess the effects. This is due to the fact that micro economic reform has a relatively long time lag compared to macro economic policy; so if you were going to incorporate an example into a short answer or an essay, choose something from a little while ago so that you can tell me what the effects are.
Hope this helps :) sorry for the super late reply!!
The current budget's fiscal stance is contractionary. I'm confused, because the federal expenditure exceeds that of last year. Anyone care to explain this?
Hey Lumenoria,
Sorry for this really late reply to your question, if you are still interested:
remember that a budget stance is calculated based on the budget outcome of the previous year, compared to the budget outcome of this year.
A budget outcome is just Revenue - Expenses --> i.e. Taxation - expenditure
For 2016, this figure was around $39.6b deficit, in 2017, $29.4b which is a decreased deficit --> i.e. a contractionary stance :)
How would you answer this question? Thank you!Hope this clears things up!!! good luck for trials
Describe and explain the trends in Australia’ economic growth over the past 5 years (6 marks)
Hey there Chloe,
Sorry for this super late reply to your really good question!!
Firstly, notice the directive verbs are describe and explain - which you must both do in this question - looking at the mark value (6) we should be looking at choosing the main changes in Australia's economic growth over the past few years since 2012.
I.e. you would choose different points in time within the last 5 years and tell me what the ecnomic growth at this point was, and what contributed to it as well as describing some characteristics.
For example, in 2009 the Global Financial Crisis saw a sharp decrease in economic growth of the US which caused an economic slowdown in the international business cycle which inevitably affected Australia as seen in the decrease of economic growth from 3.7% to 1.3% in 2008-2009. THis was due to a loss of consumer confidence which inhibited consumption and thus decreased the demand for goods and services domestically as well as internationally, seeing a decrease in exports which further decreased economic growth. Within this period, the reluctancy to consume saw an increase in unemployment and underemployment blah blah. So do something like that, dealing with the main trends of economic growth since 2012.
Hope this helps!!!
Post by: Lexi_Jones19 on July 12, 2017, 03:02:55 pm
Evaluate the Australian government policies in addressing three economic issues to achieve the economic objectives
I already have three issues: Eco growth, unemployment and inflation but i don't know what to do after. Kinda confused. Please help! Thank You!!
Post by: isaacdelatorre on July 14, 2017, 04:30:12 pm
Hi can someone help me with this question?
Evaluate the Australian government policies in addressing three economic issues to achieve the economic objectives
I already have three issues: Eco growth, unemployment and inflation but i don't know what to do after. Kinda confused. Please help! Thank You!!
Hey there Lexi!!
The major thing with this question is the directive verb Evaluate which essentially means to give a judgment. This judgment should be very clear in your introduction --> do you think the government's policies are effective, ineffective, mildly so - do they need improvement or change??
You would most probably split this question up into the three issues, outlining what they are and why they are important for the government to address - then go through different policies that address these issues - remember both macro (monetary/fiscal) and micro economic policies should be discussed and then an evaluation of whether or not they are achieving their goal.
So for inflation for example, you would define what it is and a brief overview of what causes it as well as the effects then tell me that it's mainly the responsibility of the RBA through monetary policy and give me a brief overview of what they have done to address it - so tell me that it was effective in curbing inflation by setting higher interest rates that discourage people to take out loans and consume/invest.
Let me know how you go with this, or if you need any more clarification/help!!
Happy studying!! :)
Post by: roygbivmagic on July 16, 2017, 10:47:37 pm
Post by: isaacdelatorre on July 16, 2017, 11:16:21 pm
Hey! Could you please explain the difference between the fiscal outcome and the underlying cash outcome?
Hey there!!
So in fiscal policy there are three ways of calculating the budget outcome: fiscal outcome, underlying cash outcome and the headline cash outcome.
fiscal outcome is used as a long term indicator of the budget. It is calculated as total revenue - total expenses - net capital investment. It is important to note that this measure excludes one off items (just like in topic 3, when calculating the underlying inflation rate, you take out the one off volatile changes). It is a long term indicator because it is calculated using the accrual method (when revenue/expenses is incurred instead of received) e.g. the government passes an act to say they will give $3 million to a disaster stricken country; but don't actually pay it until the next year, this will still be counted. Think of this one as what the government plans and aims to do with its money - hence why it is used for long term indication.
underlying cash outcome is used a short term measure of the budget. as opposed to fiscal outcome which is what the government plans to do with the money using the "accrual" method, the underlying cash outcome uses the "cash method" which basically means you calculate the outcome based on money that has been spent or received instead of planning to spend it. Thus because it is directly what the government has spent and received, it shows us the short term outcome of the budget.
Hope this helps :)
Post by: mitchello on August 08, 2017, 01:12:21 pm
A decrease in consumption expenditure of $400 million causes a fall in the level of national income.
If the current level of national income is $3000 million and the marginal propensity to save is 0.4, what is the new level of national income?
Thankss :D
Post by: Natasha.97 on August 08, 2017, 01:22:15 pm
Hey, I was wondering if you could please explain how to answer this - not sure if its actually tricky or if I'm just looking at it wrong:
A decrease in consumption expenditure of $400 million causes a fall in the level of national income.
If the current level of national income is $3000 million and the marginal propensity to save is 0.4, what is the new level of national income?
Thankss :D
Hi! Do you have the original consumption expenditure?
Post by: mitchello on August 08, 2017, 01:27:23 pm
Hi! Do you have the original consumption expenditure?I wish :( Haha that was the question word for word. I'm not sure if it really helps, but here were the options:
The new level of national income is: A) $2600 million, B) $2333 million C) $2000 million D) $1000 million
Post by: Natasha.97 on August 08, 2017, 02:15:03 pm
I wish :( Haha that was the question word for word. I'm not sure if it really helps, but here were the options:
The new level of national income is: A) $2600 million, B) $2333 million C) $2000 million D) $1000 million
Hi!
Not sure if this is correct, but here is my working:
(http://i.imgur.com/0BveNRx.png)
Hope this helps! :)
Post by: sl1402 on August 08, 2017, 02:29:24 pm
I was trying to do a HSC essay question; 'Discuss the impact of changes in the domestic and global economy on Australia's exchange rate.', and while I have the economic theory down, I have no idea what statistics or examples to use??? Any pointers to some good stats relevant would be appreciated.
Post by: Natasha.97 on August 08, 2017, 02:49:02 pm
Hey guys,
I was trying to do a HSC essay question; 'Discuss the impact of changes in the domestic and global economy on Australia's exchange rate.', and while I have the economic theory down, I have no idea what statistics or examples to use??? Any pointers to some good stats relevant would be appreciated.
Hi!
Domestic economy: mining boom i.e. before/during/after
Global Economy: GFC, i.e. before/during/after
Hope this helps :)
Post by: TheFreeMarketeer on August 13, 2017, 02:14:00 pm
Thanks so much.
Post by: soha.rizvi1 on August 19, 2017, 09:04:02 am
Post by: studyharddd on August 24, 2017, 06:46:10 pm
2. Describe what action the RBA takes to tighten and loosen monetary policy.
3. Identify the impact of the following transactions on the supply of funds in the short-term money market and their impact on the cash rate.
a) The RB buys Commonwealth Government Securities from a bank.
b) The RB sells Commonwealth Government Securites to a financial Instituition.
Peace.
Post by: Natasha.97 on August 24, 2017, 08:48:04 pm
1. Explain how interest rates are determined in Australia with reference to domestic market operations, exchange settlement accounts and the cash rate.
2. Describe what action the RBA takes to tighten and loosen monetary policy.
3. Identify the impact of the following transactions on the supply of funds in the short-term money market and their impact on the cash rate.
a) The RB buys Commonwealth Government Securities from a bank.
b) The RB sells Commonwealth Government Securites to a financial Institution.
Peace.
Hi!
In my opinion, these questions are pretty similar. Here's some information to assist in answering:
- Domestic Market Operations (DMO): Actions by Reserve Bank in short-term money market to buy/sell second-hand Commonwealth Government Securities (CGS - Treasury notes + bonds) in order to influence the cash rate and the general level of interest rates
- Exchange Settlement Accounts (ESA): Banks/some ADIs (Authorise Deposit-holding Institutions) hold a certain proportion of their funds with RBA in these accounts to settle payments w/ other banks
○ Must be kept in credit (no overdraw allowed for any unexpected circumstances)
○ Financial institutions can:
- Deposit surplus cash in the Short-Term Money Market (STMM) to earn interest
- Borrow cash from banks which have surplus funds
- Cash Rate: The interest rate paid on overnight loans in the STMM
○ Determined by demand + supply for funds
○ Demand: Cash reserves in ESA
○ Supply: RBA (making payments to ESAs or vice-versa)
- Monetary Policy: Actions by the Reserve Bank, on behalf of the government, to influence the cost and availability of money and credit in the economy
Tighten Monetary Policy i.e. Contractionary Monetary Policy
Aim: Slow down economic activity + reduce inflationary pressure
- RBA sells CGS (receives money from ESA)
- Decrease of borrowable funds in STMM
- Upwards pressure on cash rate
- Upward pressure on market interest rates (banks want to maintain profit margins)
- Investment and Consumption decreases (more expensive to repay loans)
- Level of economic activity decreases
- RBA sells CGS (receives money from ESA)
- Decrease of borrowable funds in STMM
- Upwards pressure on cash rate
- Upward pressure on market interest rates (banks want to maintain profit margins)
- Investment and Consumption decreases (more expensive to repay loans)
- Level of economic activity decreases
Loosen Monetary Policy (MP) i.e. Expansionary Monetary Policy
Aim: Stimulate economic activity and reduce the rate of unemployment (periods of low growth)
- RBA purchases CGS (deposits money into ESA)
- Increase of borrowable funds in STMM
- Downwards pressure on cash rate
- Downward pressure on market interest rates
- Investment and Consumption increases
- Level of economic activity increases
- RBA purchases CGS (deposits money into ESA)
- Increase of borrowable funds in STMM
- Downwards pressure on cash rate
- Downward pressure on market interest rates
- Investment and Consumption increases
- Level of economic activity increases
Hope this helps!
Post by: julzzz on September 11, 2017, 12:33:57 pm
Is "managed" referring to the flexible peg, or how the RBA manages the AUD by dirtying the float?
Thanks
Post by: Natasha.97 on September 11, 2017, 12:46:21 pm
I am just a bit confused on this question: Distinguish between a fixed and a managed exchange rate.
Is "managed" referring to the flexible peg, or how the RBA manages the AUD by dirtying the float?
Thanks
Hi!
Fixed exchange rate: A system where the value of the currency is set and converted by the government or the central bank (RBA).To intervene in the Forex market, the government would require reserves of foreign currency/gold. Example: China (before 2005)
Managed exchanged rate: A system that exhibits both a flexible and fixed rate (currency is allowed to fluctuate within a centrally determined band). The value can change as a result of the demand and supply for AUD, but a central authority determines the upper and lower limits within which it can fluctuate.
Hope this helps
Post by: Shlomo314 on September 11, 2017, 08:30:59 pm
Could someone help me with this essay question please? "Assess the effectiveness of domestic and global policy to achieve environmental sustainability"
Could you go through what I should write for each paragraphs please?
Thankyou
Post by: Natasha.97 on September 11, 2017, 09:14:09 pm
Hi,
Could someone help me with this essay question please? "Assess the effectiveness of domestic and global policy to achieve environmental sustainability"
Could you go through what I should write for each paragraphs please?
Thankyou
Hi Shlomo314! Here are a few suggestions:
Introduction:
- Definition of environmental sustainability, domestic policy (i.e. market-based policy) and global policy (i.e. international agreements)
- Thesis: what your argument is in relation to the question (e.g. policies were ineffective/effective)
- Briefly outline what you will be saying in the body paragraphs
Domestic Policy:
- Product Stewardship for Oil Program: 8.5% levy on new oil (helps to fund the recycling of old oil)
- Solar Towns Programme: $2.1million (2014-15) to subsidise installation of renewable energy systems
Global Policy:
- Stockholm Convention (2004): Protection of human health and environment from organic pollutants
- Montreal Protocol (1997): Phase out production of ozone-depleting products
- Kyoto Protocol (2008): Reduce greenhouse gas emissions
Conclusion: Overall judgement e.g. were both types of policies effective, or one type was but the other wasn’t.
Hope this helps
Post by: Claudiaa on September 15, 2017, 08:27:06 pm
Post by: Natasha.97 on September 15, 2017, 08:31:15 pm
When the RBA sells/buys second hand government securities, what effect will it have on the supply of money and hence the cash rate?
Hi!
Selling second-hand government securities (Commonwealth Government Securities/CGS) (Contractionary Monetary Policy)
Aim: Slow down economic activity + reduce inflationary pressure
- RBA sells CGS (receives money from Exchange Settlement Accounts/ESA)
- Decrease of borrowable funds in Short Term Money Market (STMM)
- Upwards pressure on cash rate
- Upward pressure on market interest rates (banks want to maintain profit margins)
- Investment and Consumption decreases (more expensive to repay loans)
- Level of economic activity decreases
Buying second-hand government securities (Expansionary Monetary Policy)
Aim: Stimulate economic activity and reduce the rate of unemployment (periods of low growth)
- RBA purchases CGS (deposits money into ESA)
- Increase of borrowable funds in STMM
- Downwards pressure on cash rate
- Downward pressure on market interest rates
- Investment and Consumption increases
- Level of economic activity increases
Hope this helps!
Post by: chloe9756 on September 16, 2017, 06:03:54 pm
Which of the following is the best measure of external stability?
A) CAD
B) Net foreign debt as a % of GDP
C) Net public debt as a % of GDP
D) Net foreign liabilities
Answer: B (I don't understand why A and D are incorrect)
What is the most sustainable economic argument for implementing artificial barriers to trade?
A) To protect domestic employment
B) To raise government revenue
C) To discourage dumping
D) To achieve self-sufficiency
Answer: C
Which of the following is most likely to add to Australia’s Capital and Financial Account surplus?
A) An increase in royalties paid to Australia
B) An increase in Australia’s foreign aid program for international emergencies
C) An increase in loans borrowed by Australian banks from foreign lenders
D) An increase in money transferred to relatives overseas by migrants to Australia
Answer: C (Why is A incorrect?)
Which of the following policy changes would likely improve the allocative efficiency of an economy?
A) Decrease in the tax-free threshold
B) A decrease in agricultural subsidies
C) An increase in the minimum wage for hospitality workers
D) A decrease in the size of an import quota on a consumer good
Answer: B (Why is C incorrect)
Post by: Natasha.97 on September 16, 2017, 06:34:27 pm
Quote
What is the most sustainable economic argument for implementing artificial barriers to trade?
A) To protect domestic employment
B) To raise government revenue
C) To discourage dumping
D) To achieve self-sufficiency
Answer: C
Hi!
Not A
- This argument ignores the idea of comparative advantage (The economic principle that nations should specialise in the areas of production which they have the lowest opportunity costs and trade with other nations so as to maximise both nations’ standard of living)
- Short term effects of removing the barriers to trade: Unemployment in inefficient and uncompetitive industries, which leads to domestic (structural) unemployment
- Long term: Structural change results in the reallocation of workers/resources into more productive sectors of the economy
Not sure about the counter-argument for B or D
C
- Sales of the domestic equivalent of the import that is being "dumped" will drop (the import is cheaper than the market price)
- Domestic industry will either decline or be wiped out (cannot compete against the cheap imports)
- Some companies use this strategy to gain market share
- Only reason that the World Trade Organisation accepts for protection
Hope this helps
Post by: bundahboy on September 16, 2017, 08:25:43 pm
Could you please explain the answers for these multiple choice questions?
Which of the following is the best measure of external stability?
A) CAD
B) Net foreign debt as a % of GDP
C) Net public debt as a % of GDP
D) Net foreign liabilities
Answer: B (I don't understand why A and D are incorrect)
Which of the following is most likely to add to Australia’s Capital and Financial Account surplus?
A) An increase in royalties paid to Australia
B) An increase in Australia’s foreign aid program for international emergencies
C) An increase in loans borrowed by Australian banks from foreign lenders
D) An increase in money transferred to relatives overseas by migrants to Australia
Answer: C (Why is A incorrect?)
Which of the following policy changes would likely improve the allocative efficiency of an economy?
A) Decrease in the tax-free threshold
B) A decrease in agricultural subsidies
C) An increase in the minimum wage for hospitality workers
D) A decrease in the size of an import quota on a consumer good
Answer: B (Why is C incorrect)
For the external stability question, B is a better answer than D because net foreign debt excludes foreign equity in its measurement. Equity is less of a problem for external stability as it only attracts a return when businesses are profitable and the economy is doing well. Debt on the other hand requires interest to be paid regardless of a firm's profitability, presenting the risk of default. Not sure about why D would be more correct than A though.
For the KAFA question, both A and C contribute positively to the capital and financial account. However, the amount of money that comes in through foreign loans dwarfs the amount that arrives in the form of royalty payments. Thus, C is the more correct answer.
For the microeconomic reform Q, C cannot be correct as an increase in the minimum wage reduces the labour market's ability to independently determine wage outcomes. This can create inefficiencies, such as when a firm that is willing to hire workers at below the minimum wage is unable to do so. This generates unemployment amongst workers and limits the productive capacity of the firm, reducing aggregate supply and hence allocative efficiency.
Post by: angelahchan on September 18, 2017, 12:03:54 pm
I was wondering which graphs would you guys recommend memorizing for the extended response? obviously different questions are suited to different graphs, but which types of graphs would be applicable for most responses and actually add marks to your response?
Post by: Mathew587 on September 19, 2017, 06:19:54 pm
hiNo graph as far as I know adds marks without appropriate justiification.
I was wondering which graphs would you guys recommend memorizing for the extended response? obviously different questions are suited to different graphs, but which types of graphs would be applicable for most responses and actually add marks to your response?
Remmeber all thats in the textbook and thats all you need i.e. AD/AS/ CAD/BOP equations, economic cycles, lorenz curves, philips curve...
Post by: Claudiaa on September 19, 2017, 06:23:57 pm
I was wondering how could I prepare for an extended? And could someone possibility give my tips to writing an Eco extended repsonse under timed exam conditions and what is required?
Post by: Natasha.97 on September 19, 2017, 06:42:26 pm
I'm doing my Prelim Eco exam tomorrow and I have 2 extended response questions...
I was wondering how could I prepare for an extended? And could someone possibility give my tips to writing an Eco extended repsonse under timed exam conditions and what is required?
Hi!
I would do dot-point plans for 2-3 possible essay questions (Syllabus: "Examine Economic Issues"), and write out 1 in actual exam conditions (40 minutes, no notes etc.)
In reading time, I would look at both questions and try to come up with ideas on what to write, and as soon as reading time is over, jot down those ideas and make a proper plan for each essay (2 minutes each)
In terms of what to include, definitions of the key terms in the question, relevant graphs (most things could be linked back to the demand/supply graph if you're stuck) and an explanation of the graph and how it links to the question.
Hope this helps, all the best in your exam tomorrow :D
Post by: angelahchan on September 22, 2017, 08:57:38 pm
I'm always confused about conditional vs. non conditional foreign aid and where it's recorded in the balance of payments; I think conditional is in capital whereas non conditional is in net secondary, but in a question how do I tell whether the aid is conditional or not? e.g. a multichoice I'm doing rn is "Australia provides foreign aid to build schools in a developing country. This will be entered in Australia's BOP as a: (the correct answer is debit in capial).
Post by: Natasha.97 on September 22, 2017, 09:01:37 pm
Hi,
I'm always confused about conditional vs. non conditional foreign aid and where it's recorded in the balance of payments; I think conditional is in capital whereas non conditional is in net secondary, but in a question how do I tell whether the aid is conditional or not? e.g. a multichoice I'm doing rn is "Australia provides foreign aid to build schools in a developing country. This will be entered in Australia's BOP as a: (the correct answer is debit in capial).
Hi!
Conditional foreign aid is given with instructions on how to use said foreign aid in a country. In the example, the aid is given to "build schools", so this would be an example of conditional foreign aid.
Hope this helps
Post by: angelahchan on October 05, 2017, 11:57:12 am
(https://i.imgur.com/6CERuf3.png)
Post by: Mathew587 on October 05, 2017, 01:47:12 pm
Hi, could someone please help explain why the answer is B? I thought with less of those who would be categorized as unemployed in labour force, unemployment rate would decreaseif less people are actively looking for work -> labour force would be smaller
(https://i.imgur.com/6CERuf3.png)
therefore looking at the unemplyment rate formula:
(no of unemploed people/labour force)
the labour force would decrease and no of unemployed would increase resulting in a higher unemployment rate
therefore it's B :)
Post by: Natasha.97 on October 05, 2017, 02:20:41 pm
if less people are actively looking for work -> labour force would be smaller
therefore looking at the unemplyment rate formula:
(no of unemploed people/labour force)
the labour force would decrease and no of unemployed would increase resulting in a higher unemployment rate
therefore it's B :)
Hi!
Just a slight note that the number of unemployed won't change (this is a case of hidden unemployment, which is not included in the statistics as they don't fall under the definition: "actively seeking work"), but you're spot on about the labour force decreasing :D
Post by: hinakamishiro on October 06, 2017, 04:54:27 pm
Post by: lcamilleri.53 on October 06, 2017, 05:02:03 pm
Hey guys! Can I please have some help with this question? I don't really understand the working out/ reasoning. Thanks! :)
Hey, so this question is using the simple multiplier. So to calculate the MPC, the change in consumption is 40 for every 50 in income (i.e. 40/50). Hence the MPC = 0.8. Therefore the multiplier (k) = 1/1-MPC = 1/1-0.8 = 5. Therefore to find the initial change in exports the formula is change in national income divided by the multiplier (100/5 =20). Therefore the answer should be A
Post by: Shlomo314 on October 07, 2017, 04:00:06 pm
What type of aid would fall under secondary income and what type of aid would fall under the Capital and Financial income?
Cheers?
Post by: mixel on October 07, 2017, 04:11:18 pm
Hi,
What type of aid would fall under secondary income and what type of aid would fall under the Capital and Financial income?
Cheers?
IIRC untied aid falls under the secondary income account of the Current Account and tied aid falls under the Capital account.
Post by: carolinewang206 on October 21, 2017, 03:42:40 pm
Post by: Natasha.97 on October 21, 2017, 03:51:20 pm
Hey, was just wondering what the general process was with these questions? we never did it in classHi!
Hope this helps
Post by: carolinewang206 on October 21, 2017, 03:55:30 pm
Hi!
Hope this helps
perfect thanks so much!! :)
Post by: Lumenoria on October 25, 2017, 11:48:24 pm
Referring to the photo, would the size of the quota be 2000 or do you have to do 2000-1000 so that it's 1000?
Post by: Natasha.97 on October 26, 2017, 06:54:06 am
(http://uploads.tapatalk-cdn.com/20171025/3afde0c7e180b52728162489e838e2c7.jpg)
Referring to the photo, would the size of the quota be 2000 or do you have to do 2000-1000 so that it's 1000?
Hi!
The quota would be 4000-2000, which is 2000 :)
Post by: lcamilleri.53 on October 26, 2017, 07:25:09 am
Post by: Lumenoria on October 26, 2017, 08:14:04 am
Hi!
The quota would be 4000-2000, which is 2000 :)
Omg that's completely different to what I thought, can you explain how?
Post by: Natasha.97 on October 26, 2017, 08:44:30 am
Omg that's completely different to what I thought, can you explain how?
Hi!
Background Info
A quota is defined as a restriction on the amount/value of a good that may be imported.
The amount of imports is the difference between the quantity that domestic businesses can supply, and the quantity that is demanded.
The amount of imports is the difference between the quantity that domestic businesses can supply, and the quantity that is demanded.
So before the quota was implemented, the quantity that domestic producers supplied was 1000, whereas the quantity demanded was 5000. The amount of imports is 5000-1000 = 4000.
At the new price of $12, the quantity that domestic producers supplied is 2000, whereas the quantity demanded is 4000. The amount of imports is 4000-2000 = 2000.
At the old price, overseas producers could supply 4000, but at the new price, overseas producers can only supply 2000. Therefore, the quota is 2000 (maximum value they could supply).
Hope this makes sense!
Post by: Lumenoria on October 26, 2017, 12:08:32 pm
Hi!Background InfoA quota is defined as a restriction on the amount/value of a good that may be imported.
The amount of imports is the difference between the quantity that domestic businesses can supply, and the quantity that is demanded.
So before the quota was implemented, the quantity that domestic producers supplied was 1000, whereas the quantity demanded was 5000. The amount of imports is 5000-1000 = 4000.
At the new price of $12, the quantity that domestic producers supplied is 2000, whereas the quantity demanded is 4000. The amount of imports is 4000-2000 = 2000.
At the old price, overseas producers could supply 4000, but at the new price, overseas producers can only supply 2000. Therefore, the quota is 2000 (maximum value they could supply).
Hope this makes sense!
Aw thankyou, you're incredible! That was ridiculously helpful, thanks again for such a comprehensive answer :)
Post by: Natasha.97 on October 26, 2017, 01:10:39 pm
Aw thankyou, you're incredible! That was ridiculously helpful, thanks again for such a comprehensive answer :)
You're welcome, I'm glad that it helped ;D
Post by: nattynatman on October 28, 2017, 04:53:56 pm
Post by: zofromuxo on October 28, 2017, 04:59:25 pm
Hey guys does anyone know why the answer is clothing and not food?This is because if you look at the picture.
Even though Food has a higher weighting factor then Clothing.
The Clothing has an increase of 20 compared to Food of 10 to the CPI by expenditure group.
The question is asking for which CPI expenditure group contributes the most to the inflation rate.
Post by: nattynatman on October 28, 2017, 11:49:30 pm
This is because if you look at the picture.
Even though Food has a higher weighting factor then Clothing.
The Clothing has an increase of 20 compared to Food of 10 to the CPI by expenditure group.
The question is asking for which CPI expenditure group contributes the most to the inflation rate.
based on that, doesn't that mean housing and health also contributes more than clothing?
Post by: studyharddd on October 30, 2017, 09:55:23 pm
Post by: yattmoani on October 31, 2017, 06:10:53 pm
Post by: isaacdelatorre on October 31, 2017, 06:35:49 pm
Hey guys does anyone know why the answer is clothing and not food?
Hi there,
So to figure this out, we look at the weighting of each category and the increase it had.
So for clothing, it makes up 30% of the CPI increase and since the change for that group was 10 - we times 10 by 0.3 to get the weighted increase which is 3. However when we do that same thing for food (0.2 x20) we get 4 which is a higher increase than 3 and thus it contributed higher.
Hope this helps :) just remember to look at both the weighting and the increase.
Good luck :)
Yo can anyone shoot me a link to some notes on external stability?
Hey there mate,
You should be able to find some in the notes section (click on the notes tabs above) alternatively.. in the shop section there is a set of band 6 economics notes which is sure to have external stability.
Hope this helps; feel free to ask any questions on the topic if you have any :D
Hi! Could someone please help me with this question? Also what topic is it in?
Hey there, so this is in topic 3 - the first sub topic which is on economic growth. Here we have to find the value of the multiplier and firstly find the MPC which is (change in Consumption)/(change in Income) --> 90/150 = 0.6.
Then using this we find the value of the multiplier which is 1/(1-MPC) --> 1/(1-0.6) = 2.5.
Then the multiplier effect is that an increase in one of the components of aggregate demand (C + I + G + X - M) will have a multiplied effect on income by the value of the multiplier --> so a $40bn increase will increase the equilibrium level of income by $100bn. Therefore the new equilbrium is $400bn (C).
Hope this helps :)
Post by: studyharddd on November 01, 2017, 03:13:23 pm
Post by: ellybubble on November 01, 2017, 03:26:33 pm
Yo can someone please explain these for me. Thankyou
hey, so for Q 16 you should know the formula that change in Y (income) = k x change in expenditure
to work out k, k = 1/MPS (So we need to work out MPS)
MPS = change in savings/change in income = 100/500 = 1/5
Thus, k = 5
so now, 1000 = 5 x change in expenditure
therefore, change in expenditure = 1000/5 = 200 so B
(hope this is right, i am a 2017 hsc eco student)
Post by: ellybubble on November 01, 2017, 03:29:56 pm
Yo can someone please explain these for me. Thankyou
For Q 18, we need to work out the nominal GDP for year 1 = C + I + G + (X-M) = 1000
nominal GDP for year 2 = 1100
but we need to work out the real GDP for year 2 to compare this with year 1:
real GDP = nominal GDP x 100/110 = 1000
so the growth rate is 0% i think
Post by: fish99 on November 01, 2017, 04:50:49 pm
I am also kind of confused how to incorporate teh transmission channels into the answer.....?
Post by: BradMate on November 01, 2017, 05:09:14 pm
Could someone help me with this type of question: Analyse the monetary policy stance adopted by the RBA during 2017. Using two monetary policy transmission mechanisms or channels, explain how this stance is likely ot have impact on the goals of strong and sustainable growth and full employment. (6 marks) I believe the monetary policy stance has remained the same throughout 2017, have I got that correct?
I am also kind of confused how to incorporate teh transmission channels into the answer.....?
I would talk about how the RBA have maintained the stance of level interest rates as they are in a tough position with low inflation, unacceptable unemployment and record low wages growth, yet they can't adopt expansionary monetary policy due to the property market that needs suppressing, and huge pressures from the US with their contractionary monetary policy (alongside the high AUD for a large part of this year).
For transmission channels, I would focus on the effect of unchanged interests to 1. households (wage growth, unemployment), and 2. financial flows / overseas sector (AUD, US pressures, broadly declining international competitiveness with more recent reliance on mining exports with growing export price index throughout 2017)
Post by: zofromuxo on November 01, 2017, 05:12:14 pm
Could someone help me with this type of question: Analyse the monetary policy stance adopted by the RBA during 2017. Using two monetary policy transmission mechanisms or channels, explain how this stance is likely ot have impact on the goals of strong and sustainable growth and full employment. (6 marks) I believe the monetary policy stance has remained the same throughout 2017, have I got that correct?Disclaimer: I did VCE Economics so the transmission channels may differ slightly or completely.
I am also kind of confused how to incorporate teh transmission channels into the answer.....?
There are 5 transmission channels/mechanism for how a change in interest rates affects economic activity.
1. Cost of credit (Savings and Investment)
2. Cash Flows
3. Availability of Money and Credit
4. Asset values/prices
5. Exchange rate
Well we that the monetary policy hasn't changed interest rates since August of 2016.
So we know that the stance hasn't changed at all during 2017.
I would talk about the cost of credit (savings and investment) channel as since the interest rate is so low. It means it costs less of consumers to borrow money. This incentivises consumers to borrow money to purchase goods and services and this then increases the demand for consumer durables and is likely to increase Consumption demand in the economy. This should then push economic growth and thus help improve achieving the goal of SSG. This then flows onto achieving Full Employment through a higher economic growth requiring more labour to produce more those consumer durables as there is a higher demand for them.
You can then talk about how for the Cash flow channel. The interest rates currently have a positive impact on users in the economy with exisiting variable rate loans. As they have less discretionary income dedicated to the repayment of the loan. This allows consumers to spend more money on goods and services which then drive up Consumption and AD in the economy. This then flows into higher rates of economic growth and how this helps achieve SSG. You can they copy and paste what I said before for Cost of Credit channel here for helping full employment.
I hope this helps. I would also include statistics to back up your answer too. although the whole reason why the cash rate hasn't risen is because of the transmission mechanism haven't worked. There is a good article I think by The Age talking about the transmission channels being broken. But I digress
BradMate's answer has shown that reality is different to theory. What I have written above is the theory that RBA hopes for but the reality is in BradMate's answer.
Post by: fish99 on November 01, 2017, 05:44:12 pm
I would talk about how the RBA have maintained the stance of level interest rates as they are in a tough position with low inflation, unacceptable unemployment and record low wages growth, yet they can't adopt expansionary monetary policy due to the property market that needs suppressing, and huge pressures from the US with their contractionary monetary policy (alongside the high AUD for a large part of this year)
I hope this helps. I would also include statistics to back up your answer too.
Excellent - thanks so much for your help, makes sense now 👍😃
Sorry - just realised I posted on HSC economics - not VCE (im doing vce) 🤔
Post by: BradMate on November 01, 2017, 05:57:12 pm
From my understanding reserve requirements are restrictions and guidelines that must be met for deposits and loans by financial institutions and consumers.
e.g. the decreasing maximum LVRs for home loans for particular suburbs in Sydney and Melbourne.
Thanks
Post by: nattynatman on November 01, 2017, 07:14:47 pm
Thanks ~ :)
Post by: Lumenoria on November 01, 2017, 08:02:12 pm
Hey, can someone explain this answer (D) to me please?
Thanks ~ :)
Hey!
Well, in order to see whether inflation has gone up or down, you use the formula CPI(second period)-CPI(previous period)/CPI(previous period) x 100. Therefore, it is clear that the inflation levels have infact decreased.
For the second part, the decrease in numbers means that the Terms of Trade are deteriorating. Essentially, this means that export prices are decreasing relative to import prices, thus the economy can no longer afford to buy the same amount of imports as it exports. For example, countries that import oil will see an increase in their terms of trade when the oil industry is in a recession (where prices go down), while companies that export oil would see a decrease in their Terms of trade because they're not receiving enough money from their exports to sustain their demand for imports. The answer cannot be A, because the exports per se do NOT fall. A fall in export volumes usually ensues an increase in Terms of trade, where the country is able to afford a higher quantity of imports. In fact, in the long run, usually an economy with diminishing terms of trade needs to export an increased volume of goods to buy the same amount of imports. Therefore, the answer is D :)
I hope this makes sense :)
[/quote]
Post by: angelahchan on November 02, 2017, 01:37:09 pm
Post by: sophiegmaher on November 03, 2017, 04:42:07 pm
Post by: natashaa_99 on November 04, 2017, 11:33:00 am
Just wondering what the effect of monetary policy is on the exchange rate? Does loosening/tightening affect demand, supply, or both at the same time?
Thanks ! :)
Post by: sophiegmaher on November 04, 2017, 11:43:44 am
Hi,
Just wondering what the effect of monetary policy is on the exchange rate? Does loosening/tightening affect demand, supply, or both at the same time?
Thanks ! :)
So monetary policy controls the cash rate, which subsequently controls the general level of interest rates in the economy. This influences the demand for an economy's currency. So, if contractionary monetary policy is employed in Australia to increase the cash rate, interest rates will increase. Relative to the interest rates in other countries, this increase in interest rates means that foreign investors would receive a greater return on their investments in Australia because of the greater interest repayments, hence they would want to do this and hence must be Australian Dollars to invest in Australia. So, the demand for Australian dollars increase, which causes an appreciation of the Australian Dollar- you can show this on an AD/AS graph for Australian dollars :)
Post by: natashaa_99 on November 04, 2017, 12:01:09 pm
So monetary policy controls the cash rate, which subsequently controls the general level of interest rates in the economy. This influences the demand for an economy's currency. So, if contractionary monetary policy is employed in Australia to increase the cash rate, interest rates will increase. Relative to the interest rates in other countries, this increase in interest rates means that foreign investors would receive a greater return on their investments in Australia because of the greater interest repayments, hence they would want to do this and hence must be Australian Dollars to invest in Australia. So, the demand for Australian dollars increase, which causes an appreciation of the Australian Dollar- you can show this on an AD/AS graph for Australian dollars :)
Thanks so much! So supply wouldn't be affected by the decreased interest rate - just demand would be?
Post by: angelahchan on November 04, 2017, 12:41:23 pm
Post by: Vinnnnnnyyyyyy on November 04, 2017, 12:45:51 pm
Thanks so much! So supply wouldn't be affected by the decreased interest rate - just demand would be?
Well, when demand for Aus dollars increases, supply also decreases. If you draw a Supply/Demand graph for Aus dollars, you can see this :)
Post by: bunnykun on November 04, 2017, 12:49:52 pm
"Monetary policy can also be used. Lowering the cash rate can affect the term structure of interest rates across the economy, reducing the cost of credit."
what does "term structure" and "cost of credit" mean?
Thanks in advance! :)
Post by: Cat_1 on November 04, 2017, 01:06:55 pm
Assess the effectiveness of government policy in Australia in attempting to improve the BOGS in recent times?
Thanks!
Post by: mbaramilis on November 04, 2017, 01:10:12 pm
Well, when demand for Aus dollars increases, supply also decreases. If you draw a Supply/Demand graph for Aus dollars, you can see this :)
Hi,
I get the concept but when you say increase and decrease, do you mean movement along the curve or an actual shift of the curve?
Thanks :)
Post by: sophiegmaher on November 04, 2017, 02:27:32 pm
Hi,
I get the concept but when you say increase and decrease, do you mean movement along the curve or an actual shift of the curve?
Thanks :)
Increase or decrease mean a shift of the curve, expansion or contraction mean a movement along the curve :)
Post by: sophiegmaher on November 04, 2017, 02:31:01 pm
Hi, does anyone know whether fiscal or monetary policy have a shorter time lag? I think fiscal has a longer time lag for implementation, whereas monetary has a longer time lag for the effect after implementation to take place. but in 2014 q24 "explain the limitations of both fiscal and monetary policy in addressing economic slowdown", the sample answer seems to assume time lag means time lag for implementation... (so does time lag automatically mean time lag for implementation?)
I think you were correct in your own analysis, where there are different types of time lag and monetary policy has a longer time lag of affect and a short time lag for implementation, whereas fiscal policy has a shorter time lag for affect and a longer time lag for implementation- this can also involve the time taken to recognise the trend and formulate a policy to counter-act it. This is also due to fiscal policy being subject to political constraints, where politicians wish to act in the interests of the public so they can get re-elected.
Post by: angelahchan on November 04, 2017, 03:16:09 pm
This is probably a dumb question but in this sentence:I don't know what the exact terms mean, but I think it's just a convoluted way of saying that lowering the cash rate affects (lowers) interest rates (via the transmission mechanism), resulting in a lower cost of borrowing (due to less interest needing to be repaid on loans)
"Monetary policy can also be used. Lowering the cash rate can affect the term structure of interest rates across the economy, reducing the cost of credit."
what does "term structure" and "cost of credit" mean?
Thanks in advance! :)
Post by: angelahchan on November 04, 2017, 03:21:21 pm
Hey guys, anyone have any HSC question predictions?
art of smart has a list of hsc question predictions: https://www.artofsmart.com.au/hsc-economics-2017-trial-exam-questions/
I think there'll probably be something on the case studies since it hasn't been an essay question for a while
Post by: sophiegmaher on November 04, 2017, 03:48:59 pm
art of smart has a list of hsc question predictions: https://www.artofsmart.com.au/hsc-economics-2017-trial-exam-questions/
I think there'll probably be something on the case studies since it hasn't been an essay question for a while
Legend!
Post by: ayylmaolad on November 04, 2017, 04:13:06 pm
your response, you should refer to the economic information provided. "
Hello, so in questions where it asks for "changes in the global economy" what sort of things can we talk about, im confused and stumped because it is so broad
Post by: isaacdelatorre on November 04, 2017, 05:13:03 pm
Are reserve requirements set by the government or the RBA, or some other regulatory body? (maybe APRA?)
From my understanding reserve requirements are restrictions and guidelines that must be met for deposits and loans by financial institutions and consumers.
e.g. the decreasing maximum LVRs for home loans for particular suburbs in Sydney and Melbourne.
Thanks
Hey there,
sorry for the late response to your question. Reserve requirements isnt something that you really have to know for this course but APRA is the main regulatory body that used to impose heavy restrictions but have since started to decrease their regulation and involvement in the market. There are still regulations in place tho.
Good luck for the exam!!!
Isaac :D
Hi, does anyone have info on china and the international business cycle? I know they implemented a stimulus package as a response to the gfc, but idk where to find info on the effects of the package
Hey there,
So in terms of China and the stimulus in the GFC - there isn't exactly hard stats on the specific outcomes of that policy. Mainly because there were many responses to the GFC and the effects of it can't just be attributed to that one stimulus (monetary policy e.g.). However if you were looking at that; I would use the stats on growth around 2008-2009 and say that it didnt go into negative growth like other countries due to these expansionary policies. In terms of the international business cycle - look at changes in GWP over time especially around the GFC if you want to link it to China.
Hope this helps; sorry I dont have a bank of statistics - I was too lazy when I did my HSC
Isaac :D
Hi, does anyone know whether fiscal or monetary policy have a shorter time lag? I think fiscal has a longer time lag for implementation, whereas monetary has a longer time lag for the effect after implementation to take place. but in 2014 q24 "explain the limitations of both fiscal and monetary policy in addressing economic slowdown", the sample answer seems to assume time lag means time lag for implementation... (so does time lag automatically mean time lag for implementation?)
Hey there,
so the answer actually makes the same distinction tha tyou made. If you look at the first paragraph on fiscal policy limitations it says that the 'implementation of fiscal policy is subject to time lags' meaning that it has an implementation lag due having to pass houses of parliament etc. Whereas monetary has a short implementation lag but a medium term impact lag (usually 6-8 months) as the suggested answer says. So you are both correct :) thanks Sophie for the input as well!!!!
Good luck !!
Isaac :D
This is probably a dumb question but in this sentence:
"Monetary policy can also be used. Lowering the cash rate can affect the term structure of interest rates across the economy, reducing the cost of credit."
what does "term structure" and "cost of credit" mean?
Thanks in advance! :)
Hi there,
so a term structure is just how long the loan lasts so for instance a 2 year loan with interest paid annually... or interest paid monthly - those are all parts of the term structure. The cost of credit on the other hand is the relative cost of borrowing money - this is directly correlated to the interest rate since you have to pay back interest when you borrow the money. So basically the sentence means that when you use expansionary monetary policy to lower the cash rate, you essentially you reduce the cost to consumers and businesses to borrow money (since less interest has to be paid) i.e. incentivisng borrowing to stimulate the economy
Hope this helps, good luck
Isaac :D
Can someone please answer this question
Assess the effectiveness of government policy in Australia in attempting to improve the BOGS in recent times?
Thanks!
Hey Cat,
What a question - so you would firstly look at the factors that affect BOGS and current issues with BOGS - so things like international competitiveness, narrow export base, exchange rates, things like that (not exhaustive list, just things off the top of my head) then in the same paragraph that you talk about how they affect BOGS, you would assess the impact of a policy to remedy that. So for example, international competitiveness - talk about how they affect inflation and the exchange rate through monetary policy in order to maintain competitiveness.
Alternatively you could look at it in terms of fiscal, monetary, microreform and say how those have all affected BOGS - this is a weird question and I'm sorry my knowledge of the syllabus has dwindled a bit but that's how I would go about it.
Good luck!!
Isaac :D
"Analyse the impact of changes in the global economy on Australia’s Balance of Payments. In
your response, you should refer to the economic information provided. "
Hello, so in questions where it asks for "changes in the global economy" what sort of things can we talk about, im confused and stumped because it is so broad
Hey so in terms of changes in the global economy; I would look at things like the GFC, commodity boom, China's industrialisation, global downturns (Euro crisis) --> choose a few of these and then say how this affects BOGS + PYA + NSY + KFA etc. so like how global economic activity affects our exports --> give an example like china's industrialisation and high growth which increased demand for our iron ore exports resulting in a surplus on BOGS etc.
It's incredibly broad - i think i read a practice essay on this that was over 1500 words - so choose really important global shifts and say how they would affect accounts on BOP.
GOod luck!!!!
Post by: Noorijaz on November 04, 2017, 06:42:17 pm
can someone please do this question
i dont get it
thanks
Post by: lcamilleri.53 on November 04, 2017, 07:15:04 pm
Therefore k = 1/(1-0.5) = 2
Since consumption has increased by 100m from year 3 to 4
National income increases by 200m, meaning new national income is now 800m (D)
In retrospect you can actually rule out A definitely and B to an extent without doing the question, because it is asking for the new national income not the increase in national income
Post by: hinakamishiro on November 04, 2017, 07:50:26 pm
Thanks! :)
Post by: toasted on November 04, 2017, 08:03:15 pm
Hey guys! Can someone please explain why the economy's international competitiveness had decreased in this Q? Because shouldn't a deteriorated ToT mean that the eco's imports are cheaper to buy and thus more competitive?
Thanks! :)
Hey!
Thats a valid point if the ToT decrease has been derived from a decrease in export price index, however in this case the export price index has remained constant (100) while import price index has increased. Now we look at the TWI, which is an indicator of the relative exchange rates between Australia and major trading partners, and we see that it has increased. Therefore, in a foreign economy, a country will be able to purchase less from Australia for each unit of foreign currency, reducing demand and ultimately reducing the international competitiveness of Australia
Hope that makes sense!
Edit: How would i go about structuring a response to the essay question "Analyse effects of domestic and global free trade and protection on the Australian economy" (2013 HSC)
Post by: angelahchan on November 05, 2017, 10:04:35 am
(https://i.imgur.com/vsANW2L.png)
Post by: angelahchan on November 05, 2017, 10:11:25 am
Edit: How would i go about structuring a response to the essay question "Analyse effects of domestic and global free trade and protection on the Australian economy" (2013 HSC)
If you have time, I would definitely suggest looking at the productivity commission report, it's all on the effects of global and free trade protection on the Australian economy: https://www.pc.gov.au/research/completed/rising-protectionism/rising-protectionism.pdf
(you can pretty much copy what's being said there for anything to do with protection)
As for effects on domestic, you can talk about Australia's reduction in protectionism/ increase in free trade (e.g. closing of car manufacturing sector), or you can talk about what could potentially happen if Australia increases protectionism as a response to the global increase in protectionism (this is mentioned in the productivity commission report as well).
For structure, I'd suggest maybe 2 paragraphs on global, with one para on free trade and one on protectionism, and 2 paragraphs on domestic similarly structured
Post by: hinakamishiro on November 05, 2017, 12:51:02 pm
Thanks! :)
Post by: EEEEEEP on November 05, 2017, 01:06:20 pm
Hey guys can someone please explain why C is the correct answer? It doesn't make any sense to me.Globalisation is the increasing interaction of people through the growth of the international flow of money, ideas and culture.
Thanks! :)
A) No, it helps globalisation as people can move around
B) No, it helps glob. as people can exchange ideas and do business more easily.
C) Yes. Oil allows people to move, it powers trains, it powers planes. THUS an increase in the oil price would affect the whole world drastically Economically and socially. (it is the more correct answer)
D) This may slow one trade.. but C)
Post by: toasted on November 05, 2017, 01:10:59 pm
Hi, can someone please explain the difference between product and factor markets, as well as which microeconomic reforms correspond to which markets? Also could I please have some help with this question? thanks!
(https://i.imgur.com/vsANW2L.png)
Hey thanks for the help on my question :)
Product market refers to the market in which PRODUCTS are sold, so essentially the market in which goods and services are sold
Factor market refers to the market in which FACTORS OF PRODUCTION are sold, so essentially the inputs required by business eg. land/labour/enterprise/capital.
Microeconomic reform largely deals with both of these markets for example labour market policies are directed at the factor market, while privatisation was to improve competiton within the product market.
As for the question, i think you assume that y=c+s+i (i think this is the three sector model of the flow of income) so mps=change in saving/change in income which would be 100/200 and therefore k multiplier = 1/(1/2) = 2 (D)
Hope that helps! :D
Post by: BradMate on November 05, 2017, 01:20:03 pm
I get that employers are less likely to higher a youth cos they have to get paid more, and more likely to pay an adult if they are paid relatively less but couldn't you look at it from the perspective of adults being more willing to get a job (more incentivised to get a job, more productive, willing to work more hours etc.) as they are getting paid relatively more - from A?
So given more adults are willing to work, they take more jobs, and increase unemployment of youth?
Post by: BradMate on November 05, 2017, 01:24:29 pm
Answer is C
Post by: toasted on November 05, 2017, 01:38:26 pm
Also, if someone could please explain Question 20, I'd really appreciate it :)
Answer is C
Hey so at $15 ($10 wp + $5 tariff) 30 million units are willing to be supplied by domestic industries, while 70 million units are demanded by domestic consumers. This excess demand will be supplied by foreign imports, which would effectively be 70million-30million, which is 40 million. A quota is the set quantity of a good allowed to be imported and hence a 40 million quota will have the same impact will have the same impact as a $5 tariff, hence C.
Post by: Rehaker on November 05, 2017, 01:42:00 pm
I'd Just like to know some information about Economics Essays in general.
My teacher said that some topics can be linked (E.g. Topic One and Two , Topic Three and Four of the course).
How do I know what topics are linked? Especially in an extended response question? Thanks Heaps!! :) :)
Post by: BradMate on November 05, 2017, 01:58:44 pm
Rehaker -- have a look at the past HSC exams from 2012 til 2016 (just type in '2012 HSC economics' on google) and you can check out the 4 extended responses in each :) Most the time the topics are linked, or at least a comprehensive answer requires linking the topics together. If you spend 5 mins planning and you know your stuff that shouldn't be a problem
Post by: CyberScopes on November 05, 2017, 02:13:50 pm
The answer here is D. I understand why it is correct, but why is it MORE correct than A?
I get that employers are less likely to higher a youth cos they have to get paid more, and more likely to pay an adult if they are paid relatively less but couldn't you look at it from the perspective of adults being more willing to get a job (more incentivised to get a job, more productive, willing to work more hours etc.) as they are getting paid relatively more - from A?
So given more adults are willing to work, they take more jobs, and increase unemployment of youth?
Adults may be more willing to work, but employers would not be willing to hire. Pay for adults is considerably higher than that of youth, so if the minimum wage for adults increase, employers would rather hire youth employees instead at a cheaper price. And for D, its important to notice that if minimum wage for youth increases while adult pay is unchanged, employers would rather higher adults who would have more experience and a greater skill set than youth.
Post by: B1234o on November 05, 2017, 02:17:44 pm
This is unrelated to the question posed, but does any have or know where to find the answers to the skills revision section of the Australia in the global economy workbook (8th Edition).
Thank You
Post by: ellybubble on November 05, 2017, 02:50:59 pm
What would i write for this question:
Explain how ONE labour market policy may influence the level of structural unemployment. (3 marks)
Thanks!
Post by: Lexi_Jones19 on November 05, 2017, 08:38:47 pm
can someone help me with this question?
In a hypothetical economy, MPC = 0.9. What is the change in national income if investment declines by $100 million? so the answer is $1Billion but i don't get how??
TIA
Post by: Natasha.97 on November 05, 2017, 09:04:25 pm
Hi,
can someone help me with this question?
In a hypothetical economy, MPC = 0.9. What is the change in national income if investment declines by $100 million? so the answer is $1Billion but i don't get how??
TIA
Hi!
Hope this helps
Post by: Vinnnnnnyyyyyy on November 05, 2017, 09:08:19 pm
Hi,
can someone help me with this question?
In a hypothetical economy, MPC = 0.9. What is the change in national income if investment declines by $100 million? so the answer is $1Billion but i don't get how??
TIA
Since MPC is 0.9, MPS is 0.1
k = 1/0.1 = 10
change in Y = k times change in AD
= 10 x 100m
= 1b
But since decrease in investment, it's -$1b
Post by: isaacdelatorre on November 05, 2017, 09:51:27 pm
In the exam tomorrow, stay calm - read questions carefully - at least 3 times!!! highlight/underline/cross out whatever you need to do to make sure you read and fully comprehend the question.
YOU GOT THIS!!!!
Post by: dantoun13 on November 05, 2017, 09:54:42 pm
How can aggregate demand decrease unemployment if the economy is at NAIRU (where there is zero cyclical unemployment)?
Post by: isaacdelatorre on November 05, 2017, 10:00:30 pm
2008 HSC Economics, Question 7
How can aggregate demand decrease unemployment if the economy is at NAIRU (where there is zero cyclical unemployment)?
Hey there,
So economic growth in the short to medium term is driven by changes in Aggregate Demand. So if aggregate demand increases; it will increase short term economic growth. Also since aggregate demand is the total demand for goods and services produced in the economy; if that increases then it means the demand for goods and services is increasing. When this happens; firms need to increase production to satisfy this demand. Thus they will need to hire more workers to increase production; therefore decreasing unemployment. --> so basically increased AD = increased growth = decreased cyclical unemployment
Good luck for tomorrow!!!
Isaac :D
Post by: dantoun13 on November 05, 2017, 10:04:52 pm
Hey there,
So economic growth in the short to medium term is driven by changes in Aggregate Demand. So if aggregate demand increases; it will increase short term economic growth. Also since aggregate demand is the total demand for goods and services produced in the economy; if that increases then it means the demand for goods and services is increasing. When this happens; firms need to increase production to satisfy this demand. Thus they will need to hire more workers to increase production; therefore decreasing unemployment. --> so basically increased AD = increased growth = decreased cyclical unemployment
Good luck for tomorrow!!!
Isaac :D
Thanks! But at NAIRU isn't there no cyclical unemployment? So how would increased economic growth decrease unemployment below this rate if there are no cyclically unemployed people in the economy?
Post by: isaacdelatorre on November 05, 2017, 10:06:57 pm
Thanks! But at NAIRU isn't there no cyclical unemployment? So how would increased economic growth decrease unemployment below this rate if there are no cyclically unemployed people in the economy?
Sorry i didnt read the question properly - dont do that in the exam... learn from me! - but if aggregate demand does increase then frictional and structural unemployment may decrease as those people may get sucked into employment due to high economic activity and the higher demand for goods and services. However when this does happen the decrease in unemployment does correlate to an increase in inflation.
HOpe that clears things up
Post by: dantoun13 on November 06, 2017, 11:39:48 am
Post by: Natasha.97 on November 06, 2017, 11:45:47 am
Are market and non-market based policies to the environment (e.g. tax, subsidies, embargoes, targets, regulations) a part of fiscal policy or are they microeconomic policies?
They're microeconomic policies :)
Post by: dantoun13 on November 06, 2017, 05:20:51 pm
Post by: FutureLawStudent on November 24, 2017, 11:44:57 am
This question is really bugging me. I've attached it to my post. So essentially the TOT have decreased, and the exchange rate has increased. Exports are now less value in comparison to imports. Exports are less competitive and imports are cheaper. So how can you deduce what happened to the EPI and IPI?
Its logical based off of just the TOT that epi would have decreased and ipi increased, but its possible that both decreased or increased, just at a different rate.
Post by: ericazzz on January 05, 2018, 06:45:19 pm
So for my case study, one of the questions was the 'Examine the impact of globalisation on the economic performance of the chosen country' (India)'. I was thinking of linking trade liberalisation as one of the drivers of economic growth. However, I'm struggling to link or find relevant stats to help back up that trade liberalisation has increased economic growth in India. Are there any suggestions of how to approach this question?
Thanks and much greatly appreciated :)
Post by: Brun on January 10, 2018, 11:35:31 am
Hey,
So for my case study, one of the questions was the 'Examine the impact of globalisation on the economic performance of the chosen country' (India)'. I was thinking of linking trade liberalisation as one of the drivers of economic growth. However, I'm struggling to link or find relevant stats to help back up that trade liberalisation has increased economic growth in India. Are there any suggestions of how to approach this question?
Thanks and much greatly appreciated :)
Hi ericazz,
For globalisation essays it is always important to remember what globalisation refers to (i.e. the increased movement of trade, finance, investment, labour and technology between different economies, leading to the formation of a global and interconnected economy). While trade, is always a good start for talking about impacts of globalisation, don't think to also talk about other ones which are relevant such as increases in foreign investment in the Indian economy and increasing ease of finance in India. As for what stats you could have for trade, you could provide stats such as exports as % of GDP and show how that has grown over the years. Don't forget to give some real world examples of trade such as what the top Indian exports are and how that has shifted due to globalisation and changing demand patterns in the world economy. Also mention the free trade agreements and international organisations (WTO, BRICs) that India is part of to show how India has increasingly become more open to world trade due to the impacts of globalisation.
Hope I helped! :D If you have any more questions, feel free to ask.
Post by: emily_p on January 30, 2018, 10:25:48 pm
I was wondering if anyone could help me understand why CAD + KAFAS has to equal zero - or in other words why the amount made in the KAFA has to equal to the exact amount (give or take stat errors) in the CA? I understand that there are links between the two account and that a credit in say investment leads to a debit in the NPI section of the current account, but I’m not sure why one account must be exactly the negative of the other. For example, what if we made 10 billion in investments but lost only 7 billion in the NPI (including returns on investment, labour payouts etc), resulting in the CAD being maybe only -30 while the KAFAS is +60?
I’ve also seen these equations in many textbooks:
Supply of $A = Demand for $A
M + Y debits + K outflow = X + Y credits + K inflow
M - X + Y debits - Y credits = K inflow - K outflow
I’m not really sure what these mean or how these are derived. If anyone could explain my two very long (sorry!) questions I would be really grateful.
Thank you! :)
Post by: emilyygeorgexx on January 31, 2018, 03:51:00 pm
Hello!
I was wondering if anyone could help me understand why CAD + KAFAS has to equal zero - or in other words why the amount made in the KAFA has to equal to the exact amount (give or take stat errors) in the CA? I understand that there are links between the two account and that a credit in say investment leads to a debit in the NPI section of the current account, but I’m not sure why one account must be exactly the negative of the other. For example, what if we made 10 billion in investments but lost only 7 billion in the NPI (including returns on investment, labour payouts etc), resulting in the CAD being maybe only -30 while the KAFAS is +60?
I’ve also seen these equations in many textbooks:
Supply of $A = Demand for $A
M + Y debits + K outflow = X + Y credits + K inflow
M - X + Y debits - Y credits = K inflow - K outflow
I’m not really sure what these mean or how these are derived. If anyone could explain my two very long (sorry!) questions I would be really grateful.
Thank you! :)
Hi!
I probably won't be able to give you a perfect answer as I am still learning about the BOP as well. I think it's because we have an floating exchange rate so therefore BOP should always balance to 0. Any deficit that is experienced on the Current Account must be offset by an equal inflow (surplus) of funds on the Capital Account. When it doesn't equal to 0, the net errors and omissions ensures it does.
Not sure if that was even very helpful! Hopefully someone could explain it to you better :)
Post by: mae_an on February 03, 2018, 10:45:27 pm
Post by: Lumenoria on February 04, 2018, 01:57:52 am
Is there more foreign and business confidence in an economy that has a current account deficit or surplus?
Well, it depends on the circumstances. The CAD can lead to depreciation in an economy that runs on a floating exchange rate (ie. Australia) by placing downward pressure on the currency, which makes foreign buyers more inclined to invest in that economy due to their increased purchasing power. This will lead to increase of demand for that economy's goods and hence an influx of capital inflow, therefore helping reduce the CAD and the disequilibrium. A current account surplus is not necessarily a good thing, for example Spain's transition from a large CAD to a surplus has mainly been fuelled by a sharp drop in domestic demand, which ultimately caused high rates of unemployment and a recession. A deficit often occurs due to strong levels of growth and strong consumer spending - rather than uncompetitiveness. I think the CAD is usually a good thing as long it is maintained by long term capital investment and not unsustainable levels of borrowing (eg. by government).
Post by: emilyygeorgexx on February 09, 2018, 07:46:08 pm
Does anyone know where I can find some Half Yearly practice papers. The topics I have covered so far are 'The Global Economy' and 'Australia's Place in The Global Economy". Any questions relating to these two topics would also be great.
Thanks!! :)
Post by: Claudiaa on February 09, 2018, 07:56:00 pm
Could someone please help me understanding what this question is asking of me? "Analyse the influence of different factors on Australia’s trade and financial flows"
i.e. one of the suggested answers include "composition of Australian trade" so would i talk about how the composition has changed (dutch disease? etc) but then how would I go about analysing the influence of different factors on Aus' trade and financial flows? (Essentially I don't understand what the question is)
Post by: Lumenoria on February 10, 2018, 08:39:37 am
Hiii!!I think the question is just asking you to discuss what impacts the patterns of trade and financial flows. So if I were you, I'd probably address fluctuations in exchange rate and how this affects the CAD - depending on which avenue you pursue, this could either discourage or encourage foreign investment in the economy. For example, you could say financial inflows will continue rising if foreigners expect the currency to continue appreciating as they will benefit from higher return in terms of the foreign currency. Maybe you could even make a link to the resources boom. And yes, you could definitely discuss dutch disease, as long as you make relevant links back to the question. Also, the shift of economies from developing to emerging - particularly in the Asian region - has increased the amount of imports into our country as they are able to produce goods at a price lower than what is available to consumers domestically. In China for example, the shift from a socialist economy to a market economy has enabled rapid economic growth, which has not only benefitted the country itself, but also Australia. In addition, there has been more and more trade liberalisation in these countries due to closer economic and political ties which has thus increased trade flows into Australia - so essentially, globalisation. I think this is much more pertinent to the topic of trade compositions, so ensure this is mentioned somewhere in your response. I could literally think of an infinitude of ways you could go about addressing this question. You could also mention Australia's status as a net capital importer and how this has allowed to become dependent on foreign capital to supplement our shortage in domestic savings, which in short, increases both direct and portfolio investment blablablah.. HAHA this was just lowkey a braindump, but hope it helped somewhat AHH
Could someone please help me understanding what this question is asking of me? "Analyse the influence of different factors on Australia’s trade and financial flows"
i.e. one of the suggested answers include "composition of Australian trade" so would i talk about how the composition has changed (dutch disease? etc) but then how would I go about analysing the influence of different factors on Aus' trade and financial flows? (Essentially I don't understand what the question is)
Post by: headsup on February 15, 2018, 06:44:12 pm
need help with this question:
Explain why the sum of the two accounts (capital account & financial account) total zero under a system of floating exchange rates.
Thanks heaps :)
Post by: kristieevans on February 20, 2018, 02:44:11 pm
So I'm in year 12 and I've just been given an assessment task on Australia's current account position.
Our essay question is:
Analyse the impact each of these causes has had on Australia's CAD. ("these causes" is referring to a list of structural and cyclical causes.)
I'm kinda confused about how the whole CAD thing links together. I understand terms of trade and exchange rate and all that, but I don't really understand what the CAD is.
Also, any suggestions for how to structure an essay response to this kind of question??
Thanks : )
Post by: natasha.sharma8 on February 24, 2018, 09:17:27 pm
Post by: emilyygeorgexx on February 25, 2018, 02:28:51 pm
what are causes of appreciation and depreciation
Hey!
So for an appreciation an increase in the demand for AUD is equivalent to a decrease in the supply of AUD. Factors that cause an increase in the demand for AUD include increased demand for Australia's exports, expected future exchange rate increases, investment flows increase, etc. Factors that cause a decrease in supply include Australia's imports increase, interest rate differential decreases, etc.
For a depreciation a decrease in the demand for AUD is equivalent to an increase in the supply of AUD. Factors that cause a decrease in the demand for AUD include demand for Australia's exports decrease, interest rate differential decreases, etc. Factors that cause an increase in the supply of AUD include Australia purchasing imports increase, interest rate differential decreases, expected future exchange rate decreases, etc.
Hope this helps :)
Post by: a.leisha on February 25, 2018, 06:16:08 pm
Post by: emilyygeorgexx on February 25, 2018, 09:42:49 pm
Heyy, I have an economics in-class test coming up on economic issues. It's only on unemployment, inflation and selected parts of wealth and y, and eco. growth. The test will only be multiple choice and a couple of short answers so I'm wondering if I will need to know any unemployment or inflationary trends for the test or if they are mostly used in essay questions? Thank you!!! :))
Hey!
From assessments I have done at school I’d say probably not for multiple choice and short answer. However, if you’d like to cover yourself maybe just know the direction it has been going in the last few years and it’s current stance right now.
Maybe also just know like the basic statistics like we want NAIRU unemployment to be between 5 and 6%, sustainable economic growth between 3 - 4%, CPI inflation between 2 - 3%, etc
Hope this helps :)
Post by: wishmeluck on February 26, 2018, 02:29:02 pm
When writing and essay about CAD or the BOP what are the things i need to include? I know the essay should be answering the question, but what are the general things should the essay have for all questions? :-\
Post by: 006896 on February 27, 2018, 05:50:35 pm
I need help with an economics essay. I would like to have it looked over. Is this the right place to post it?
Thanks!
Hi!
Could you please explain to me the effects of a recession on an economy (and also how/if this differs from just a general contraction)? Also, how can the government intervene to stimulate the economy?
Thank you.
Mod Edit: Post merge! :)
Post by: raymond.semaan on March 08, 2018, 08:02:06 am
Hi!
Could you please explain to me the effects of a recession on an economy (and also how/if this differs from just a general contraction)? Also, how can the government intervene to stimulate the economy?
Thank you.
A recession is basically the end point of a contraction, it is the lowest point it will reach before kicking back off again or at least thats how I see it. It's where all of the effects of low economic activity are at their worst, i.e Unemployment rises, drop in consumer spending, drop in consumer confidence, drop in real income etc
With regards to Government Intervention, they intervene through a process called Open Market Operations which is the buying and selling of Commonwealth Government Securities(CGS) by the RBA in order to either remove money from the Economy or to pump money back into the Economy. The banks buy or sell these CGS using money from their Exchange Settlement Accounts, subsequently reducing or increasing the supply of money in the economy. This results in a movement in Interest Rates as less money would ^Interest Rates(supply curve shift to the left) and more money would result in lower Interest Rates(supply curve shift to the right). These changes in Interest Rates encourage or discourage borrowing of money which is a large stimulant/sedative concerning Economic Activity.
I have a Lucid Chart Diagram I believe will help you so I've posted it below
https://www.lucidchart.com/invitations/accept/b29e46d7-dab2-4d3d-8304-e696c5ebe003
Post by: joemassoud on March 08, 2018, 01:55:26 pm
1. Distinguish between the effects of a depreciation and an appreciation of the Australian dollar on exports prices, import prices and inflation (3 marks)
2. Analyse the impact of a sustained appreciation in the Australian dollar on the balance of payments and the rate of structural change in Australian industry (5 marks)
Thanks in advance!!
Post by: raymond.semaan on March 08, 2018, 07:51:03 pm
What is the best way to structure a response to this question, I've created an intro but I'm having trouble deciding what to base my body paragraphs on . Should structure each paragraph based on the components of Aggregate Demand, i.e Consumers, Government, Investment, Imports and Exports, or should I structure it based on areas such as the Current Account Deficit, Inflation, Unemployment, Structural Change and Economic Growth.
Post by: joemassoud on March 15, 2018, 05:20:02 pm
By any chance, does anyone have a response to the following question:
Analyse the impact of recent changes in the global economy on Australia’s balance of payments.
If not, can someone please give me an idea of what to write or a plan
Thanks in advance!
Post by: katgrace1 on March 18, 2018, 09:28:10 pm
Hey guys, if anyone could please help me answer the following questions that will be awesome:
1. Distinguish between the effects of a depreciation and an appreciation of the Australian dollar on exports prices, import prices and inflation (3 marks)
2. Analyse the impact of a sustained appreciation in the Australian dollar on the balance of payments and the rate of structural change in Australian industry (5 marks)
Thanks in advance!!
1. A depreciation is where the dollar holds less value in relation to another currency or basket of currencies (TWI) . If our dollar is cheaper to importers, it will make export prices cheaper and therefore make our exports more competitive. Import prices will rise as it will cost more to trade from the local currency to a foreign currency. Inflationary pressure will increase as the price to purchase goods and services will increase. The opposite effects will occur for an appreciation.
2. A sustained appreciation is referring to a long term view. If specifically looking at BOP you would need to distinguish the imapct on the current account as well as the capital & financial account.
In terms of the current account, a sustained appreciation will lead to exports being highly priced and will have low international competitiveness. Also domestic consumers can pay more for their dollar and will increase consumption including imports. This will worsen BOGS and therefore the CAD. Also the net primary income will be impacted by the valuation effect. When our dollar appreciates, it will also result in debts and servicing costs reducing (assuming the debts are variable exchange rate- ceteris paribus).
The K Acc is impacted as foreign assets will be worth more overseas due to the valuation effect. This will improve the K account. Remember the K account and Current account should balance so an improvement in one will result in a decay in the other.
In terms of the rate of structural change, an appreciation will lead to a decrease in foreign investment which will hinder economic and business growth.
Post by: katgrace1 on March 18, 2018, 09:33:44 pm
"what are the impacts on the australian economy of a sustained appreciation of the australian dollar"
What is the best way to structure a response to this question, I've created an intro but I'm having trouble deciding what to base my body paragraphs on . Should structure each paragraph based on the components of Aggregate Demand, i.e Consumers, Government, Investment, Imports and Exports, or should I structure it based on areas such as the Current Account Deficit, Inflation, Unemployment, Structural Change and Economic Growth.
When structuring an essay I often find it easier to write out a brief essay plan. Write according to your personal style. Either of the options would be fine, as long as you clearly link back to the question. Ensure if doing the first way to highlight that you are showing impacts on elements of the economy, maybe in conclusion summarising the impact as a whole. If writing via second method continuously link to the impact on the economy rather than dumping information. Hope this helped.
Post by: dispersionforces on March 20, 2018, 08:37:17 am
Kind regards.
Post by: StudyBuddyKJ on March 26, 2018, 04:06:01 pm
Why does the Reserve Bank of Australia use indirect method of quotation for exchange rates, over direct method of quotation? I never really understood why the RBA will use indirect, when direct method seems so much easier.
Post by: StephTol on March 26, 2018, 07:18:51 pm
I am wondering if someone was able to summarise the Balance of Payments because I am not really grasping the whole concept of it all.
Thanks in advance!
Post by: StudyBuddyKJ on March 27, 2018, 05:54:23 pm
Hey!
I am wondering if someone was able to summarise the Balance of Payments because I am not really grasping the whole concept of it all.
Thanks in advance!
Okay, so the Balance of Payments comprises of two accounts. The two accounts are the current account, and the capital and financial account. The current account consists of the balance of goods and services (otherwise known as BOGS), the net primary income, and the net secondary income. The BOGS part is basically just looking at net exports (stuff you bring out of the country) minus net imports (stuff you bring into the country). The BOGS is usually in fluctuation (either in deficit or in surplus)
The net primary income is basically just returns on investment from credits -debits. Credits is money going into the country. Debits is money going out of the country. Because Australia spends more and saves less, it has very low domestic savings, hence net primary income is usually deficit. Also remember that a lot of countries choose to invest into Australia because Australia has relatively high interest rates as compared to other countries. This means that there will be a greater return on investment. Hence, there is more money going out of the account (which is a debit by the way) to pay the foreign countries back, hence there is a deficit.
The net secondary income is basically just credits- debits for government transfers (aka stuff that is not directly related to investment or exports). this can be stuff like Australia giving out foreign aid to different countries, migrants transfering money back to their home country, that sort of thing. Again, there is a lot of fluctuation with it being either a deficit or surplus. It just depends.
So the current account is basically the NPI (net primary income), NSI (net secondary income) and BOGS (balance of goods and services). The capital and financial account is literally just the capital account and financial account (two separate accounts). For all intents and purposes, we just say that those two accounts are together.
Capital Account basically records credits and debits for the acquisition or disposal of non-produced & non-financial assets such as foreign aid and net capital brought into Australia by migrants. The Financial Account records credits and debits associated with direct investment, portfolio investment, other investment and changes in the level of reserves held by the RBA.
That is pretty much it. Hope that helps! Again it is a quick summary. Feel free to research and go into more detail.
Post by: raymond.semaan on March 27, 2018, 07:01:46 pm
Post by: emilyygeorgexx on March 27, 2018, 08:44:11 pm
Can someone tell me the consequences of the Current Account Deficit, I can't seem to find it in the textbook
Hey!
If you have the Tim Dixon textbook its on pages 124 - 126.
Post by: raymond.semaan on March 28, 2018, 07:58:00 am
Hey!
If you have the Tim Dixon textbook its on pages 124 - 126.
I have the Tim Riley Textbook I think, is it a big chunk of info or can you just copy and paste it
Post by: allate on April 03, 2018, 02:59:43 pm
Post by: emily_p on April 05, 2018, 08:54:15 pm
hi, would anyone know an economic cost of a free trade agreement involving Australia? would trade diversion count or are there better options? thanks in advance.
I feel like trade diversion would be particularly significant for bilateral agreements (I've mostly learnt that diversion is a disadvantage of bilateral) but they can also work for multilateral agreements/trading blocs! For example the European Union is pretty exclusive - it promotes free trade between countries within the bloc, however trading with countries outside can be difficult. Other costs can involve structural unemployment (seen with the manufacturing industry - car producers like Ford, Holden, Toyota etc have shut down due to overseas competition) so while free trade promotes investment into efficient industries, it can lead to retrenchment of certain workers within the economy. If an economy is moving from tariffs in particular towards free trade then governments can also lose revenue collected from taxes on overseas goods. Hope this helps!
Post by: raymond.semaan on April 07, 2018, 09:12:53 pm
Post by: gumscape on April 17, 2018, 12:35:54 pm
Which of the following is most likely to shift both the aggregate demand and aggregate supply curve to the right?
(A) An increase in investment and a reduction in subsidies to producers
(B) An increase in the budget deficit and a decrease in the cost of labour
(C) An increase in the productivity of labour and an increase in interest rates
(D) An increase in the budget surplus and an increase in the cost of raw materials
In short pls help me i'm failing this subject.
Post by: emilyygeorgexx on April 17, 2018, 01:13:05 pm
Helloooo, this is from 2010 MC.
Which of the following is most likely to shift both the aggregate demand and aggregate supply curve to the right?
(A) An increase in investment and a reduction in subsidies to producers
(B) An increase in the budget deficit and a decrease in the cost of labour
(C) An increase in the productivity of labour and an increase in interest rates
(D) An increase in the budget surplus and an increase in the cost of raw materials
In short pls help me i'm failing this subject.
Is the answer B?
Post by: gumscape on April 20, 2018, 03:10:07 pm
Is the answer B?
It sure is, I just have no idea why lmao
Post by: JTrudeau on April 20, 2018, 03:50:58 pm
It sure is, I just have no idea why lmao
Alright, I’m gonna give this a try.
It is B, and here’s why:
An increase in the budget deficit means you’re increasing government spending more than you increase taxation. According to our aggregate demand equation, AD=C+I+G+X-M, increasing government spending (G) increases your overall level of aggregate demand.
This part I’m less sure about. A decrease in the cost of labour means firms can supply the same quantity of goods at a lower price (because their costs of production go down). So this encourages them to hire more workers and increase their quantity supplied, thus increasing aggregate supply.
Does that make sense? :)
Post by: emilyygeorgexx on May 12, 2018, 02:01:29 pm
Can someone explain how to do this question and get the answer C. I understand the part about increased purchasing power for Australians travelling overseas but I don't get the domestic part.
Thanks :)
Post by: Lumenoria on May 12, 2018, 03:07:17 pm
Hey!
Can someone explain how to do this question and get the answer C. I understand the part about increased purchasing power for Australians travelling overseas but I don't get the domestic part.
Thanks :)
Holy crap, this is a massive curveball haha! I get why you're stuck, my original thought was that the purchasing power would be weaker in year 1 compared to year 2, thus the purchasing power would relatively increase even if overall there was a decrease due to inflation. But then I reread your post and the answer was C, so obviously that wasn't it.
Okay, this took me a while to wrap my head around, but it's the only plausible explanation I can come up with that results in C.
Hypothetically, say there's an economy with inflation of 200% one year then 100% the next. In this economy, the oranges are $5 at the beginning, and you have $30 in your pocket as a domestic consumer. By the end of year one, oranges are worth $15 [(100%+200%)x$5]. However, by the end of year two, oranges are worth a massive $30 [(100%+100%)x$15]. In year one, you could buy two oranges, but in year two you could only buy one. Therefore, even though inflation has decreased, your purchasing power still diminishes over these 2 years. Hence, you can extrapolate this to 2%/1%, exaggerating the numbers just made it easier to illustrate my point lol.
So, while the inflation rate HAS in fact decreased compared to the previous year, inflation is STILL occurring so the real value (purchasing power) of any given amount of money has decreased. I suppose this is true regardless of the inflation rate as long as it is positive, even if it is 0.00001%. lol
I hope this helped! x
Post by: emilyygeorgexx on May 12, 2018, 04:29:40 pm
Holy crap, this is a massive curveball haha! I get why you're stuck, my original thought was that the purchasing power would be weaker in year 1 compared to year 2, thus the purchasing power would relatively increase even if overall there was a decrease due to inflation. But then I reread your post and the answer was C, so obviously that wasn't it.
Okay, this took me a while to wrap my head around, but it's the only plausible explanation I can come up with that results in C.
Hypothetically, say there's an economy with inflation of 200% one year then 100% the next. In this economy, the oranges are $5 at the beginning, and you have $30 in your pocket as a domestic consumer. By the end of year one, oranges are worth $15 [(100%+200%)x$5]. However, by the end of year two, oranges are worth a massive $30 [(100%+100%)x$15]. In year one, you could buy two oranges, but in year two you could only buy one. Therefore, even though inflation has decreased, your purchasing power still diminishes over these 2 years. Hence, you can extrapolate this to 2%/1%, exaggerating the numbers just made it easier to illustrate my point lol.
So, while the inflation rate HAS in fact decreased compared to the previous year, inflation is STILL occurring so the real value (purchasing power) of any given amount of money has decreased. I suppose this is true regardless of the inflation rate as long as it is positive, even if it is 0.00001%. lol
I hope this helped! x
Omg thank you so much! This actually makes so much more sense now. My class has literally been arguing for 2 lessons on this question because no one could understand that even though inflation decreased, you would lose your purchasing power.
If they gave me this question in an exam I honestly would full get it wrong.
Post by: Lumenoria on May 13, 2018, 09:50:15 am
Omg thank you so much! This actually makes so much more sense now. My class has literally been arguing for 2 lessons on this question because no one could understand that even though inflation decreased, you would lose your purchasing power.
If they gave me this question in an exam I honestly would full get it wrong.
Not a problem! I definitely would've gotten it wrong too, were it not for you asking!! HAHA
Post by: henrychapman on May 22, 2018, 11:51:28 am
Does anyone have any suggestions as to how they would structure a micro essay and what they'd include?
Any past essays/scaffolds would really assist. Thank you very much !
Post by: FutureLawStudent on May 23, 2018, 11:45:14 am
Hi guys,
Does anyone have any suggestions as to how they would structure a micro essay and what they'd include?
Any past essays/scaffolds would really assist. Thank you very much !
Personally,
I would do maybe 2 pages outlining microeconomic policy, so defining micro, the AD/AS impact of micro (e.g. increase in AS), a J curve explanation, outlining the three different types of productivity, and explaining the difference between factor and product markets.
Then I would do paragraphs on major areas of reform. Starting with factor reforms, so labor reform (wage setting etc.), followed by capital reform (financial deregulation). Then product market reform, such as trade liberalisation (TCF, Automotive), as well as privatisation/corporatisation, competition policy (ASIC etc.).
Hope that helps.
Post by: emilyygeorgexx on May 23, 2018, 05:13:48 pm
3 An economy has the following consumption function: C = 0.6Y + 500
If the economy currently has an equilibrium income of $600b, what would the new equilibrium income be following a decrease in autonomous investment of $10b?
(A) $525b
(B) $575b
(C) $583b
(D) $625b
Answer is B - I'm so stuck!!
Post by: Lumenoria on May 23, 2018, 10:58:17 pm
Desperate help please!!!
3An economy has the following consumption function: C = 0.6Y + 500
If the economy currently has an equilibrium income of $600b, what would the new equilibrium income be following a decrease in autonomous investment of $10b?
(A)$525b
(B)$575b
(C)$583b
(D)$625b
Answer is B - I'm so stuck!!
Hey there! I have no clue how to include fractions on the actual site, so I attached a photo of how I'd approach this specific question. Hopefully you can read it haha
Post by: emilyygeorgexx on May 23, 2018, 11:17:31 pm
Hey there! I have no clue how to include fractions on the actual site, so I attached a photo of how I'd approach this specific question. Hopefully you can read it haha
Ahh thank you so much!! Was full trying to rearrange the consumption function because when I asked my teacher first if I had to do the multiplier she was like oh nooo but now I get it
Post by: Lumenoria on May 23, 2018, 11:24:43 pm
Ahh thank you so much!! Was full trying to rearrange the consumption function because when I asked my teacher first if I had to do the multiplier she was like oh nooo but now I get it
Not a problem! This is definitely a curly one, I swear I haven't seen one like it at all in any of the past papers I've done haha. At first I actually thought that too, I kept subtracting the 10 from the 600 for some reason despite it being investment HAHAHAHA. Yeah, my teacher is lowkey horrendous (I feel bad for saying it but it's true lol) at teaching, so I've been going ahead trying to teach myself the entire course because he's so unreliable. He legit scratches his head for 2 years on the simplest multiple choice questions lmao, so I feel ya hahaha
Post by: StephTol on May 24, 2018, 06:54:12 pm
Is there any difference between what is required in an economics essay or extended response? Or are they the same thing.
How would you llok at approaching this question:
Discuss the consequences of an unequal distribution of income and wealth and the impact of fiscal policy on the distribution of income in Australia
Post by: emilyygeorgexx on May 24, 2018, 08:06:23 pm
Hey guys,
Is there any difference between what is required in an economics essay or extended response? Or are they the same thing.
How would you llok at approaching this question:
Discuss the consequences of an unequal distribution of income and wealth and the impact of fiscal policy on the distribution of income in Australia
It is generally the same thing but look at the mark allocation to be sure. Say if it is worth 20 marks, definitely would take it down the essay path. However, some short answers use the directive term 'discuss' and are usually 6 ish marks. That 6 marks would require it to use a structured approach to answer the question.
In saying that the question above definitely sounds like an essay so do it like one. Intro, paragraph 1, paragraph 2, etc. You could do like one consequence and link that specific consequence to the impact on fiscal policy or you could just do them completely separate.
It's up to you!
Post by: joemassoud on June 01, 2018, 11:21:18 am
I have this assignmnet on the following question:
Discuss the effectiveness of the government’s monetary and fiscal (budget) economic policies in achieving economic growth, low inflation and low unemployment for the Australian economy.
I am really stucked with this question. If anyone can give me any ideas on what to write that would truly be awesome.
Also, with regard to monetary policy, am I suppose to be looking into the recent changes in terms of the cash rate (e.g. should I talk about what are the implications of keeping the cash rate steady?)
Thanks in advance!
Post by: JTrudeau on June 01, 2018, 03:59:29 pm
Hey Guys,
I have this assignmnet on the following question:Discuss the effectiveness of the government’s monetary and fiscal (budget) economic policies in achieving economic growth, low inflation and low unemployment for the Australian economy.
I am really stucked with this question. If anyone can give me any ideas on what to write that would truly be awesome.
Also, with regard to monetary policy, am I suppose to be looking into the recent changes in terms of the cash rate (e.g. should I talk about what are the implications of keeping the cash rate steady?)
Thanks in advance!
Hey there! So with Economics essays, I find them to be a bit of an “info dump but with style”. So take what you’ve learnt in your notes, and piece them together in a way that makes sense.
For this, you definitely want to define your key terms: Inflation, Economic Growth, Unemployment, Monetary Policy, and Fiscal Policy. This’ll take place in the first few paragraphs. You’ll want to cover the basic definitions, types, and briefly the causes.
Because it’s asking about monetary and fiscal policy in particular, make sure to elaborate on how they work (e.g. the buying and selling of second hand commonwealth government securities for MP, different budget outcomes of FP), and effects different stances have on the three economic issues.
Since it asks about effectiveness, you’d want to discuss the strengths and weaknesses of both policies, and throw in some examples and stats from Australian history.
As for diagrams, you could use the Changes in Interest Rates diagram for MP, and the Keynesian Inflationary Gap diagram or maybe Short/Long Run Phillips Curves.
Hope this helps! Good luck :)
Post by: shaner on June 02, 2018, 07:04:21 pm
I need help on structuring an essay for environmental sustainability of Topic 3. How would I approach it? Where would I need to incorporate govt policies within it?
Thanks!
Post by: emilyygeorgexx on June 02, 2018, 07:42:19 pm
Hey guys,
I need help on structuring an essay for environmental sustainability of Topic 3. How would I approach it? Where would I need to incorporate govt policies within it?
Thanks!
Hey!
I would definitely start off with the theory first. So things like
* Ecological sustainable development
* The trade off between economic growth and environmental quality (PPF)
* Private and social costs and benefits
* Externalities --> 2 diagrams (positive and negative)
* Focus on the 3 issues
* You may wish to do some conflicts with environment sustainability (this is more topic 4 but definitely can be integrated)
After all the theory, I would do the policies. Refer to 2018-19 Budget to make sure your essay has relevant info!
Hope this helps :)
Post by: henrychapman on June 04, 2018, 07:00:41 pm
Hey Guys,Hey Joe, (again - I seem to be following you a bit on the various forums haha)
I have this assignmnet on the following question:Discuss the effectiveness of the government’s monetary and fiscal (budget) economic policies in achieving economic growth, low inflation and low unemployment for the Australian economy.
I am really stucked with this question. If anyone can give me any ideas on what to write that would truly be awesome.
Also, with regard to monetary policy, am I suppose to be looking into the recent changes in terms of the cash rate (e.g. should I talk about what are the implications of keeping the cash rate steady?)
Thanks in advance!
Bit different to what everyone else might suggest, however the way we are taught to structure our essays is through phases in Australia's recent economic history. These phases include: Mining Investment Boom I (2002-2007) GFC (2008-2010) MIB II (2010-2012) and current "rebalancing" phase. Your teacher may want you to do it in terms of the economic objectives that have been listed above- i.e: a paragrah on growth, inflation and full employment and you can throw in examples from those phases in. However, if you wanted to do it the way I've suggested I'd highly recommend it because you are directly answering the question. You are asked to discuss the effective of fiscal and monetary on THE AUSTRALIAN ECONOMY-
i.e real life impacts. This really does address the question fully. However, I would check with your teacher before attacking it from this angle because they may not support it and I know a lot of schools don't- its just the way we're taught. I essentially did the same essay in preparation for my exam (its a policy essay on either micro or macro) which I'll attach here so you can see how my response its structured. It's an assess question, so I'm forced to make a judgement, whereas you just have to provide for and against. And what I would really suggest is don't be afraid to be critical of a policy, or say that it didn't really have much of an impact ! This shows that you're really addressing the question properly. other tips: for fiscal, include names of various policies and for monetary provide reasons why the cash rate changed.
But essentially:
Intro (answer the question and definitions)
AD graph (critical in every macro essay) and show impact on AD (step marker through it)
Monetary theory set up (RBA influences cash rate through buying and selling of CGS's in ESA's)
Fiscal theory set up ( conducted through the budget, three budget outcomes and three stances, automatic stabilisers)
THEN:
GFC: (I ignored MIB I because the stimulus I used is only 2008-2018)- Fiscal very effective, Monetary not a great impact but did its job. Both ran countercyclical to economic conditions of the time (i.e recession).
MIB II: Monetary main influencer (coz it has direct control over inflation) and fiscal also contractionary to reduce growth
Current: THE MOST IMPORTANT: the markers wanna see updated and relevant trends to the economy right now. So right now: monetary is operating at an expansionary stance to try and lift growth, while fiscal is working pro cyclically (i.e with the trend) as there have been a series of contractionary budgets to try and return to surplus. The judgement here: fiscal is ineffective and is hindering Monterey's effectiveness.
In all three of these it is fundamental to discuss the effectiveness of the achievement of the three objectives - then you're directly addressing the question. Essay is attached to this post. Best of luck !
Post by: joemassoud on June 04, 2018, 09:34:14 pm
Hey Joe, (again - I seem to be following you a bit on the various forums haha)
I just realised that I have seen you on various forums (I think it was Economics and Modern).
Also, thank you so much for your advice, I will be sure to ask my teacher if he wants us to approach the question the way you did or in a different way. (I think my teacher wants me to approach the question looking at recent policies, not sure tho). At the moment, I'm thinking of looking at 3 fiscal reforms and 2 monetary reforms. By any chance could you please have a read of what I have done so far:
REFORM #1: BACKING BUSINESSES TO INVEST & CREATE MORE JOBS
One of the major reforms that were brought about by the 2018-19 Australian Budget was the government’s decision to support businesses to invest and develop more jobs for Australians. The Government’s decision to “extend the $20,000 instant asset write-off by a further 12 months to the 30th of June 2019” (Budget.gov, 2018), ultimately provides small businesses with the opportunity to reduce costs of capital investment and overall provide incentives for them to innovate and grow. CPA Australia has argued for the ”write-off to be made a permanent feature of the tax system because it encourages business to invest and create jobs” (In The Black, 2018). Furthermore, the government’s commitment to “increase the unincorporated small business tax discount rate from 5% to 8%” (Budget.gov, 2018) further reveals the government’s aim to reduce the tax burden on businesses in order to promote investment, growth and stimulate more jobs for Australians. Consequently, the flourishing small business sector will see a decrease in unemployment as a result of a dramatic increase in job creation, and will ultimately assist in promoting economic growth by stimulating aggregate demand.
REFORM #2: GUARANTEEING THE ESSENTIAL SERVICES THAT AUSTRALIANS RELY ON
Moreover, with the 2018-19 budget, the government also introduced their decision to “guarantee the essential services that Australians rely on” (Budget.gov, 2018). This ultimately means Australians will be assured access to high‑quality hospitals and schools, a strong Medicare system and vital services for those with a permanent and significant disability. As a result, this will promote economic development through the increase in investment, which will ultimately trigger economic growth. The government is also “providing additional choice for older Australians to live healthier, more independent and safer lives” (Budget.gov, 2018), so they can take advantage of the opportunities that a longer life brings. Moreover, the Government’s record investment in schools will provide teachers with the means to improve the performance of our students and prepare them for the jobs of the future and thus, stimulating economic development.
REFORM #3: PROVIDING TAX RELIEF TO ENCOURAGE & REWARD WORKING AUSTRALIANS
Additionally, the government also stated their decision to provide tax relief to encourage and reward working Australians. It is through our prospering economy, the Government can fund this plan and ultimately deliver a stronger Budget to ensure Australia continues to live within its means. The government’s Personal Income Tax Plan will make personal income tax lower, fairer and simpler. The plan begins with permanent tax relief to middle and lower income earners, to encourage and reward working Australians and to assist with the cost of living pressures. The immediate benefit for low and middle-income earners will be up to “$530 a year and up to $1,060” (Business Victoria, 2018) for a working couple, starting in 2018-19. By lifting the “32.5% tax bracket to $90,000 from 1 July 2018, around 200,000 taxpayers will be prevented from moving into the 37% tax bracket” (The Sydney Morning Herald, 2018).
Post by: headsup on June 28, 2018, 04:16:34 pm
ummm.... bit stuck in my assignment but just have the following questions....
Year 1 - Revenue 825 - Expenditure 700
Year 2 - Revenue 900 - Expenditure 800
Calculate the budget outcome for Year 1
What is the budget stance for Year 2?
And last question.... Explain how the RBA, through Domestic Market Operations, would decrease interest rates in the economy...
Any help would be muchly appreciated as it is due tomorrow!!! and fighting a cold (= not thinking clearly)......
Thanks Heaps!!!!!!!
Post by: emilyygeorgexx on June 28, 2018, 04:51:59 pm
Hey!!!
ummm.... bit stuck in my assignment but just have the following questions....
Year 1 - Revenue 825 - Expenditure 700
Year 2 - Revenue 900 - Expenditure 800
Calculate the budget outcome for Year 1
What is the budget stance for Year 2?
And last question.... Explain how the RBA, through Domestic Market Operations, would decrease interest rates in the economy...
Any help would be muchly appreciated as it is due tomorrow!!! and fighting a cold (= not thinking clearly)......
Thanks Heaps!!!!!!!
Hey!
So firstly in year 1, government revenue is greater than government expenditure (T > G) so therefore the budget outcome it’s fiscal surplus.
For year 2, the budget is still in surplus as government revenue is still greater than government expenditure. However, the budget in Year 1 was a surplus of $125 million and in Year 2 the budget was in surplus of $100 million. The budget surplus got smaller so therefore the budget stance is expansionary.
To decrease interest rates the RBA buys back Commonwealth Government Securities which therefore increases the money supply in the Exchange Settlement Accounts. As there is now a greater supply of funds this puts downwards pressure on interest rates and decreases them. You can see this by drawing the supply curve and shifting it to the right!
Hope this helps ;D
Post by: headsup on June 28, 2018, 06:50:35 pm
For year 2, the budget is still in surplus as government revenue is still greater than government expenditure. However, the budget in Year 1 was a surplus of $125 million and in Year 2 the budget was in surplus of $100 million. The budget surplus got smaller so therefore the budget stance is expansionary.
Thanks heaps!!!!!!!
Just a quick question. On the table with the numbers it says Expenditure ($a).... what does that mean????
Thanks again..
Post by: emilyygeorgexx on June 28, 2018, 07:35:53 pm
Thanks heaps!!!!!!!
Just a quick question. On the table with the numbers it says Expenditure ($a).... what does that mean????
Thanks again..
Expenditure is how much money the government spends each year on things such as infrastructure projects, unemployment benefits, etc
Post by: headsup on June 28, 2018, 07:52:25 pm
Expenditure is how much money the government spends each year on things such as infrastructure projects, unemployment benefits, etcThanks... but wondering why is says in is in $a??? See image.
Post by: emilyygeorgexx on June 28, 2018, 08:55:57 pm
Thanks... but wondering why is says in is in $a??? See image.
Probably just a typo!
Post by: headsup on June 28, 2018, 08:57:39 pm
Probably just a typo!
Thanks! Man you are a wizz.... All the best with your HSC!!!!
Post by: headsup on June 28, 2018, 11:52:20 pm
Just two more questions! If someone could help be MUCHLY appreciated...
1) Explain how fiscal policy might be applied to improve a country’s external stability. (5 marks)
2) Discuss the effectiveness of fiscal policy at increasing the level of economic growth during a recession? (5 marks)
Thanks again!!!!
Post by: wlam on July 10, 2018, 07:15:11 pm
So I'm doing the Financial markets topic of the prelim year and am struggling to memorise the features of the terms e.g. ASIC, APRA, RBA, credit unions, investment banks etc., as there is a lot of theory. I find the other topics so far more logical rather than memory-based e.g. supply and demand.
How do i tackle this?
Thanks
Post by: JTrudeau on July 10, 2018, 08:00:03 pm
Sorry!!! Me again.....
Just two more questions! If someone could help be MUCHLY appreciated...
1) Explain how fiscal policy might be applied to improve a country’s external stability. (5 marks)
2) Discuss the effectiveness of fiscal policy at increasing the level of economic growth during a recession? (5 marks)
Thanks again!!!!
1. So for this question you can think about external stability as measured by the CAD, foreign debt, terms of trade, exchange rate, and/or international competitiveness. How does FP affect all of these measures?
An expansionary stance on the budget would inc economic growth, potentially worsening the CAD and putting us in greater foreign debt (to fund investment), but it may also improve our terms of trade (if demand for our exports grow) and cause an AUD depreciation (which means we're more internationally competitive. And vice versa for a contractionary stance.
You could also mention how low budget deficits/surpluses are seen as a greater sign of external stability by investors, which is why we're currently trying to bring the budget into surplus.
2. Ooh, now this question gets into a discussion of the strengths and weaknesses of FP. So economic growth can be measured by AD = C + I + G + X - M, meaning the government can directly impact the level of AD by changing G. And one of the big features of FP is that it has a short impact time lag-- so it'll get ya out of the recession fast.
The downside? We only change the budget once a year. So if the recession happens a month after the budget is released, we're kinda stuck with our current expenditure/taxation for another 11 months (in theory at least, in practice we have a Mid Year Economic and Fiscal Outlook around December to make revisions).
But hey, we've also got automatic stabilisers, which adjust the level of expenditure and taxation according to economic conditions. So while these stabilisers alone aren't very helpful in fixing a recession, they'll help slow the impact.
Hope this helps! :)
Hi,
So I'm doing the Financial markets topic of the prelim year and am struggling to memorise the features of the terms e.g. ASIC, APRA, RBA, credit unions, investment banks etc., as there is a lot of theory. I find the other topics so far more logical rather than memory-based e.g. supply and demand.
How do i tackle this?
Thanks
Hey wlam! Welcome to ATARNotes! :)
And yeah, Economics definitely has its sections where it's pure memorisation. For these sections, I rely heavily on things like flashcards and read-writing (name in progress, but basically reading a page of your notes and then trying to write down as much of it as you can-- rinse, repeat, until you get all the information). If you can remember what the abbreviations stand for, you can sometimes figure out what they do from the name.
Good luck in your studying!
Post by: wlam on July 10, 2018, 08:06:39 pm
1. So for this question you can think about external stability as measured by the CAD, foreign debt, terms of trade, exchange rate, and/or international competitiveness. How does FP affect all of these measures?
An expansionary stance on the budget would inc economic growth, potentially worsening the CAD and putting us in greater foreign debt (to fund investment), but it may also improve our terms of trade (if demand for our exports grow) and cause an AUD depreciation (which means we're more internationally competitive. And vice versa for a contractionary stance.
You could also mention how low budget deficits/surpluses are seen as a greater sign of external stability by investors, which is why we're currently trying to bring the budget into surplus.
2. Ooh, now this question gets into a discussion of the strengths and weaknesses of FP. So economic growth can be measured by AD = C + I + G + X - M, meaning the government can directly impact the level of AD by changing G. And one of the big features of FP is that it has a short impact time lag-- so it'll get ya out of the recession fast.
The downside? We only change the budget once a year. So if the recession happens a month after the budget is released, we're kinda stuck with our current expenditure/taxation for another 11 months (in theory at least, in practice we have a Mid Year Economic and Fiscal Outlook around December to make revisions).
But hey, we've also got automatic stabilisers, which adjust the level of expenditure and taxation according to economic conditions. So while these stabilisers alone aren't very helpful in fixing a recession, they'll help slow the impact.
Hope this helps! :)
Hey wlam! Welcome to ATARNotes! :)
And yeah, Economics definitely has its sections where it's pure memorisation. For these sections, I rely heavily on things like flashcards and read-writing (name in progress, but basically reading a page of your notes and then trying to write down as much of it as you can-- rinse, repeat, until you get all the information). If you can remember what the abbreviations stand for, you can sometimes figure out what they do from the name.
Good luck in your studying!
thanks!!
Post by: a.leisha on July 11, 2018, 11:23:24 pm
Post by: BiggieT on July 18, 2018, 04:22:42 pm
Heyy guys! Coming up to trials I'm trying to get a grasp on my notes and memorising content. As the subject is so content rich I was wondering if anyone had any tips on how to layout notes and how to summarise the info so its easier to memorise and not so overwhelming/content overload. Thank you!!! :)
The biggest tip I have is to structure your notes exactly as per the syllabus. This is especially handy when it comes to the short answer section of the paper. While Multiple Choice and Stimulus Response focus primarily on your ability to apply the content to a variety of real (and fake) situations, the short answer and essay require an intrinsic knowledge of the syllabus dot points and what each one entails.
The ATAR Notes book is a really good start, and then from there it's all about how much content you can remember and don't need to write down. For me, I have a really good photographic memory so keeping my notes shorter helps me retain more of the info. But if you prefer to read notes over and over, then perhaps longer notes will work better for you.
As is the case in pretty much every subject, and as clichčd as it sounds, what works best is a personal preference and there is truly no correct answer.
Good luck for the trials.
Post by: Brun on July 21, 2018, 04:05:19 pm
Heyy guys! Coming up to trials I'm trying to get a grasp on my notes and memorising content. As the subject is so content rich I was wondering if anyone had any tips on how to layout notes and how to summarise the info so its easier to memorise and not so overwhelming/content overload. Thank you!!! :)
One way is to try to use acronyms to summarise the main points of the syllabus. Sometimes you do have all the knowledge inside your head but forget one aspect of the course because of the huge amount of content. Acronyms can help with that, e.g. for topic 3 (economic issues):
Growth
Unemployment
Inflation
Distribution of Income
Environment
That's all the economic issues, except external stability. So you might make your acronym GUIDE E (I know, not the best, but makes it a lot easier to remember).
Post by: headsup on July 30, 2018, 08:19:04 pm
On our trial notice one of the points say 'National Income data in a table, question on foreign investment'... Just trying to understand exactly what it is trying to say???
Thanks!!
Post by: natasha.sharma8 on July 30, 2018, 10:42:01 pm
Explain how movermnet in the australian dollar can affect the perfomace of the australian dollar
Post by: Lumenoria on July 31, 2018, 02:01:06 pm
what key things i should talk about in this essay question
Explain how movermnet in the australian dollar can affect the perfomace of the australian dollar
Hey there! I'm assuming you mean in the Australian economy? Just at the top of my mind, I would probably address how exchange rate fluctuations impact foreign equity and liabilities (so external stability), international competitiveness (i.e. dutch disease which eroded non-mining sectors in the mining boom due to sustained appreciation), impact on domestic consumption (i.e. depreciation discourages Australians from buying imports), valuation effect, debt trap scenario, imported inflation and perhaps the RBA's interventions in response to these issues. Because you have to address cause and effect for an explain question, you should probably draw on the fundamental reasons for exchange rate fluctuations in one paragraph with diagrams to illustrate this. For instance, depreciation can be caused by a decrease in demand for Australian exports or a reduction in our interest rates, and vice versa. Hope this helps!
Post by: Lumenoria on July 31, 2018, 02:01:40 pm
what key things i should talk about in this essay question
Explain how movermnet in the australian dollar can affect the perfomace of the australian dollar
Hey there! I'm assuming you mean in the Australian economy? Just at the top of my mind, I would probably address how exchange rate fluctuations impact foreign equity and liabilities (so external stability), international competitiveness (i.e. dutch disease which eroded non-mining sectors in the mining boom due to sustained appreciation), impact on domestic consumption (i.e. depreciation discourages Australians from buying imports), valuation effect, debt trap scenario, imported inflation and perhaps the RBA's interventions in response to these issues. Because you have to address cause and effect for an explain question, you should probably draw on the fundamental reasons for exchange rate fluctuations in one paragraph with diagrams to illustrate this. For instance, depreciation can be caused by a decrease in demand for Australian exports or a reduction in our interest rates, and vice versa. Hope this helps!
Post by: Brun on July 31, 2018, 04:41:25 pm
Hey there! I'm assuming you mean in the Australian economy? Just at the top of my mind, I would probably address how exchange rate fluctuations impact foreign equity and liabilities (so external stability), international competitiveness (i.e. dutch disease which eroded non-mining sectors in the mining boom due to sustained appreciation), impact on domestic consumption (i.e. depreciation discourages Australians from buying imports), valuation effect, debt trap scenario, imported inflation and perhaps the RBA's interventions in response to these issues. Because you have to address cause and effect for an explain question, you should probably draw on the fundamental reasons for exchange rate fluctuations in one paragraph with diagrams to illustrate this. For instance, depreciation can be caused by a decrease in demand for Australian exports or a reduction in our interest rates, and vice versa. Hope this helps!
This is a very comprehensive answer and covers what I would probably write. One example of a good diagram to use for this type of essay would be the 'J-Curve' which shows how a depreciation in the AUD initially leads to a worsening of the Balance on Goods and Services (BOGS), but eventually does lead to an improvement of the BOGS. You can then link this to economic growth.
Post by: Bells_123 on August 01, 2018, 12:10:56 am
It's from the HSC 2016 paper :)
Post by: Lumenoria on August 01, 2018, 07:29:06 am
I was wondering for this multiple choice question, how do you figure out if the purchasing power of consumers in the domestic economy increases or decreases? I'm a bit confused on the logic there and I feel like I'm missing something.
It's from the HSC 2016 paper :)
Hey,
I've answered this before so I'll just paste my answer here:
I exaggerated the numbers a bit so that the effect is a bit more clearer to recognise.
Hypothetically, say there's an economy with inflation of 200% one year then 100% the next. In this economy, the oranges are $5 at the beginning, and you have $30 in your pocket as a domestic consumer. By the end of year one, oranges are worth $15 [(100%+200%)x$5]. However, by the end of year two, oranges are worth a massive $30 [(100%+100%)x$15]. In year one, you could buy two oranges, but in year two you could only buy one. Therefore, even though inflation has decreased, your purchasing power still diminishes over these 2 years. Hence, you can extrapolate this to 2%/1%, exaggerating the numbers just made it easier to illustrate my point lol.
So, while the inflation rate HAS in fact decreased compared to the previous year, inflation is STILL occurring so the real value (purchasing power) of any given amount of money has decreased. I suppose this is true regardless of the inflation rate as long as it is positive, even if it is 0.00001%. lol
I hope this helped! x
Post by: Bells_123 on August 02, 2018, 05:48:42 pm
Hey,
I've answered this before so I'll just paste my answer here:
I exaggerated the numbers a bit so that the effect is a bit more clearer to recognise.
Hypothetically, say there's an economy with inflation of 200% one year then 100% the next. In this economy, the oranges are $5 at the beginning, and you have $30 in your pocket as a domestic consumer. By the end of year one, oranges are worth $15 [(100%+200%)x$5]. However, by the end of year two, oranges are worth a massive $30 [(100%+100%)x$15]. In year one, you could buy two oranges, but in year two you could only buy one. Therefore, even though inflation has decreased, your purchasing power still diminishes over these 2 years. Hence, you can extrapolate this to 2%/1%, exaggerating the numbers just made it easier to illustrate my point lol.
So, while the inflation rate HAS in fact decreased compared to the previous year, inflation is STILL occurring so the real value (purchasing power) of any given amount of money has decreased. I suppose this is true regardless of the inflation rate as long as it is positive, even if it is 0.00001%. lol
I hope this helped! x
Thank you!!
I also had a question about unemployment and inflation - does a rising inflation rate lead to lower or higher unemployment and why?
I've heard different answers from people so I wanted to clarify.
Post by: emily_p on August 02, 2018, 06:32:10 pm
Thank you!!
I also had a question about unemployment and inflation - does a rising inflation rate lead to lower or higher unemployment and why?
I've heard different answers from people so I wanted to clarify.
An increase in inflation will lead to a decrease in unemployment. Inflation will lead to a wage price spiral, where employers will request wage rises so that they can meet their consumption expenses. The increase in wages/income will then be an incentive for those unemployed to find work as soon as possible - to take advantage of the high and increasing wages, and hence there will be less unemployment.
The Phillips Curve will show this :)
Post by: Fergus6748 on August 02, 2018, 08:05:13 pm
An increase in inflation will lead to a decrease in unemployment. Inflation will lead to a wage price spiral, where employers will request wage rises so that they can meet their consumption expenses. The increase in wages/income will then be an incentive for those unemployed to find work as soon as possible - to take advantage of the high and increasing wages, and hence there will be less unemployment.I can see what you are saying but ultimately an increase in inflation results in an increase in unemployment. As price inflation of goods and services will lead employees and unions to request/get wage increases to meet their consumption needs as you said, this increases the cost that a employer will have to pay each employee. However, employers are more likely to reduce their workforce or switch to more efficient capital options to keep production costs down and profits up. Unfortunately, because of this high wages is a incentive for the unemployed but because the job market is diminished, unemployment will ultimately increase.
The Phillips Curve will show this :)
Post by: henrychapman on August 05, 2018, 06:10:28 pm
Thank you!!
I also had a question about unemployment and inflation - does a rising inflation rate lead to lower or higher unemployment and why?
I've heard different answers from people so I wanted to clarify.
The answers you have gotten have probably confused you a little bit - both are correct to some extent however I'll try and put it in the simplest explanation.
Possibly the best way to do is break this up into short and long term impacts.
If unemployment is below the Non-accelerating inflation rate of unemployment (NAIRU) this will increase inflation. Because of economic growth, firms aren't looking for more firms new workers to enter the workforce. As such, they pay increased wages to those already in the workforce to attract the best existing labour. This therefore increases inflation. In the same way, if the government wanted to try and increase employment via macroeconomic policy, this would be successful in the short term at reducing unemployment, but over the long term wage increases won't keep up with inflation and as a result, firms will be forced to sack some of their workforce, which increases unemployment. Unemployment will return back to NAIRU.
So easiest way to remember it: growth and unemployment are interdependent on each other. An increase in growth will (generally) increase employment. Once it does this and firms are forced to compete for the best workers and thus increase their wages, this creates inflation.
However over the long term, this growth in wages cannot keep up with the wage of inflation, which increases firm costs because employees will want wages to keep going up. Forces firms to fire staff- therefore increasing unemployment.
I hope that answer was comprehensive and makes sense
Post by: Bells_123 on August 05, 2018, 11:49:45 pm
The answers you have gotten have probably confused you a little bit - both are correct to some extent however I'll try and put it in the simplest explanation.
Possibly the best way to do is break this up into short and long term impacts.
If unemployment is below the Non-accelerating inflation rate of unemployment (NAIRU) this will increase inflation. Because of economic growth, firms aren't looking for more firms new workers to enter the workforce. As such, they pay increased wages to those already in the workforce to attract the best existing labour. This therefore increases inflation. In the same way, if the government wanted to try and increase employment via macroeconomic policy, this would be successful in the short term at reducing unemployment, but over the long term wage increases won't keep up with inflation and as a result, firms will be forced to sack some of their workforce, which increases unemployment. Unemployment will return back to NAIRU.
So easiest way to remember it: growth and unemployment are interdependent on each other. An increase in growth will (generally) increase employment. Once it does this and forms are forced to compete for the best workers and thus increase their wages, this creates inflation.
However over the long term, this growth in wages cannot keep up with the wage of inflation, which increases firm costs because employees will want wages to keep going up. Forces firms to fire staff- therefore increasing unemployment.
I hope that answer was comprehensive and makes sense
Thank you for all the replies! I was confused in the beginning but it makes a lot more sense now ;D
Post by: ilikeapples on August 17, 2018, 07:55:41 am
Which statement is most correct?
A. There is no change in the exchange rate between 2019 and 2020.
B. Australian exports to the US are less expensive in 2020 compared to 2019.
C. Goods imported from the US are more expensive in 2019 compared to 2020.
D. For US investors, Australian assets are more expensive to buy in 2020 compared to 2019.
I am most confused about the conversions how do you change the ratio of dollars to better understand what is going on?
Thankyou
Post by: ilikeapples on August 17, 2018, 08:41:14 am
Post by: S200 on August 17, 2018, 11:12:10 am
I am having trouble working out this MC question from 2017 HSC: In 2019, one US dollar buys 1.25 Australian dollars. In 2020, one Australian dollar buys 0.75 US dollars.Well, for US$1, they are getting AU$1.25 - 25 cents more.
Which statement is most correct?
A. There is no change in the exchange rate between 2019 and 2020.
B. Australian exports to the US are less expensive in 2020 compared to 2019.
C. Goods imported from the US are more expensive in 2019 compared to 2020.
D. For US investors, Australian assets are more expensive to buy in 2020 compared to 2019.
I am most confused about the conversions how do you change the ratio of dollars to better understand what is going on?
Thankyou
Conversely, for AU$1, we are getting US$0.75 - 25 cents less.
the difference either way is the same, so I'd say that the exchange rate has not changed. Therefore A.
Post by: emilyygeorgexx on August 17, 2018, 11:46:43 am
Well, for US$1, they are getting AU$1.25 - 25 cents more.
Conversely, for AU$1, we are getting US$0.75 - 25 cents less.
the difference either way is the same, so I'd say that the exchange rate has not changed. Therefore A.
I am pretty sure there has been a change in the exchange rate between 2019 and 2020. I think the answer's B
Post by: Lumenoria on August 17, 2018, 12:02:32 pm
I am having trouble working out this MC question from 2017 HSC: In 2019, one US dollar buys 1.25 Australian dollars. In 2020, one Australian dollar buys 0.75 US dollars.
Which statement is most correct?
A. There is no change in the exchange rate between 2019 and 2020.
B. Australian exports to the US are less expensive in 2020 compared to 2019.
C. Goods imported from the US are more expensive in 2019 compared to 2020.
D. For US investors, Australian assets are more expensive to buy in 2020 compared to 2019.
I am most confused about the conversions how do you change the ratio of dollars to better understand what is going on?
Thankyou
I agree with Emily's answer.
Value of AUD in 2019 = 1 / 1.25 = 0.8
Value of AUD in 2020 = 0.75
Thus AUD has depreciated against USD, resulting in B :)
Post by: EEEEEEP on August 17, 2018, 12:12:47 pm
Well, for US$1, they are getting AU$1.25 - 25 cents more.There is definitely a change in the exchange (after converting either way).
Conversely, for AU$1, we are getting US$0.75 - 25 cents less.
the difference either way is the same, so I'd say that the exchange rate has not changed. Therefore A.
I disagree with you, after having done the calculations. The calculations for the USD are below. For the AUD
1/1.25 = 0.8 (2019)
0.8 - 0.75 (2020 value) = 0.05. People are getting 5c less per AUD that they convert to USD. :)
I agree with Emily's answer.That is correct. I'd also like to add that we can also confirm the answer, by doing the calculation from the US's perspective.
Value of AUD in 2019 = 1 / 1.25 = 0.8
Value of AUD in 2020 = 0.75
Thus AUD has depreciated against USD, resulting in B :)
We can also calculate the that (1/0.75) (indirect quotation for US) is 1.333
1.3333 - 1.25 = 0.08. The US are getting 8 cents more per dollar in 2020.
Thus, US investors and purchasers need to spend less USD to buy AU products.
Post by: S200 on August 17, 2018, 04:02:39 pm
Post by: ilikeapples on August 18, 2018, 11:51:58 am
Post by: raylmao on August 18, 2018, 12:13:43 pm
Unemployment question: If a scenario such as this was in a MC question "Charlie doesn’t have a job and gave up looking for one due to poor economic conditions in his town"... This would count as hidden unemployment right? However is he recognised under the unemployment rate - since he is not actively seeking work. Simply put: is hidden unemployment recognised in the unemployment rate and the labour force?
im pretty sure it's not.... simply because those who are classified as 'hidden' have given up seeking work.
Post by: CC0073 on August 18, 2018, 03:30:59 pm
Can someone please explain the answer of this multiple choice?
a call-centre operator has been made redundant as her position has been replaced by an automated system. Identify the most appropriate category for her situation.
The answer says Underemployment; I thought it was structural unemployment.
Thank you heaps!!!
Post by: Brun on August 18, 2018, 03:50:56 pm
Hello
Can someone please explain the answer of this multiple choice?
a call-centre operator has been made redundant as her position has been replaced by an automated system. Identify the most appropriate category for her situation.
The answer says Underemployment; I thought it was structural unemployment.
Thank you heaps!!!
Mmmhh... I agree that it should be structural unemployment (unemployment due to structural changes such as new technology which results in skills not being in demand in the labour force).
Underemployment means either that they are not working as many hours as they would like, but are still employed; or someone is working in a job that does not fully use their skills (e.g. a person with a commerce degree working in a fast food chain). The situation described here really does not fit either meaning (because she is unemployed not employed in a job without enough hours or use of her skills).
Was this an exam created by a school? Perhaps, it would be best to clarify whether there was some mistake made in the answers.
Post by: CC0073 on August 19, 2018, 08:09:00 am
Mmmhh... I agree that it should be structural unemployment (unemployment due to structural changes such as new technology which results in skills not being in demand in the labour force).
Underemployment means either that they are not working as many hours as they would like, but are still employed; or someone is working in a job that does not fully use their skills (e.g. a person with a commerce degree working in a fast food chain). The situation described here really does not fit either meaning (because she is unemployed not employed in a job without enough hours or use of her skills).
Was this an exam created by a school? Perhaps, it would be best to clarify whether there was some mistake made in the answers.
I found it in a trials paper from another school, but you're right, i suspected that it was a mistake in the answer as well, except I wasn't sure.
I didn't know underemployment could mean someone not using their skills before, so thanks so much for answering!!!
Cheers!
Post by: varun.amin on August 19, 2018, 08:26:11 pm
I've got a question that I'm unsure how to answer from a trial paper, it's attached below. Could someone please let me know how to work this out? Thanks in advance.
Post by: Bells_123 on August 21, 2018, 06:44:04 pm
Thank you!
Post by: emilyygeorgexx on August 21, 2018, 07:39:01 pm
I had a quick question wondering if the NAIRU and 'natural rate of unemployment' are the same thing (the level of unemployment without cyclical factors and inflation is stable) ?
Thank you!
I guess the concept behind each is quite similar. From my understanding and because the definition is just fresh in my head because I had my trial yesterday:
* The natural rate of unemployment is the the level of unemployment in the economy where there is no cyclical unemployment, therefore only structural, frictional, etc. Under the RBA Act 1959, full employment in the economy is said to be 5-6% unemployment
* The NAIRU is the level of unemployment in the economy that can be maintained without inflationary pressures occurring
This is just how I see it, wouldn't mind other opinions!
Post by: Fergus6748 on August 27, 2018, 02:14:43 pm
I had a quick question wondering if the NAIRU and 'natural rate of unemployment' are the same thing (the level of unemployment without cyclical factors and inflation is stable) ?
Thank you!
Going on from Emily
I guess the concept behind each is quite similar. From my understanding and because the definition is just fresh in my head because I had my trial yesterday:
* The natural rate of unemployment is the the level of unemployment in the economy where there is no cyclical unemployment, therefore only structural, frictional, etc. Under the RBA Act 1959, full employment in the economy is said to be 5-6% unemployment
* The NAIRU is the level of unemployment in the economy that can be maintained without inflationary pressures occurring
This is just how I see it, wouldn't mind other opinions!
The NAIRU is just a inflation target that the government aims to either reach or lower. The natural rate of unemployment is the actual rate and is what we quote. When the unemployment rate is above the government will use macro and micro policies to bring within NAIRU and if it is inside then the government will try to bring down NAIRU as they want lower unemployment. However the risk is that when the unemployment rate is below NAIRU then we are at an unsustainable rate of unemployment that causes inflationary pressures.
That's my understanding at least, hope this helps!!
Post by: wlam on September 06, 2018, 10:22:03 am
Can someone please explain to me about the recent trends in unemployment in the past few years (preferably after 2011)? Can someone discuss the reasons for these trends like the Mining Boom II etc.
Thanks
:) :)
Post by: Brun on September 11, 2018, 10:03:14 pm
Hi!!
Can someone please explain to me about the recent trends in unemployment in the past few years (preferably after 2011)? Can someone discuss the reasons for these trends like the Mining Boom II etc.
Thanks
:) :)
Hi,
These are my notes on the unemployment trends of Australia:
• Australia began experiencing higher unemployment rates in the mid 1970s, after recording very low unemployment rates in the 1960s and 1970s. The rate of unemployment peaked in the early 1990s due to structural changes and the 1990-91 recession – the unemployment rate was 10.7% in 1992-93 (the highest since the Great Depression of the 1930s).
• Following the 1991 recession, there was a steady decline in Australia’s unemployment rate during the consecutive years of economic growth.
• Unemployment fell to a record low of 4.2% in 2007-8, during the peak of the Mining Boom.
• In 2008-09, the GFC had a major impact on the Australian labour market, with unemployment rising to 5.8% in 2008-9 due to low growth of 1.7% in the economy. However, there was a quick recovery and unemployment fell to 5.1% in 2009-10 due to the continuing Mining Boom.
• The Mining Boom ended around 2013, leading to unemployment rising to over 6%.
• In March 2018, the unemployment rate was 5.5% due to a record 17 consecutive months of job growth. Most recent stats show that unemployment is now at 5.4% in July 2018 (due to continuing steady job growth and a slight decline in the participation rate). \
Post by: wlam on September 17, 2018, 09:56:35 pm
Hi,
These are my notes on the unemployment trends of Australia:
• Australia began experiencing higher unemployment rates in the mid 1970s, after recording very low unemployment rates in the 1960s and 1970s. The rate of unemployment peaked in the early 1990s due to structural changes and the 1990-91 recession – the unemployment rate was 10.7% in 1992-93 (the highest since the Great Depression of the 1930s).
• Following the 1991 recession, there was a steady decline in Australia’s unemployment rate during the consecutive years of economic growth.
• Unemployment fell to a record low of 4.2% in 2007-8, during the peak of the Mining Boom.
• In 2008-09, the GFC had a major impact on the Australian labour market, with unemployment rising to 5.8% in 2008-9 due to low growth of 1.7% in the economy. However, there was a quick recovery and unemployment fell to 5.1% in 2009-10 due to the continuing Mining Boom.
• The Mining Boom ended around 2013, leading to unemployment rising to over 6%.
• In March 2018, the unemployment rate was 5.5% due to a record 17 consecutive months of job growth. Most recent stats show that unemployment is now at 5.4% in July 2018 (due to continuing steady job growth and a slight decline in the participation rate). \
Post by: ilikeapples on September 23, 2018, 04:01:12 pm
Post by: Chelsea f.c. on September 23, 2018, 04:26:41 pm
Post by: Chelsea f.c. on September 23, 2018, 04:34:43 pm
One could say that america has a capital account deficit because they spend to much on consumption so can't afford to invest... or one could say America is such a good place to invest that even with americas savings there are so many good ideas that it requires overseas funds to satisfy...
Sorry for spamming but not familiar with course but study Eco finance at uni
Post by: hannahyasin on September 27, 2018, 10:01:17 pm
I also have half way gotten there but need some help understanding the entire concept.
I know there is no specific formula but first step is using multiplier to find MPC. find MPC. and then? I don't quite get how MPC could be used to find consumption and national income.
Post by: JTrudeau on September 28, 2018, 06:51:58 am
Hi, I've been trying to solve past mc questions when I stumbled upon a question that tricked me a little. I tried solving it but couldn't quite get the right answer. Its 2017 HSC MULTIPLE CHOICE QUESTION 19. anyone help me out?
I also have half way gotten there but need some help understanding the entire concept.
I know there is no specific formula but first step is using multiplier to find MPC. find MPC. and then? I don't quite get how MPC could be used to find consumption and national income.
Hey Hannah! Welcome to ATARNotes!
As a hint: know that the definition of MPC is change in consumption over change in income. $$MPC = \frac{\Delta C}{\Delta Y}$$
Give it a go, and then click on the spoiler tag for the solution.
Spoiler
(https://i.imgur.com/VgVKXg8_d.jpg?maxwidth=640&shape=thumb&fidelity=medium)
Post by: henrychapman on October 01, 2018, 10:42:35 pm
Post by: ilikeapples on October 03, 2018, 05:33:18 pm
Post by: emilyygeorgexx on October 03, 2018, 07:54:26 pm
Could someone help me out with the attached multiple choice question please (((:
So you first find out the MPC which is 200-110/300-150 = 0.6
Then now you know the MPC is 0.6 that means the MPS is 0.4
Then you do the multiplier so k = 1/0.4 which is 2.5
Then because it increased by $40bn you do $40bn x 2.5 which is $100 bn - This is the increase in national income
Lastly, to find the new equilibrium level of income you do $100bn + $300bn = $400bn
Therefore, the answer is C ;D
Post by: ilikeapples on October 03, 2018, 08:06:52 pm
So you first find out the MPC which is 200-110/300-150 = 0.6
Then now you know the MPC is 0.6 that means the MPS is 0.4
Then you do the multiplier so k = 1/0.4 which is 2.5
Then because it increased by $40bn you do $40bn x 2.5 which is $100 bn - This is the increase in national income
Ahh thank you didn't realise it was a multiplier question ::)
Lastly, to find the new equilibrium level of income you do $100bn + $300bn = $400bn
Therefore, the answer is C ;D
Post by: AdmiralVictor on October 05, 2018, 05:22:55 pm
Also any ideas on approaching a macroeconomic policy essay? The only thing I have in mind right now is basically dividing the essay into fiscal and monetary, then writing how each works to address certain economic objects (usually internal stability but may include others based on the question). And even then I'm not entirely sure how to structure these paragraphs
Post by: isaacdelatorre on October 07, 2018, 07:21:16 pm
How much evidence do we need to be incorporating for the short answers or is pure theory to answer the question enough? Usually at most I would make reference to a real world example if it's relevant - e.g. closing down of motor car industry for a question asking about removal of subsidies or structural unemployment - asking this because I lost 4 marks in my trials because I lacked 'evidence' in the form of statistics to back up my explanations
Also any ideas on approaching a macroeconomic policy essay? The only thing I have in mind right now is basically dividing the essay into fiscal and monetary, then writing how each works to address certain economic objects (usually internal stability but may include others based on the question). And even then I'm not entirely sure how to structure these paragraphs
Hey Admiral Victor,
In terms of short answer questions - I never used a statistic or trend unless the question specifically said to do it. Simply because it doesn't ask you to do that. Looking at marking criteria for the HSC in previous years you can see what you are required to do to get a certain mark (usually things like if you outline two things you can get a 2, explain one and describe the other = 3, explain two = 4) that kind of thing. Nowhere has it ever said to include an example to get the mark. This may be helpful in your explanation of the concept - for instance if you don't explain it well then the teacher might not give you marks but if you use an example to help your explanation then they may be more inclined to give you the marks.
For the essay: that's a tough one because it would depend on what the question is. As a general kind of framework you want to be able to say what the policies are; how they affect/achieve the objectives and how effective they are at doing so. In terms of preparing for it - I would recommend having a really thorough understanding of how each policy works and it's effects on the economy specifically the economic issues. Moreover I would also have a good understanding of micro policies and how they interact with macro policies which could be important in an 'evaluate the effectiveness' question. Hope these help :)
Post by: hannahyasin on October 08, 2018, 06:54:14 pm
another question, is the Carbon Pollution Reduction scheme still running?
if anyone has a sample band 6 environmental essay please send!
Post by: isaacdelatorre on October 09, 2018, 12:26:23 am
is there a specific structure for eco essays? also my teacher always says don't describe in an eco policy essay like anything- but almost every sample I read has a bit of description. in general for all essays, should historical trends be incorporated in one para or thought the essay & in an eco policy essay is it necessary to mention very old policies or should I go straight into contemporary policies?
another question, is the Carbon Pollution Reduction scheme still running?
if anyone has a sample band 6 environmental essay please send!
Hey Hannah,
So there's obviously no set structure to an essay - they wanna see your argument and voice develop. In saying that, your essay does have to be well structured, logical and cohesive. Check out this post I made a while back, it explains how I wrote my essays. You can see it here.
this is the structure I go through in my lectures as well - if you missed them - definitely check out the lecture slides in the noes section!
Good luck
Post by: parallaxd on October 14, 2018, 06:41:05 pm
"Analyse the effects of protectionist trade policies on the Australian economy."
Post by: emilyygeorgexx on October 14, 2018, 07:38:11 pm
For this question, it doesn't specify if global or domestic trade policies so does that mean you can talk about the effects of domestic and global protectionist policies on the Australian economy??
"Analyse the effects of protectionist trade policies on the Australian economy."
Hey!
Yes you definitely can and I probably would for this questions as well. Especially with the current trade war between China and the United States. Despite, Australia not being directly involved, as China is our major trading partner, anything that happens in the Chinese economy can have flow on effects into the Australian economy, especially with Australia being in the regional area as well.
Post by: key to success on October 20, 2018, 07:34:10 pm
I was wondering whether anyone can help me with the concept of terms of trade?
when there's an improvement in the tot, does that mean that the revenue gained from exports exceeds the amount the country pays for imports?
so if for example, we sell 100 exports for a $1 each (for simplicity), we get 100 in total, but if the following yr we sell 200 exports for a $1 each, we get 200 in total- is that an improvement in the tot?
Please, i'll really really appreciate any clarification.
Post by: Lumenoria on October 20, 2018, 08:23:57 pm
Hey guys!
I was wondering whether anyone can help me with the concept of terms of trade?
when there's an improvement in the tot, does that mean that the revenue gained from exports exceeds the amount the country pays for imports?
so if for example, we sell 100 exports for a $1 each (for simplicity), we get 100 in total, but if the following yr we sell 200 exports for a $1 each, we get 200 in total- is that an improvement in the tot?
Please, i'll really really appreciate any clarification.
Hey, the example you provide doesn't really provide any indication of the ToT because it's all relative to the PRICE of a given amount of imports - not the VOLUME, as you seem to be under the impression of.
If the ToT improves, this means exports are increasing relative to import prices. For example, if in 2017, exports and imports were both $1, the ToT would be 1/1 x 100 = 100 (remember ToT = export price index/import price index x 100). But say in 2018, export prices rose to $3 due to higher global demand, whilst imports only rose to $2, this would mean that export prices are outpacing import prices, so the ToT would improve from 100 to 150. That would mean we can buy 1.5x more imports with the same amount of exports. So in this case, the export revenue earned from 20 transactions would be $60, which can buy 30 imports (because they're priced lower at $2 remember).
I hope this makes sense! :)
Post by: key to success on October 21, 2018, 04:28:45 pm
Hey, the example you provide doesn't really provide any indication of the ToT because it's all relative to the PRICE of a given amount of imports - not the VOLUME, as you seem to be under the impression of.
If the ToT improves, this means exports are increasing relative to import prices. For example, if in 2017, exports and imports were both $1, the ToT would be 1/1 x 100 = 100 (remember ToT = export price index/import price index x 100). But say in 2018, export prices rose to $3 due to higher global demand, whilst imports only rose to $2, this would mean that export prices are outpacing import prices, so the ToT would improve from 100 to 150. That would mean we can buy 1.5x more imports with the same amount of exports. So in this case, the export revenue earned from 20 transactions would be $60, which can buy 30 imports (because they're priced lower at $2 remember).
I hope this makes sense! :)
thank you so much- so its the price of the exports/imports that effects it so nothing to do with the total value of the imports/exports?
i'm confused as to how they may work out a price if there are so many different types of exports- is it an average of the price of all exports/imports?
Post by: Brun on October 27, 2018, 10:57:51 am
thank you so much- so its the price of the exports/imports that effects it so nothing to do with the total value of the imports/exports?
i'm confused as to how they may work out a price if there are so many different types of exports- is it an average of the price of all exports/imports?
Yep, that's correct! If you take a look at some of the HSC papers, a common question will be: Which of these factors could have caused a rise in the terms of trade?
The answers would include: a) A rise in the volume of exports; b) A rise in the price of exports
The correct answer would be (b) not (a) as the TOT only measures price of exports/imports rather than volume.
As for how the TOT measures multiple goods/services, the formula for TOT is: Export price index/Import price index. This price index differs from country to country, but it could simply be an average of all prices or it could be weighted according to the significance of a particular good in a country's trade (similar to the consumer price index for inflation).
You won't have to worry about how this is calculated, as it does involve complicated formulas which are beyond the scope of the course. You would always be given the price index for imports and exports if you were asked to calculate TOT. Hopefully, this explanation clears things up for you! :D
Post by: ilikeapples on October 31, 2018, 08:29:27 am
Thankyou
Post by: Caleb Campion on October 31, 2018, 10:50:30 am
Hi I just have a question based on the globalisation topic: so I have a prepared essay in point form for a broad question on 'assessing the impact of globalisation', while the syllabus specifies that we must have a case study showing the effects of globalisation on an economy other than Australia (which I also have prepared for) it doesn't specify that it can ask for the effects of globalisation on Australia specifically - is this something that we are assumed to have stuff prepared for that they can ask and if so what things should we be talking about?
Thankyou
Yeah look, I would definitely suggest that your prepared essay be broad, and be very much general dot points and arguments, because usually its just not worth the risk or effort to use a prepared essay in an economics exam. If it doesn't fit the question, you just will not get top marks at all.
But yes, if they asked for the impact of globalisation, I assume that they would very much expect you to talk about Australia. I would suggest maybe a 2/3rds Australia, and 1/3rd other economy, if you wanted or even 100% Australia. But if they ask specifically for another economy other than Australia, then do more obviously.
I don't think they would ask specifically for Australia as it is a given that it is about Australia if not specified otherwise.
Post by: Fergus6748 on October 31, 2018, 11:33:45 am
Hi I just have a question based on the globalisation topic: so I have a prepared essay in point form for a broad question on 'assessing the impact of globalisation', while the syllabus specifies that we must have a case study showing the effects of globalisation on an economy other than Australia (which I also have prepared for) it doesn't specify that it can ask for the effects of globalisation on Australia specifically - is this something that we are assumed to have stuff prepared for that they can ask and if so what things should we be talking about?Heya, from past exams, they have usually specificied whether they want either Australia, another country, or both at once.
Thankyou
Yeah look, I would definitely suggest that your prepared essay be broad, and be very much general dot points and arguments, because usually its just not worth the risk or effort to use a prepared essay in an economics exam. If it doesn't fit the question, you just will not get top marks at all.Otherwise, Caleb is on the point, it isn't really worth preparing an essay specifically. Since economics is such a broad and connected subject, the question can be on basically anything and trying to pin it down with a prepared essay is risky and might be a inefficient use of time. More generally speaking, they expect you to have fairly extensive knowledge on Australia's economic policies and very well may ask us in the exam to go on at length about them. I would recommended summarising and revising the strategies of both Australia and another country but I wouldn't go much further than that. Hope this helps!!
But yes, if they asked for the impact of globalisation, I assume that they would very much expect you to talk about Australia. I would suggest maybe a 2/3rds Australia, and 1/3rd other economy, if you wanted or even 100% Australia. But if they ask specifically for another economy other than Australia, then do more obviously.
I don't think they would ask specifically for Australia as it is a given that it is about Australia if not specified otherwise.
Post by: ilikeapples on November 01, 2018, 08:24:18 am
Post by: sarahsachhha on November 03, 2018, 08:46:56 am
Thanks in advance
Post by: Fergus6748 on November 03, 2018, 02:12:26 pm
Hi could someone help me out as I get bit confused between the different types of efficiency.. If a resource is not being used in the most efficient way is this a lack of technical or allocative efficiency and why?Hey, so in that case it would be a lack of technical efficiency. As it is talking about the use of a resources, so it's talking about the productivity. Here is a quick definition of the three main efficiences:
Thanks in advance
Allocative efficiency: ensuring resources are distributed to the most valued production (i.e. resource allocation).
Technical efficiency: maximizing production from fixed resources (i.e. increased productivity).
Dynamic efficiency: the ability of the economy to adapt to changing conditions.
Hope this helps!!!
Post by: EclipseApocalypse on November 03, 2018, 03:00:09 pm
Post by: Fergus6748 on November 03, 2018, 04:05:34 pm
(1) So for the first part, it would be 12 as free trade is about removing the barriers to trade, namely protectionist policies, so in this case it would be a subsidy.
(2) The world price would be 8 for similar reasoning. The price without any subisidies or tariffs.
(3) Quantity supplied would be 200 units, just follow the price and match up with the Supply curve.
(4) Quantity supplied is 150 for same reasoning
(5) Quantity demanded with free trade is 150 as that's where the price meets the demand curve
(6) The quantity of exports is the same as above so 150 units as the curves are at equilibrium so the supply meets the demand.
(7) This gets tricky, so you have to find the amount of units of product is sold to do this you look at the quantity supplied at the price 12 (200 units) and the quantity demanded at the same price (100 units) and then subtract it, then you times that quantity by the price sold, so 12:
200-100=100 units
100 x 12 = $1200 (Supplier revenue without free trade)
(8) Similar to above but this time since the supply meets the demand curve at the world price (with free trade) of 8, it is just a straight multiplication:
8 x 150 = $1200
(9) Lastly, not 100% on this question but I would say that it is a export-competing market because the supplier revenue without free trade (e.g. Australia) is the same as the supplier revenue with free trade (e.g. Japan). Thus, because each supplier is gaining the same amount of revenue, neither of them is out competing the other, so it is an export-competing market.
Hope this helps!!!
Post by: AdmiralVictor on November 04, 2018, 09:51:42 pm
In regards to essay questions that require 'explain the impacts of x on y' I'm certain we have to detail the causes first before delving into the impacts? (hence the explain directive) --> e.g. explain the effects of fluctuations in the exchange rate on the Australian economy - I would first have to detail the causes of an appreciation and depreciation before going into the impacts? And would it be fine to divide these type of essays into causes first then effects by paragraph?
And does the same apply for 'explain the causes of x on y' where we should also go into the effects? - e.g. explain the causes of AU's persistent CAD
Post by: steviemay2000 on November 05, 2018, 02:37:37 pm
Post by: studyily on November 05, 2018, 04:56:10 pm
Which of the following could lead to a deterioration in the structural component of Australia's current account deficit?
a) An increase in net foreign liabilities
b) A decrease in portfolio investment by foreign firms
c) A decrease in export volumes due to a weakening global economy
d) An increase in imports resulting from an improvement in the terms of trade
I'm not too sure how to answer this question. What does it mean by 'deterioration in the structural component of Australia's CAD'? Thank you!
Post by: fahdabdul on November 05, 2018, 05:00:42 pm
Hi, could someone please help me differentiate between foreign aid which goes into the capital and financial account and foreign aid which goes into the net secondary account of the current account - I have heard so many explanations but they all seem to contradict each other and I keep getting multiple choice questions wrong.. thank you!
Foreign aid which goes into the net secondary income account is not for a specific thing. You could say its general foreign aid. Foreign aid in the capital account occurs when it is for a specific purpose such as the development of schools in Zimbabwe or something like that.
Post by: steviemay2000 on November 05, 2018, 05:22:33 pm
Post by: Caleb Campion on November 05, 2018, 06:44:40 pm
Hello first post here! what statistics should be memorised for the upcoming essays in the economics exam? Any key topics/statistics or trends?
If you haven't already memorised statistics or trends --> There isn't a whole lot you can do right now.
The best help I could suggest this close to the exam is memorising the peak highs and lows, as well as the current statistics for each of the following:
- CAD
- Exchange Rate
-Unemployment
- Inflation
- Interest Rates
- Growth
- Distribution of Income (GINI Coefficient)
- historical terms of trade movements (ie, increased significantly through the 2000s due to the mining investment boom, and has declined steadily since 2012 due to falling Chinese demand)
At the least know the current statistic for each of these, and have a general idea of how each of these elements changed/moved during the Global Financial Crisis (2008-9)
Post by: Caleb Campion on November 05, 2018, 06:52:36 pm
Hi! Just came across a past HSC question (2015 Q15):
Which of the following could lead to a deterioration in the structural component of Australia's current account deficit?
a) An increase in net foreign liabilities
b) A decrease in portfolio investment by foreign firms
c) A decrease in export volumes due to a weakening global economy
d) An increase in imports resulting from an improvement in the terms of trade
I'm not too sure how to answer this question. What does it mean by 'deterioration in the structural component of Australia's CAD'? Thank you!
When they use the term deterioration, they are suggesting the CAD is 'worsened', in that, which one of the four options is a structural factor that would increase Australia's Current Account Deficit.
We know that one of the structural components of Australia's CAD is our high level of foreign debt, and liabilities. So if this were to increase, obviously our repayments and servicing costs will increase, seen as debits in the NPY, and will worsen the CAD --> Therefore our answer is Option A.
For closure, we know this answer is also correct through elimination: Option B is a cyclical factor due to the changing sentiment of investors etc, Option C suggests changes due to a weakening global economy, which obviously cyclical, and so too in Option D, the terms of trade, which is also cyclical due to changes in demand for particular commodities etc.
Hope that helps/ isn't too complicated.
Post by: 61288 on November 05, 2018, 07:10:47 pm
Then with this hsc question "Australia provides foreign aid to build schools in a developing country. how is this recorded" why was the answer still in the capital account when it is a specific thing?The main reason why it is the capital account is because it factors in "conditional aid". Because the government is providing money specifically for building schools, this is a form of conditional aid, hence it is recorded on the capital account. Hope this helps!
Post by: emilyygeorgexx on November 05, 2018, 07:42:54 pm
Hi! Just came across a past HSC question (2015 Q15):
Which of the following could lead to a deterioration in the structural component of Australia's current account deficit?
a) An increase in net foreign liabilities
b) A decrease in portfolio investment by foreign firms
c) A decrease in export volumes due to a weakening global economy
d) An increase in imports resulting from an improvement in the terms of trade
I'm not too sure how to answer this question. What does it mean by 'deterioration in the structural component of Australia's CAD'? Thank you!
Okay so structural component of the CAD can be both the narrow export base (BOGS) or savings and investment gap (NPY).
This questions is more leaning (imo) to the savings investment gap. So as Australia is a net capital importer, we don't have enough to service our own liabilities as the domestic pool of savings is very low due to the crowding out effect. As a result of this low level of savings, Australian's look overseas to borrow the money necessary to service their liabilities. However, when borrowing the money from overseas this incurs debt servicing costs such as interest which must be paid, and are recorded as a debit in the NPY. These 2 factors account for contributing to the CAD and the level of foreign debt.
So as you know NFL = NFD + NFE, so any increase in the net foreign debt will worsen the overall NFL. Therefore the answer is A.
EDIT: Didn't see someone already answered it!
Post by: gershadev on November 06, 2018, 12:47:51 pm
I'm confused in the:
1) difference between exchange settlement accounts and commonwealth government securities?
2)what does liquidity have to do with RBA buying and selling of CGS?
3)would an Australian buying real estate from overseas be recorded as a debits on the current account or capital and financial account?? (Is the real estate a 'good' or a 'financial asset') (found on another thread :P)
Thanks
Post by: bigro27 on November 06, 2018, 05:49:24 pm
Post by: FutureLawStudent on December 23, 2018, 01:55:48 pm
Hey I was wondering how many pages are expected for a 19-20/20 essay in economics? I usually write around a full booklet (7-8 pages) but in the case there is an essay on something like environment then I think I'd be looking at like 5 pages. Anyone know roughly what the HSC markers expect to hit those really up tier responses assuming the content itself is strong, detailed and data-supported?
/quote]
This is obviously very late, but if you want my 19.5/20 2018 HSC Economics essay I can upload it.
Post by: 006896 on January 07, 2019, 11:08:46 am
With tariff diagrams, I understand that the gov revenue is the rectangle formed from world price to the new price with the tariff added. However, when the tariff is so high, that it is equal to the equilibrium price, does that mean the gov receives no tariff revenue? Or how do you calculate revenue in that instance? I have attached a question that asks for this knowledge.
Thanks
Post by: 006896 on January 07, 2019, 11:28:42 am
So with subsidy diagrams, are the foreign importers not considered at all? Eg. in tariff diagrams, the importer revenue can be calculated. Is this unable to be calculated in subsidy diagrams?
Also, why, when domestic suppliers get subsidies, do they decrease their supply? Wouldn't it be more beneficial to keep their supply at the same level, as they would get a greater overall revenue?
I've attached a diagram, which I'm not sure if it is helpful.
Thanks
Post by: henrychapman on January 10, 2019, 12:13:36 pm
Hi,
So with subsidy diagrams, are the foreign importers not considered at all? Eg. in tariff diagrams, the importer revenue can be calculated. Is this unable to be calculated in subsidy diagrams?
Also, why, when domestic suppliers get subsidies, do they decrease their supply? Wouldn't it be more beneficial to keep their supply at the same level, as they would get a greater overall revenue?
I've attached a diagram, which I'm not sure if it is helpful.
Thanks
Hey there,
These are really good questions and certainly protection as a whole is one of the harder concepts to grasp in the course.
To answer the first question, foreign importers are not considered in the subsidy diagram and only shows the domestic market for when an industry is operating in accordance with the market forces of supply and demand, and then the changes in supply and demand once the subsidy has been implemented. The only calculation to be done in a subsidy diagram is the size of subsidy, which is the vertical height on the diagram.
And your second question, theoretically, if firms are given a subsidy, this then lowers their costs of production which therefore lowers the market price- meaning that they are unable to make enough profit. So it is true, all other things being equal, that they will decrease their supply. However, overseas competitors will also decrease their supply as the domestic producers are more competitive in the market due to cheaper prices, therefore increasing domestic supply relative to overseas supply. In a way, subsidies almost "block" overseas competition as subsidies make it cheaper for goods to be produced and therefore cheaper to purchase as reflected through their market price.
I know this may sound a bit confusing but hope this helps !
Post by: emilyyyyyyy on January 14, 2019, 03:04:35 pm
I need help with an assessment! So the question is Evaluate the economic growth and the economic development of the Brazilian economy in the last decade in regard to its integration into the global economy.
My teacher suggested we break the assessment up into sections: intro, global impact (e.g. quality of life, unemployment, trade, eco policies, etc), impacts of globalisation (e.g. market deregulation, protectionism, joining trade blocs or unions, TNCs, etc), conclusion.
I'm confused as to how I should go about answering the question, and how I should structure it?
Thanks heaps
Post by: emilyygeorgexx on January 15, 2019, 05:59:46 pm
hi!
I need help with an assessment! So the question is Evaluate the economic growth and the economic development of the Brazilian economy in the last decade in regard to its integration into the global economy.
My teacher suggested we break the assessment up into sections: intro, global impact (e.g. quality of life, unemployment, trade, eco policies, etc), impacts of globalisation (e.g. market deregulation, protectionism, joining trade blocs or unions, TNCs, etc), conclusion.
I'm confused as to how I should go about answering the question, and how I should structure it?
Thanks heaps
Hey!
I'll try and help answering this question because I did China as my case study but the structure should be relatively the same. So when i wrote an essay for a similar question like this the best thing I found was breaking it up into strategies that promoted economic growth and strategies that promoted economic development. Obviously this whole topic is about the 'Global Economy' so you would want to explain/analyse about how the strategies Brazil implemented have contributed to the growth of the global economy. You could do this by looking at changes in GWP and even Brazil's GDP, different trade patterns, FDI inflows and outflows, etc. After going into all this theory you would then use your statistics to explain the effects these strategies have had on globalisation, like you have mentioned above. Going into the specific economic policies and its effects will be a bit tricky if you haven't done the topic 'Economic Issues' and 'Economic Policies and Management' (obviously assumed you haven't) but the basics should be easy to integrate.
Hope this helps! ;D
Post by: meerae on January 28, 2019, 08:02:22 pm
I am freaking out about my economics exam next week. How would you answer this; "Using examples, discuss the main macroeconomic and microeconomic effects of protection on a national economy like Australia"
I discussed general advantages/disadvantages of protection and assorted them intro macro and micro but its worth 5 marks and the info I have doesn't seem sufficient.
Thanks!
meerae :)
Post by: emilyygeorgexx on January 28, 2019, 09:57:16 pm
Hi!
I am freaking out about my economics exam next week. How would you answer this; "Using examples, discuss the main macroeconomic and microeconomic effects of protection on a national economy like Australia"
I discussed general advantages/disadvantages of protection and assorted them intro macro and micro but its worth 5 marks and the info I have doesn't seem sufficient.
Thanks!
meerae :)
Hey!
So basically when looking at the question you need to break it up into macro and micro. Macro essentially is looking at the whole of the Australian economy whereas, micro targets individual sectors of the economy such as employment, competition, agricultural assistance.
Some macro things I can think of off the top of my head:
* Decreases Australia's ability to trade with the rest of the world which causes a decrease in their GDP and ultimately decreases GWP
* Decreases Australia's access to a multitude of goods and service, in which they become scarce. As there is now a limited selection of goods and services, this drives the price up and contributes to an increase in cost-push inflation in the Australian economy
Some micro things I can think of off the top of my head:
* In the short term a decrease in protection causes an increase in structural unemployment for export competing businesses within the economy as their trade has now become restricted. However, in the long term this decrease in protection causes a decrease in unemployment due to increase labour productivity and technical efficiency occurring within the economy. These resources are reallocated to more efficient industries in the economy so they are able to operate at their full productive capacity.
* A decrease in protection increases the choice of goods and services available to customers. This therefore, increases competition within the economy and causes a decrease in price. Due to this decrease in price this stimulates demand within the economy, causing increased spending which overall contributes to increase in Australia's GDP and levels of economic growth.
There is definitely 100000 things that I have missed but I hope these few help ;D
Post by: emilyyyyyyy on February 20, 2019, 12:38:51 pm
thanks!
Post by: meerae on February 20, 2019, 06:51:18 pm
Hi, is someone able to help explain to me how tariffs, subsidy and quota diagrams work? I just don't get them at all :(
thanks!
Hey, Emily!
I would suggest looking at this website for diagram simulators which will further deepen your understanding; http://hsceco.com.au/simulators.html
I also reference them.
So tariffs are govt. imposed taxes on imports, thus, it would increase the world price of a good. When price increases, domestic demand would decrease and domestic supply would increase. You can see this on the simulation as when you increase the price of the tariff, the green line begins to move closer together.
Subsidies are cash payments from the govt. to businesses to encourage production of a g/s and influence the amount of resource allocation in an economy. If you look at the simulation, when the subsidy increases, so does the quantity supplied of the g/s. It is also good to note that the equilibrium quantity also decreases.
Quotas control the amount of goods that is allowed to be imported over a period of time. As the quota increases, supply will decrease and demand will increase, as seen in the simulation. For e.g. when the quota is at 500, the quantity supplied is 150 and the quantity demanded is 650. When the quota increases to 600, the quantity supplied is 100 and the quantity demanded is 700.
Hope this helps!
meerae :)
Post by: Merry Marshal on February 20, 2019, 07:03:49 pm
Hi, is someone able to help explain to me how tariffs, subsidy and quota diagrams work? I just don't get them at all :(
thanks!
hey girl, this site might help. https://www.economicsonline.co.uk/Global_economics/Tariffs_and_quotas.html
Post by: Merry Marshal on February 24, 2019, 02:57:51 pm
Post by: Chelsea f.c. on February 24, 2019, 03:55:29 pm
Post by: henrychapman on February 28, 2019, 03:36:49 pm
anyone know the impact of a reduction in protection on the CAD (current account deficit)? i am confusion, :'( please help!!!!!!!!
impacts would be:
more imports because it is now cheaper overseas therefore worsening the balance of goods and services and therefore worsening the CAD
Post by: emilyyyyyyy on March 10, 2019, 02:53:17 pm
i have a really bad teacher for eco and he doesn't teach anything - i don't learn in class and for prelims, i had to teach myself the content! Do you guys have any advice for learning the year 12 content, and how difficult would it be for me to teach myself at this point in the hsc year?
thanks!
Post by: mani.s_ on March 10, 2019, 04:06:33 pm
Post by: emilyyyyyyy on March 11, 2019, 07:03:24 pm
How should i go about studying and revising for eco, especially taking into consideration I practically have learnt nothing ...
is there any hope for me?!
thanks!
Post by: varun.amin on March 12, 2019, 06:35:24 pm
Hi all,
How should i go about studying and revising for eco, especially taking into consideration I practically have learnt nothing ...
is there any hope for me?!
thanks!
Hi Emily,
There are three main components to HSC economics in terms of exams, with each having different methods to study for. Try and focus on where you are weakest (it's easier to pick up a few extra marks in MCQ than converting a 19/20 essay to a 20/20).
-MCQ
-Short Answer
-Essays
Over the holidays I would firstly consolidate all the notes and content you’ve done up to date for economics using the syllabus dot points.With economics if you want to do well, you need to focus on understanding the concepts rather than memorising notes. HSC economics can throw different scenarios and situations at you so if you understand the concepts you can be flexible with your answers and directly answer the question. In my notes I would also note down statistics, definitions and diagrams which are all helpful to scoring well in essays and short answers and scoring full marks beyond a conceptual understanding. Also, try to understand
The next thing I would do is to go over the HSC past papers since 2010 and answer all the questions you can, each exam has a marking guidelines section which indicates which topic the section is from. After you’ve completed the exam my advice would be to mark the MCQ and Short Answer sections of the exam yourself and note down where you lost marks as these are the topics you need to revise, as well as giving the exam to your teacher or perhaps another teacher who has taught Economics at your school. Use that feedback to improve your essays and short answers. If you ever run out of past papers try and look for some online from other schools, otherwise your teacher may give you access to old ones from your school.
In terms of study guides, I found most fairly unhelpful, the only ones I really found best was the ATAR notes guide which is almost a bible for HSC economics as well as ATOMI (if the resource is available to you). If you want more detailed information on how to study for HSC economics I recommend checking out the following guides:
-https://atarnotes.com/forum/index.php?topic=166446.0
-https://www.artofsmart.com.au/categories/hsc/economics/
-https://medium.com/state-ranker-manual/economics/home
Post by: isaacdelatorre on March 13, 2019, 04:27:02 pm
hi all,
i have a really bad teacher for eco and he doesn't teach anything - i don't learn in class and for prelims, i had to teach myself the content! Do you guys have any advice for learning the year 12 content, and how difficult would it be for me to teach myself at this point in the hsc year?
thanks!
Hi Emily,
Sorry for the delayed response!
Well done on learning the preliminary content, I know it is a little bit tricky to get your head around.
It is quite a usual to need to teach yourself parts of the course, I am sure that your teacher does not intend to not teach you. Have you tried to identify what exactly it is about his teaching that you aren't resonating with? If you brought this up with the teacher I am sure that he would be happy to fix it. I know that for my business studies class I told the teacher that spending too much time on just explaining definitions wasn't really beneficial and we could do more discussions about the broader issues and she took that criticism on board.
If this doesnt work, definitely talk to other teachers in that faculty or at your school.
There are also a heap of other resources out there for you, this forum for example is great for asking questions, answering questions (this really helped me during my HSC), getting essays marked etc. As well as that, there are a plethora of paid and unpaid resources including review questions/notes/tutoring services etc. that you just need to look out for.
If you are going at this alone, definitely your textbook is your bible! read that inside and out and make sure you understand all the dot points, especially the definitions for something like economics. I would also try to test yourself and try to use the content as much as possible --> i.e. doing practice questions, past papers or answering questions on the forum. ANything like this which makes you think about the content come up with an answer is great practice.
I really hope that this doesn't affect your year 12 experience and that you do pull through!
Good luck!
I have an economics assignment due soon and its on comparing the australian economy and one other asian economy. Its a presentation 3-4 mins. In my speech i was wondering whether or not i should start with a definition for each subslide like economic growth, quality of life, etc????
Hey Mani,
It really depends on what the marking criteria is, the question etc.
3/4 mins is not really much time - however i would definitely suggest having a definition for the key concepts - not for all of them.
I would suggest looking at the marking criteria and making sure you're addressing all those points in your presentation, that is gonna get you more marks than whether or not you have a defintion!
Hope this helps,
Isaac
Post by: chelsean on March 13, 2019, 07:11:42 pm
I have a question on topic 2 for eco.
What is the relationship between the first 2 dot points
value, composition and direction of Australia's trade and financil flows to the next 3 points Australia's Balance of Payments, exchange rates and free trade and protection?
Post by: chelsean on March 13, 2019, 08:14:08 pm
Is this part talking about terms of trade? How does this impact Australia's trade?
Post by: isaacdelatorre on March 14, 2019, 05:32:34 pm
Hi,
I have a question on topic 2 for eco.
What is the relationship between the first 2 dot points
value, composition and direction of Australia's trade and financil flows to the next 3 points Australia's Balance of Payments, exchange rates and free trade and protection?
So the first dot point about trade and financial flows is related to the next part about balance of payments and exchange rates because it gives you context about the different flows australia has with the rest of the world. It's important to see how they've changed over time and realise how dependent australia is on the rest of the world.
In this way, you're able to see how the balance of payments changes and better understand how changes in economic conditions or other factors will cause changes to the different accoutns on the balance of payments and in turn how they affect exchange rates.
It's not a huge thing to know - it's sort of an underlying concept - there won't be an explicit question. but you will have to draw from both sections to answer questions.
Hope this helps.
Isaac :)
Non-rural goods, in seasonally adjusted terms at current prices, rose $5.59 billion or 8 per cent to $75.3 billion. This was driven by metal ores and minerals, up $1.6 billion or 7 per cent, and coal, coke and briquettes up $989 million or 6 per cent.
Is this part talking about terms of trade? How does this impact Australia's trade?
Hmm would you mind sending where this came from - it's a little hard to interpret without context about what this is talking about.
But from a glance - I am assuming that this is summarising Australia's trade for some period of time. In this case, it's talking about the composition of trade mainly how non, rural goods increased and specifically which ones increased.
Terms of trade talks mainly about the relative prices of exports and imports - since this doesn't really mention imports and is a total value it wouldn't be talking about terms of trade.
In terms of how this impacts trade, i'm not too sure since this is talking about australia's trade itself - any argument about how it's current trade influences future trade is kinda wishy washy.
But please let us know where this came from and I can try to make a bit more sense from it!.
Isaac
Post by: chelsean on March 14, 2019, 05:34:01 pm
Post by: stels on March 15, 2019, 04:17:20 pm
Post by: isaacdelatorre on March 17, 2019, 04:07:37 pm
Theoretically, does a decrease in the demand of AUD happen when China bans Australian coal? Does this cause depreciation?Hey Chelsean,
If China banned Australian coal, it would definitely mean a decrease in the demand for our exports and thus a decrease in the demand for the AUD and cause a depreciation!
That's the most simplistic view of it, I'm sure the government will introduce measures to soften the blow of course.
Hope this helps!
Post by: isaacdelatorre on March 19, 2019, 11:30:03 am
I'm super confused, can someone show me the working for this?
Hey stels,
So this question is really tricky at a first glance - there's too many tables and words and it's all just a little bit too confusing.
So if we break down the question, it's asking us what the increase in production is when they cooperate and trade.
Firstly, we have to look at what the total production is if they don't cooperate.
This means that each person will have to spend their time producing both goods - the question specifies that they will spend 4 hours on each good.
So since the table shows how much of one good they can make in 8 hours, you can find that if each person spends 4 hours on each good:
Max has 10 beers and 5 cheese and Morgan has 50 beers and 2.5 cheese.
In total, there is 60 beers and 7.5 cheese.
Then we need to find which activity each has a comparative advantage in, we do this by finding the opportunity cost.
For Max, the opportunity cost of 1 beer is 2 Cheese (since it takes 2.5 hours to make 1 beer and 1.25 hours to make one cheese, to give up one beer and to make cheese for 2 hours, produces 2), similarly the opportunity cost of 1 cheese is 0.5 beer.
For Morgan, the opportunity cost of 1 beer is 20 cheese and the opportunity cost of 1 cheese is 0.05 beer.
We can see that Max has a comparative advantage in cheese production and Morgan in beer production as they have a lower opportunity cost (they give up less comparatively to make that product)
When each specialises, we get 100 beers and 10 cheese.
from our original of 60 beers and 7.5 cheese, we have an increase of 40 beers and 2.5 cheese
Giving us the answer C
Hope this helps
Post by: emilyyyyyyy on April 18, 2019, 04:10:56 pm
My eco teacher is really bad and I haven't learnt anything all year :/ How difficult do you guys think it'll be for me to get a band 6 if I'm studying off the textbook and trying to teach it to myself? Also, is it actually possible to teach the entire subject to myself this late into year 12?
thanks!!
Post by: jamonwindeyer on April 18, 2019, 08:55:02 pm
hellooo
My eco teacher is really bad and I haven't learnt anything all year :/ How difficult do you guys think it'll be for me to get a band 6 if I'm studying off the textbook and trying to teach it to myself? Also, is it actually possible to teach the entire subject to myself this late into year 12?
thanks!!
Hey there! You'll probably get some answers from some fellow Eco students, but just wanted to mention the Economics Q+A being run by our Eco lecturer Isaac on Monday!! You could ask him there! Details are on our Instagram page, check the most recent post ;D
Post by: violet123 on April 26, 2019, 11:10:32 pm
Post by: violet123 on May 05, 2019, 07:49:49 am
Also which other year's stats should I also memorise to show the medium or long term effect?
Thanks
Post by: raymond774 on May 05, 2019, 05:27:22 pm
Can someone please tell me an example of a government policy that has been put in place that has affect external stability?
:)
Post by: raymond774 on May 05, 2019, 05:32:16 pm
Any help is appreciated. Thanks in advance.
Post by: emilyyyyyyy on May 05, 2019, 05:39:11 pm
My essay question for my eco assessment is this: Evaluate the effectiveness of current labour market policies in achieving Australia’s economic objectives.
I was thinking of setting my essay out like this:
Intro
Wage determination (overview, examples, stats, evaluation by comparing to other countries)
Education and Training (overview, examples, stats, evaluation by comparing to other countries)
Labour market programs (overview, examples, stats, evaluation by comparing to other countries)
Conclusion
Do you think this would be a good way to set my essay out? Or are these not really 'policies' as such?
Any help or suggestions would be appreciated :)
Post by: emilyyyyyyy on May 05, 2019, 06:04:07 pm
I'm just really confused as to whether fiscal policy stance and monetary policy stance should be opposite to each other or the same, so as to achieve the government's economic objectives?
Thanks!
Post by: henrychapman on May 08, 2019, 11:21:03 pm
When writing essays, in some topics, is it still necessary to use trends from the GFC to compare to recent trends even though it was almost 10 years ago?
Hey there,
A lot of people in my year also asked the same thing.
I say yes as it is the best example of the change from strong economic growth (MIB I) to a rapid depreciation (GFC). There was significant macro policy change and implementation and also a rapid depreciation of AUD. When explaining how, for instance expansionary fiscal/ expansionary monetary policy works I think it’s still the best example. No doubt be sure to include current trends, however the Australian economic landscape is rather benign and has been (in relative terms) since the end of MIB II (2013). So yes, I think GFC is still relevant.
Post by: wlam on May 11, 2019, 12:54:56 pm
What is the relationship between productivity and technical efficiency?
Post by: meerae on May 14, 2019, 04:55:16 pm
What are all the economic statistics and trends that I should memorise when I am preparing for trials and HSC?
Also which other year's stats should I also memorise to show the medium or long term effect?
Thanks
Hey!
I suggest knowing stats from the GFC, the resources boom and current in order to show trends from major economic events. I think if you work with these stats + any other time when major economics-related things happened (like in '08 where we almost reached full employment) will allow you to showcase medium/long effects of govt. policy and whatnot.
Hope this helps!
meerae :)
Hello, I'm having a bit of trouble trouble finding a fiscal and monetary policy that has affected External Stability.
Can someone please tell me an example of a government policy that has been put in place that has affect external stability?
:)
Hey!
Both fiscal and monetary policy affect external stability, and they're both examples of govt. policy used to influence external stability.
Basically, external stability is the aim of govt. policy (fiscal/monetary) that seeks to ensure Australia can fund foreign liabilities in the medium-to-long term (so we want to make the external accounts of the bop sustainable) to avoid currency volatility.
In terms of fiscal policy: a contractionary stance, so, reducing expenditure and increasing taxation would result in a surplus in the budget; thus foreign liabilities can be paid off with the increase in taxation.
In terms of monetary policy: having a more tightened policy, that is, raising interest rates would result in an increase of lending from foreign investors, as they would get more return on their investments. This would in turn increase foreign liabilities, instead of contributing to external stability.
I'm a little bit unsure on external stability as a whole, but I hope this helps!
meerae :)
Post by: emilyygeorgexx on May 15, 2019, 10:23:55 pm
Can someone answer this question:
What is the relationship between productivity and technical efficiency?
Hey!
Well basically, technical efficiency is the ability of the economy to achieve the maximum amount of output with a certain level of inputs, given they are all efficient. To really achieve this technical efficiency economies attempt to minimise production costs by maybe adopting leading edge technology or new machinery to reduce costs and produced in increase volumes. As they no longer need manual labour to complete tasks due to the use of technology, this means the economy can produce to their full productive capacity which will usually be more than what they could have with physical labour hence, increasing productivity. Examples of this include the rapid growth in productivity in the finance and insurance industry from 1997 to 2015 following the increased use of online banking, decreasing staff in bank branches and shifting their operations overseas.
Hope this helps!
Post by: emilyygeorgexx on May 15, 2019, 10:26:37 pm
When writing essays, in some topics, is it still necessary to use trends from the GFC to compare to recent trends even though it was almost 10 years ago?
Hey!
Sorry for this late reply. Yes, it is soo necessary to use trends from the GFC to compare to the trends today or even within the last 5 years. The GFC was probably one of the most catastrophic events that occurred within the global economy so it is always useful to see how it impact not only Australia's economy but the global economy as well as some of the policies that different countries may have adopted to move them out of the recession.
Hope this helps :)
Post by: emilyygeorgexx on May 15, 2019, 10:29:28 pm
I also have another question: if fiscal policy is contractionary, should monetary policy then be expansionary or contractionary to work well together?
I'm just really confused as to whether fiscal policy stance and monetary policy stance should be opposite to each other or the same, so as to achieve the government's economic objectives?
Thanks!
Hey Emily!
I think this would be very dependent on the data given in the question. This type of question usually comes up in multiple choice as a table form sort of question. So I would know what expansionary and concretionary monetary and fiscal policy are as well as the effects they have on the different economic objectives. This would then help you answer the question. :)
Post by: violet123 on May 26, 2019, 08:06:41 pm
For the dot point on external stability
positive and negative causes and effects
I find that point really vague. I am not exactly sure what the causes and effects is talking about. Is it causes of external stability and effects on external stability. If I were to answer a question, let's use CAD for example, do I say CAD has caused external stability and CAD's effect for external stability?
Can someone clarify what I write for cause and what I write for effects.
Thanksss
Post by: violet123 on May 30, 2019, 09:29:09 pm
Post by: gemma.hinton on June 08, 2019, 08:02:10 pm
Thanks so much!
Post by: violet123 on July 12, 2019, 08:35:33 pm
Analyse the causes and effects of external stability.
This is a question from topic 3 economic issues.
Any advice on how to structure a response on this and how to answer this question would be greatly appreciated.
Post by: KingTings on July 23, 2019, 07:30:20 pm
I don't know how to answer this essay question:Is this a short answer question? If so,
Analyse the causes and effects of external stability.
This is a question from topic 3 economic issues.
Any advice on how to structure a response on this and how to answer this question would be greatly appreciated.
I would define external stability (the ability of Australia to meet its foreign debt and equity servicing obligations)
Explain the types of Causes - Cyclical (Exchange rates/international competitiveness interest rates etc.) and Structural (savings and investment gap = high foreign investment = debt and equity servicing costs on NPI, narrow export base etc.)
Explain the Effects and make a judgement on its significance: tarnished triple A credit rating = less investment (maybe mention pitchford thesis) = less economic growth and due to lack of investment to fund businesses etc.
Hope this helps a little!
Post by: violet123 on July 30, 2019, 05:01:10 pm
Discuss how a change in Australia's terms of trade can influence the exchange rate and international competitiveness.
Post by: violet123 on July 30, 2019, 05:02:28 pm
An example of such question is in the 2018 HSC paper in the short answers
Post by: LoneWolf on August 09, 2019, 01:32:53 pm
year 11 student here,
In my text book it states "The RBA seeks to maintain the longer-term stability of the financial system by avoiding financial crises. This protects the deposits of members of the public, without actually providing a formal guarantee for depositors' funds
Can some1 explain this in layman's terms please!?
Post by: emilyyyyyyy on August 13, 2019, 11:40:12 am
Thanks :)
Post by: violet123 on August 17, 2019, 02:25:34 pm
For economics essay question to analyse the effectiveness of policy. Do I need to talk about how the policy works?
Post by: meerae on August 19, 2019, 06:13:49 pm
Hi,
For economics essay question to analyse the effectiveness of policy. Do I need to talk about how the policy works?
Hey Violet!
I would go into how the policy works briefly in like a paragraph, and make sure that you go into the limitations of the policy as well!
Hope this helps!
meerae :)
Post by: Erynxyz on August 23, 2019, 08:01:46 pm
1. Are prelim extended responses same as essays?
2. How many body paragraphs do I need minimum?
3. How do I integrate definitions to minimize words?
4. If my test includes 10 multiple choice, 20 short answer and 2 extended response in 2 hours, how much time should I allocate to each part?
5. I recently realised that the textbook doesn't cover everything we need for our exams so what other sources can I use to develop my responses?
6. Last question, how hard does eco get in y12?
Post by: emilyyyyyyy on September 28, 2019, 04:24:34 pm
Is someone pleaseeeee able to help me with these multiple choice questions? Thanks!
Post by: violet123 on September 30, 2019, 06:46:46 pm
Post by: violet123 on October 06, 2019, 10:24:26 am
For my case study, I am doing China. Do I need past strategies and contemporary strategies such as Open Door Policy and contemporary ones?
Post by: ibihadi on October 10, 2019, 10:33:12 pm
Hi,
For my case study, I am doing China. Do I need past strategies and contemporary strategies such as Open Door Policy and contemporary ones?
Preferably both if you want to hit those top bands.
Post by: emilyyyyyyy on October 28, 2019, 11:56:19 am
How important is it to have a case study essay? I have one on Brazil but it's honestly so bad and I wouldn't want to write an essay on it? I dont have a lot of time to study before eco, so should I re do it or just hope that there isn't an essay question on it?
Thanks :)
Post by: jelena_nina2001 on November 03, 2019, 12:08:03 pm
Post by: emilyyyyyyy on November 03, 2019, 06:12:47 pm
hey peeps, i need help with this question please (2017 HSC economics)
So you basically have to just do trial and error with each option. So you know that 2.5=1/(1-MPC), which is just the formula for the multiplier. So then for the first one for e.g., you have to see if 1/(1-(250-100/1000)) equals 2.5, and so on until one of the fractions equals 2.5.
Hope that makes sense :)
Post by: jelena_nina2001 on November 03, 2019, 06:17:39 pm
So you basically have to just do trial and error with each option. So you know that 2.5=1/(1-MPC), which is just the formula for the multiplier. So then for the first one for e.g., you have to see if 1/(1-(250-100/1000)) equals 2.5, and so on until one of the fractions equals 2.5.
Hope that makes sense :)
yes it does, thankyou so much!
Post by: jelena_nina2001 on November 03, 2019, 06:18:09 pm
So you basically have to just do trial and error with each option. So you know that 2.5=1/(1-MPC), which is just the formula for the multiplier. So then for the first one for e.g., you have to see if 1/(1-(250-100/1000)) equals 2.5, and so on until one of the fractions equals 2.5.
Hope that makes sense :)
Post by: jelena_nina2001 on November 05, 2019, 08:07:06 pm
Post by: milie10 on February 06, 2020, 09:24:03 am
Could someone please give me a rundown on how you would answer this short answer question in an exam?
"Outline how an economy might reach its non-accelerating inflation rate of unemployment"
Thanks :)
Post by: shekhar.patel on February 20, 2020, 08:08:25 pm
• Analyse the effects of changes in the value of the Australian dollar on the Australian Economy
Post by: LoneWolf on March 31, 2020, 04:37:30 pm
Can some1 tell me how the quantity of imports before the imposition of the tariff as 40?
Thats what the answers say!!!!!!!!
Post by: ash31 on April 25, 2020, 07:11:51 pm
Post by: LoneWolf on April 30, 2020, 04:38:57 pm
talk about 'trends' as in recent movements/fashion of movements within the factors/elements you are studying.
CAD.
the gradual narrowing of the CAD over time is an example of the effect of boosted national savings, a result of micro/macro economic reform... then give stats.... the increase in super annuation funds of 3.Trillion resulting in the shift from xx to xx of the CAD in 2018-19 and finally moving into surplus in july qtr in 2019.
Post by: LoneWolf on May 26, 2020, 08:56:29 pm
any assistance would be great
Post by: okeh on June 23, 2020, 09:33:51 pm
The movement of the cash rate initially affects short-term interest rates, then medium to long-term interest rates which ultimately influences the cost of credit across the economy. Monetary policy operates through six transmission channels; expansionary monetary policy is set through a lowering of the cash rate which encourages borrowing and spending on consumption and investment, thereby attributing to higher inflation and lower unemployment. Expansionary monetary policy stimulates aggregate demand by encouraging cash flows between borrowers and lenders, lower costs of credit borrowings, higher asset prices, increased capital outflow which thus leads to an exchange rate appreciation and finally raise inflationary expectations by increasing wage and price demands. Conversely, a contractionary monetary policy stance will discourage borrowing and spending and instead encourage spending in the economy, which would sustain a low inflation rate while increasing the level of unemployment within an economy.
The main objective of MP is maintaining price stability through keeping inflation at a sustained level that will not distort the economy. Australia formalised an inflation-targeting regime in 1996, with a target band of 2-3% inflation, to act as an anchor for inflationary expectations. Prior to 1996, Australia had a relatively high inflation rate but after the 1990s recession and the adoption of the inflation target, Australia’s inflation has been sustained since; both headline and underlying inflation averaged 2.7% between 1996 and 2011, and have averaged under 2% since 2014. Headline inflation measures the movement of prices of a basket of goods and services, weighted according to the significance for the Australian household while underlying inflation is headline inflation that removes one-off price movements and volatility. Underlying inflation tends to be less variable and more accurate in analysing long-term trends in inflation.
Inflationary pressures re-emerged in 2009 as the economy recovered from the downturn caused by the Global Financial Crisis (GFC) of 2008-09, leading to a period of stronger economic growth, wages growth at 4% and falling labour productivity, putting upward pressure on prices. The RBA adopted a contractionary monetary policy stance by raising the cash rate eight times from 3.00% to 4.75% to address inflationary expectations and a rise in inflation during the re-emergence of the commodities boom. Further cash rate increases ceased in November 2010 as the economy recovered from the GFC, despite headline inflation moving out of the RBA’s target range, reflecting the increase in fruit and vegetable prices following the floods and Cyclone Yasi in 2011. In recent years, Aus’ inflation rate has remained at or below the target range of 2-3% and reflects the effects of subdued EG, low inflation overseas and low wages growth, which averaged 2% in 2017 and 2018. Low wages growth reduces inflationary pressures significantly, because labour is the largest cost item for most businesses. In the next few years, inflation is forecasted to remain low, which will allow the RBA to keep i/r at record low levels, which boosts eco activity and thus leads to lower UE levels, leading to EG. Overall, monetary policy is the main policy used in the short and medium-term to achieve price stability as it attempts to sustain non-inflationary economic growth over the long-term.
A second key objective addressed by monetary policy is the achievement of sustainable economic growth over time, which is the rate of the increases in real GDP within the Australian economy. The Australian Government targets a 3-4% economic growth rate, and the stance of monetary policy can have a significant influence on the level of aggregate demand (AD) that can lead to an expansionary, contractionary or neutral effect on economic growth. The global economy experienced the GFC of 2008-09 as sub-prime mortgage crisis in the US housing market led to tightness in global credit markets. The cash rate was cut six times from 7.25% in September 2008 to 3.00% in April 2009, the lowest in 49 years, to support consumer confidence, domestic demand, employment and economic activity through encouraging spending and borrowing.
Recently, since 2011, the RBA has consistently eased MP, from 4.5% in 2011 to 0.25% in March 2020. In 2012, RBA eased MP due to the uncertainty surrounding the outlook for the global economy and the uneven pace of recovery in the Aus economy, with EG of 1.4% (2010-11), 3.7% (2011-12) and 2.6% (2012-13). The c/r cut of 50 basis points in May 2012 and 25 points in June 2012 were a result of the weakening growth in Europe, and the effects of the European Debt crisis. Also, the moderation of growth in China whose demand for Aus’ commodities X which underpinned Aus’ strong EG since GFC and a deterioration in financial market sentiment and the contractionary stance of Aus FP, all contributed to the four rate cuts of 25 basis points each in 2012 alone. Through the lowering of the c/r, AD was stimulated by reducing the cost of credit, in order to buffer the Aus eco against global eco uncertainty, resulting in a high level of EG in 2012. MP was therefore an effective countercyclical policy that aims to smooth the fluctuations in the business cycle by influencing the levels of AD through the instrument of the c/r.
However, there are conflicts between the objectives of achieving full employment and price stability as tightening monetary policy reduces inflationary pressures but can lead to higher levels of unemployment. Conversely, loosening monetary policy increases may reduce unemployment but could lead to an increase in inflation. Another disadvantage associated with the use of monetary policy is the time lag of 6 to 18 months between the implementation of a change in the cash rate and its impact on the economy. The RBA counters this by acting pre-emptively and using small adjustments to the cash rate to address inflation concerns before it emerges as a problem while simultaneously keeping the rate of unemployment close to the non-accelerating inflation rate of unemployment.
Monetary policy is also considered a ‘blunt instrument,’ where any changes to the level of the cash rate will impact on spending and borrowing across the economy, irrespective of industry. The Resources Boom Mark II mainly caused the inflationary pressures that re-emerged during Australia’s recovery from the GFC with strong economic growth prospects underpinning a growth in spending. An increase to the cash rate had therefore been necessary to put downward pressure on prices, and it had led to an appreciation of the exchange rate as Australia became a more favourable investment destination. But as Australia is a two-speed economy, non-mining export industries further struggled under the high Australia dollar due to a reduction in Australia’s international competitiveness as a direct result of the adjustment of the cash rate. Also, recently, banks have been acting more independently and have not been fully responding to any changes to the cash rate on the basis of maintaining their profit margins. Therefore, the effectiveness of monetary policy is currently undermined by these factors.
In conclusion, MP is a medium-term macroeconomic policy that influences the level of AD, which thus affects the level of economic growth and price stability, and employment levels as well. Prior to the past five years, RBA has been somewhat effective in achieving sustainable economic growth and internal balance by acting pre-emptively and with close observation to a variety of economic indicators, however, more recently, MP’s effectiveness has diminished due to the lack of integration between MP and FP.
SORRY GUYS FOR THE LONG READ, but HOW CAN I IMPROVE THIS ESSAY??
Post by: 0447940204 on December 09, 2020, 06:31:28 am
Has anybody got some nice recommendations for my Economics Case Study? I was considering doing Japan, South Korea or India, but I would really appreciate some suggestions and maybe why you've recommended that particular country.
Thanks so much!
Post by: Bri MT on December 09, 2020, 10:56:44 am
Hello!
Has anybody got some nice recommendations for my Economics Case Study? I was considering doing Japan, South Korea or India, but I would really appreciate some suggestions and maybe why you've recommended that particular country.
Thanks so much!
Hello!
I didn't do economics in high school but my macroeconomics class in uni this sem looked at Brazil. I personally found it really interesting to look at how Brazil climbed up, did so well in the GFC, and then how things have gone wrong since then.
I don't know enough about your syllabus to really suggest it but maybe the idea will help :)
Post by: Samueliscool223 on January 19, 2021, 01:49:18 pm
Shouldnt it decrease liabilities if anything and reduce NFD since they are the ones borrowing/purchasing our assets and hence they should have a liability to us and not the other way around, or am I being dumb
Post by: gusm03 on July 11, 2021, 05:20:48 pm
Post by: 0447940204 on August 29, 2021, 11:15:27 am
Explain how a floating exchange rate helps achieve equilibrium in the balance of payments.
It is a six-marker, and although I understand how the exchange rate affects the balance of payments (e.g. the valuation effect on NFLs in the NPY and changing export prices affecting the BOGS), I don't know how the floating exchange rate keeps it in equillibruim.
Can anyone help?
Thanks!
Post by: newbie17 on September 02, 2021, 11:45:16 am
Explain how a floating exchange rate helps achieve equilibrium in the balance of payments.
Can anyone help?
I've only ever seen this question once, and it was in an independent trial paper.
For the sake of the syllabus, you really don't need to know this. But, for your curiosity:
The BOP equilibrium is automatically restored with a floating exchange rate, not a fixed exchange rate.
Take for example, $1.00 USD = $1.20 AUD. An overseas investor lends $1000 USD or $1200 AUD. Assume there is an interest of 1% for lending this money. Australia will have to pay back $1000 USD + $10 USD interest, or $1200 AUD + $12 AUD interest. However, the surplus on the KAFA ($1000 USD) will not equal to the deficit on the CA ($1010 USD). So, an equilibrium is not reached.
Here's what happened behind the scenes, though. When the overseas investor lent $1000 USD, they needed to first buy $1200 AUD. This increased the demand for the AUD, hence made it appreciate. We're not sure what it might have appreciated to, but lets say it became $1.00 USD = $1.189 AUD. This means that the $1010 USD we need to pay back becomes $1200 AUD rather than $1212 AUD. So, in this case, an equilibrium is reached.
Post by: jaidaswift on September 16, 2021, 11:23:11 am
Post by: newbie17 on September 17, 2021, 01:14:39 pm
Hi, year 11 going to year 12 here. I was wondering what equipment you recommend for economics and what helped you when studying? My school hasn't provided an equipment list and I wanted advice from people who have done economics.
Not sure what you mean by equipment. Tim Riley or Tim Dixon textbook will serve you just fine. To ease into the HSC, download some free notes on topic 1 and skim through it whenever.