Economics Questions Thread

[NomotivationF]

Hey everyone,
I'm struggling to understand the concept and definition of net primary income and why we are in such a deficit?
My guess is because many countries running a CAS (current account surplus) invest in Australia, this results in an increase in the CAFA surplus, whilst causing income debits from said investment to pay dividends and profits to overseas owners, leading to a decrease in net primary income.

Any help would be great, thanks.

Hmmm yeah what you think is a part of it but here’s my take on it.
Also just so you know Australia has actually returned to a current account surplus is the last quarter after yeaaaars of successive deficits. The reason that we returned to surplus is mostly due to the insanely high TOT which increased credits relative to debts in the BOMT section of the current account. Apart from that, the net primary incomes has, and likely always will run a deficit. This is mainly due to the savings investment gap in Australia, meaning that Australia doesn’t have enough savings to fund its investments. This results in Australians borrowing from overseas, which initially results in credits in the CAFA. However, the interest incurred on these borrowings, as well as revenue earned from investments needs to be payed back overseas, increasing debits relative to credits in the net primary income subsection of the current account, and contributing to a current account deficit

[Jmac02]

That makes a lot of sense! Thanks 

[humma23]

Hi everyone,
The study design lists knowledge on one contemporary example of government intervention unintentionally leading to a decrease in the efficiency of resource allocation. Does anyone have some good examples?
Thankyou!!

[NomotivationF]

Hi everyone,
The study design lists knowledge on one contemporary example of government intervention unintentionally leading to a decrease in the efficiency of resource allocation. Does anyone have some good examples?
Thankyou!!

I use the minimum wage. Honestly, I doubt it'll come up again but here's mine,

The minimum wage is the minimum rate of hourly pay that a worker must be paid by their employer. The figure established by the Fair Work Commission and in 2019 the minimum wage is set at $19.43 per hour for adults. The aim of the minimum wage is to ensure that lower-skilled workers receive what is considered a ‘fair’ wage that maintains their living standards and protect them from possible exploitation by employers. The minimum wage unintentionally creates an inefficiency in resource allocation. The minimum wage is set at a level above equilibrium wage, meaning that there is a surplus of labour – the supply of labour at minimum wage is greater than the demand for labour. This leads to an over allocation of labour resources, or unemployment, in the market for labour.

[Jmac02]

Can anyone help me answer this? Thanks.

Evaluate the role of the market in achieving an efficient allocation of resources.

 

[quokka1217]

Hi, I was wondering for the exam, if we use an abbreviation for one question after stating it in full e.g. 'goods and services (g/s)' can we use this abbreviation throughout the whole exam thereon??

Thanks in advance

[IThinkIFailed]

Hi, I was wondering for the exam, if we use an abbreviation for one question after stating it in full e.g. 'goods and services (g/s)' can we use this abbreviation throughout the whole exam thereon??

Thanks in advance

Nope, only for that question

[Jmac02]

How did everyone go with the exam?

[pahm]

"Explain why an economy must achieve productive efficiency in order to achieve allocative efficiency." (3 marks).

- What do i need to touch on to get all 3 marks?
- Do I need to provide definitions for productive & allocative efficiency?
- Are examples necessary?

thank you!!

[Balfe]

"Explain why an economy must achieve productive efficiency in order to achieve allocative efficiency." (3 marks).

- What do i need to touch on to get all 3 marks?
- Do I need to provide definitions for productive & allocative efficiency?
- Are examples necessary?

thank you!!

Hey! Firstly, you should define both terms (2 marks) and then provide your explanation (1 mark).

So: “Productive efficiency occurs when an economy is producing the maximum amount possible at that point in time (productivity is maximised). In contrast, allocative efficiency occurs when the allocation of resources is such that living standards and welfare are maximised. Inherently, living standards cannot possibly be maximised if the economy is not producing the maximum amount possible, thus allocative efficiency cannot occur without productive efficiency being achieved.”

Hope this helps!

[pahm]

Hey! Firstly, you should define both terms (2 marks) and then provide your explanation (1 mark).

So: “Productive efficiency occurs when an economy is producing the maximum amount possible at that point in time (productivity is maximised). In contrast, allocative efficiency occurs when the allocation of resources is such that living standards and welfare are maximised. Inherently, living standards cannot possibly be maximised if the economy is not producing the maximum amount possible, thus allocative efficiency cannot occur without productive efficiency being achieved.”

Hope this helps!

ah I see where I went wrong - thank you so much!

[Stormbreaker-X]

Hey guys, I am doing economics this year and so far our class has covered law of supple/demand. What have you guys covered in class so far?

[pahm]

Hey guys, I am doing economics this year and so far our class has covered law of supple/demand. What have you guys covered in class so far?

We already had our first sac too though I think sac 2 will be pushed back.
You?

[ashercap]

Hey Guys,

Doing VCE economics 3/4 this year, and was wondering how you answer the "explain" questions? Just coz they're really prominent in all my SACs, and would like some advice.

Also if you have any tips for SAC's coz this is my first 3/4, would love help.

Thank youu

[Stormbreaker-X]

Hey Guys,

Doing VCE economics 3/4 this year, and was wondering how you answer the "explain" questions? Just coz they're really prominent in all my SACs, and would like some advice.

Also if you have any tips for SAC's coz this is my first 3/4, would love help.

Thank youu

Sorry I am doing unit 1/2 this year, but I am pretty sure it means include extra details in your question to make it clear to the reader (I could be wrong tho). When answering those questions, it is best to assume the reader knows nothing and you are trying to explain it to them.