Post by: sam.utute on December 15, 2010, 11:56:32 am
VCE ECONOMICS Q&A THREAD
To go straight to posts from 2020, click here.
What is this thread for?
If you have general questions about the VCE Legal Studies 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, including TuteSmart tutors! So you may even get multiple answers from different people offering their insights - very cool.
To ask a question or make a post, you will first need an ATAR Notes account. You probably already have one, but if you don't, it takes about four seconds to sign up - and completely free!
Original post
To all Economics Students:
This thread takes inspiration from EPL's massive accounting question thread that was used throughout the year. I think it would be nice if people doing economics had a single thread where they could post any queries or questions related to economics. Feel free to post anything including requests for note, tips, advice etc.
I will (and I'm sure anyone who did economics this year) endeavour to answer your questions and hopefully make your studies easier.
Good Luck Economics Students of 2011!
Sam :)[/post]
This thread takes inspiration from EPL's massive accounting question thread that was used throughout the year. I think it would be nice if people doing economics had a single thread where they could post any queries or questions related to economics. Feel free to post anything including requests for note, tips, advice etc.
I will (and I'm sure anyone who did economics this year) endeavour to answer your questions and hopefully make your studies easier.
Good Luck Economics Students of 2011!
Sam :)[/post]
Post by: gs on December 15, 2010, 01:25:04 pm
Post by: chrisjb on December 15, 2010, 03:49:31 pm
where is everyone up to?
Post by: Hutchoo on December 15, 2010, 03:59:18 pm
Yay economics :D3/4 of the way through unit 3. Started making notes/preparing for the first SAC D:
where is everyone up to?
How about you?
@OP - Good thread, I'll be posting up lots of questions :P
Post by: sam.utute on December 15, 2010, 08:19:07 pm
Make sure to write/type your own set of notes throughout the year (in addition to reading notes by someone else and the textbook). I both wrote notes in class and typed up my own set over the holidays when I got ahead. Well worth the effort.
Post by: Hutchoo on December 15, 2010, 09:55:02 pm
Just a little tip:When utute is up and ready to go, will you upload all of your notes?
Make sure to write/type your own set of notes throughout the year (in addition to reading notes by someone else and the textbook). I both wrote notes in class and typed up my own set over the holidays when I got ahead. Well worth the effort.
That would be very helpful.
Post by: sam.utute on December 15, 2010, 10:51:22 pm
Post by: Hutchoo on December 15, 2010, 10:55:35 pm
I'll upload my notes for economics tomorrow. I've still got to find them. They're somewhere inside a folder named VCE. Along with everything else.Thanks heaps, Sam.
You're such a nice guy! Always trying to help people (Y)
Post by: chrisjb on December 16, 2010, 12:23:21 am
I'm way backin AoS 1, done about the first 4 dotpoints but making fairly swift progress. Hopefully I'll have finished the AoS before the end of next week.Yay economics :D3/4 of the way through unit 3. Started making notes/preparing for the first SAC D:
where is everyone up to?
How about you?
Post by: gs on December 16, 2010, 12:37:32 am
I'm way backin AoS 1, done about the first 4 dotpoints but making fairly swift progress.
Aos = Study design?
Post by: chrisjb on December 16, 2010, 01:57:19 am
AoS= Area of study (on the study design). Each subject is broken up into areas of study which are broken up into dot points of key knowledge and skills. From what I can see in eco, the first area of study in unit 3 looks prety easy but the seccond looks massive.I'm way backin AoS 1, done about the first 4 dotpoints but making fairly swift progress.
Aos = Study design?
Post by: sam.utute on December 16, 2010, 11:16:03 am
Enjoy :)
EDIT: Just realised it is ~4MB, so I'll post it on mediafire.
Link: http://www.mediafire.com/?2cj4r9o2rzmzydf
Post by: Hutchoo on December 16, 2010, 01:09:41 pm
Ok, as promised, I'm posting my notes that helped me get a 50 in Economics. I apologise beforehand for any grammatical or typing errors that are present. Feel free to edit it in any way. I only ask that you leave my name and "utute" on it if you plan on distributing it to your friends.Thanks heaps!
Enjoy :)
EDIT: Just realised it is ~4MB, so I'll post it on mediafire.
Link: http://www.mediafire.com/?2cj4r9o2rzmzydf
EDIT: Or notes look literally ... almost the exact same :P
Post by: sam.utute on December 16, 2010, 01:21:07 pm
Same as the textbook? Yeah, they were pretty similar. I found that just typing them up helped me to understand and remember the concepts.Ok, as promised, I'm posting my notes that helped me get a 50 in Economics. I apologise beforehand for any grammatical or typing errors that are present. Feel free to edit it in any way. I only ask that you leave my name and "utute" on it if you plan on distributing it to your friends.Thanks heaps!
Enjoy :)
EDIT: Just realised it is ~4MB, so I'll post it on mediafire.
Link: http://www.mediafire.com/?2cj4r9o2rzmzydf
EDIT: Or notes look literally ... almost the exact same :P
Post by: _avO on December 16, 2010, 01:23:24 pm
http://vce.atarnotes.com/forum/index.php/topic,31396.0.html
Post by: chrisjb on December 16, 2010, 02:18:05 pm
Post by: sam.utute on December 16, 2010, 02:19:53 pm
Is everyone using economics down under this year?It might help if you get a hold of both textbooks. For some sections (e.g. Unemployment Statistics, Environmental Policy), the MacGregor and Salla book is much better than Economics Down Under.
Post by: mba on December 19, 2010, 03:56:26 pm
A key to success, and I'm sure Sammy would agree is having a comprehensive understanding of the current economic situation and how this relates to the economic goals and policy setting. Being able to discuss the economic environment in the exam (although it is still a year away) is very important if you want to get a score in the 40's.
An understanding of the relationships between the economic goals, as well as the the importance of microeconomics to the course is also a must.
Look forward to answering questions here over the next 12 months.
Post by: Hutchoo on December 19, 2010, 04:26:17 pm
How about checkpoints?
Post by: chrisjb on December 19, 2010, 04:29:34 pm
I'll definitely look into getting a copy of the MacGregor book.I've got a copy of checkpoints, but I haven't looked at it yet.
How about checkpoints?
Post by: Hutchoo on December 19, 2010, 04:32:15 pm
I think I'll get a copy of checkpoints, just in case.
Post by: sam.utute on December 19, 2010, 04:37:28 pm
Post by: mba on December 19, 2010, 04:39:12 pm
Post by: schmalex on December 23, 2010, 02:50:47 pm
Post by: VarshaPatil on January 11, 2011, 06:30:29 pm
Post by: schmalex on January 12, 2011, 11:32:36 am
That's my understanding of it. If you want more information, there's probably information on wikipedia or something.
(By the way your understanding doesn't have to be nearly that detailed.)
Post by: VarshaPatil on January 12, 2011, 01:13:54 pm
Post by: Jdog on January 12, 2011, 02:43:09 pm
Post by: Xavier1234 on February 02, 2011, 12:04:04 am
Post by: Hodgeyhodgey on February 05, 2011, 10:29:49 am
I need to know two examples each of a positive and negative relationship.
Thanks! :)
Post by: Water on February 05, 2011, 11:14:58 am
When you think about Material Living Standards
- You Think about, materialistic things, things that are superficial.: your wealth, your house, your dog, your toys, computer etc? . Anything that is materialistic right?
However, when you think about Non-Material Living Standards. You think about things that aren't superficial. Like for instance. To get that 1 million dollar house, what do we have to sacrifice? Long Hours or our health?
Is there Peace in our country?
Pollution Rates?
Environmental Damage?
Unrest? Unhappiness amongst the public?
For the non-material living standards, you look at the non superficial side and our "OVERALL QUALITY OF LIFE"
In terms of relationships; Think of this well. IF you work 16 hours a day to get enormous wealth? What is the trade off? What do you attain for working that long? What do you lose for working that long?
That should answer your question :)
Post by: Hodgeyhodgey on February 05, 2011, 11:44:42 am
A positive of this is obviously an increase in wealth, general happiness, financial security, availability of goods/services to the person(s), etc and a negative of this may be an increase in family issues, as it may limit time together due to a probable increase in work hours.
Am I on the right track? :S or am I wrong to just be listing the pros/cons of a situation..
Post by: Water on February 05, 2011, 11:56:14 am
General Happiness is subjective though, you can just say, more purchasing power ;x.
Post by: Hodgeyhodgey on February 05, 2011, 12:07:52 pm
Seeing as I have a *basic* understanding of what's going on, how would I go about answering the question? Preferably, how would you go about answering the question?
Provide 2 scenarios and a positive/negative of each scenario? Thanks :)
Post by: Water on February 05, 2011, 12:31:06 pm
I need to know two examples each of a positive and negative relationship
lol, I think I gave the wrong answer on how to approach it. Anywayz. Heres how I would do it
Negative Relationship:
Bob is working 17 hours a day as a mechanic in hope to buying a ferrari car in 3 months time. However, this has severely impacted on his relationship with his girlfriend and their coming newborne child. It has also meant that the family has had less time to spent together.
As you can see here : Material Living Standard Goes up (AKA The Ferrari Car) However Non Material Living Standard goes down (The Family Happiness)
Positive relationship:
Jane works a comfortable 10 hours a day. She is a competant worker, and uses her time wisely. After work, she enjoys her hobbies, meet up with friends, and saves money where possible. She also knows after 1 year of working, she'll recieve a promotion.
HEre We See that it is a positive relatiionship. Because the material living standard is relative to the non material living standard. (She has a secure job, and a balanced lifestyle after work).
Hopefully, this is what ur teacher is looking for!
You could also talk about, national picture, like cyclone yasi, where material living and non material living standards has plummeted!
Post by: Hodgeyhodgey on February 05, 2011, 01:00:44 pm
Thanks for the help! And trust me, I'll be coming back for more help verrryyyy soon :)
Post by: Hutchoo on February 05, 2011, 07:51:34 pm
I didn't see Water's answer LOL.
Anyway, Water is right :D
Post by: Hodgeyhodgey on February 05, 2011, 08:15:31 pm
Either way, I've emailed my distance teacher, mainly to introduce myself, but I also asked for her opinion on how to answer it just to be safe :)
Post by: chrisjb on February 05, 2011, 10:31:39 pm
Why is an increase in inflation undesirabe?
The way I see it, if the price of all goods and services goes up by say, 10 percent then producers will simply be getting 10 percent more for their product, consumers will be paying 10 percent more for their products. So... where does it all go wrong?
The only problem I could think of was that people would be able to buy 10 percent less than they could before BUT that wouldn't happen because the labour market is a market just like everything else and so inflation should be mirrored in people's wages.
Since everything is relative, a uniform increase across the board of 10 percent would cancel itself out and be the same as an increase of 0 percent wouldn't it?
Post by: Water on February 05, 2011, 10:45:03 pm
But ultimately, it is the the super market who will be getting the most profit. The producers of the products are the price takers, thats because there are many of them who are willing to take the job. However, the supermarket will be reaping the benefits, they monopolize the necessity consumer industry after all. And don't go about, that workers will be getting extra pay. There pay is according to a work contract, and even so, it is only miniscule, 5% or 3% increase per year.
You add that to the inflation of eletricity, water, petrol etc....That makes your 5% or 3% increase wage per year, almost nothing. To the consumers point of view, this is undesirable.
10 percent then producers will simply be getting 10 percent more for their product, consumers will be paying 10 percent more for their products. So... where does it all go wrong?
Flawed Idea, we live in a capitalist market. We want to be the richest. We are selfish, ambitious and want to make the most money. So we'll do at all cost to maximize our profits. Therefore, producers, most times, won't be getting a 10 percent more for their product.
Example: How much does to take to make an ipod? How much does an ipod sell for?
Post by: schmalex on February 05, 2011, 11:14:42 pm
Okay, this is a strange one, but I just can't get my head around it.
Why is an increase in inflation undesirabe?
The way I see it, if the price of all goods and services goes up by say, 10 percent then producers will simply be getting 10 percent more for their product, consumers will be paying 10 percent more for their products. So... where does it all go wrong?
The only problem I could think of was that people would be able to buy 10 percent less than they could before BUT that wouldn't happen because the labour market is a market just like everything else and so inflation should be mirrored in people's wages.
Since everything is relative, a uniform increase across the board of 10 percent would cancel itself out and be the same as an increase of 0 percent wouldn't it?
In terms of what to write on a SAC\exam
- reduces the purchasing power of those on fixed incomes (like people on contracts) or low-skilled workers, who often have little bargaining power, and therefore may not get pay rises equivalent to the inflation. For example if inflation is 10%, employers may only give low-skilled workers a 5% pay increase, or no pay increase, because if the workers quit they can be replaced.
-distorts market signals. If the price of something goes up, suppliers can't tell if it's because of higher demand, or because of inflation, and may struggle to use price signals to determine where to allocate resources.
Post by: Hutchoo on February 05, 2011, 11:17:44 pm
A) The value of incomes paid to individuals is dependent upon the quantity and quality of productive resources supplied.
B) The market or price system will value the economic contribution made by each individual and use this to determine relative income levels.
C) Price of all goods and services will be negotiated by the forces of demand and supply.
D) Equity in income distribution would be assured by government transfer, payments and progressive taxes.
The answer to the question is D.
Can someone please go through each possible answer and tell me why it is incorrect.
If you don't understand what I'm asking, here is an example:
Quote
C) Price of all goods and services will be negotiated by the forces of demand and supply.
This is incorrect because ______.
Post by: schmalex on February 05, 2011, 11:19:36 pm
Post by: Hutchoo on February 05, 2011, 11:44:56 pm
Post by: schmalex on February 06, 2011, 12:19:21 am
Post by: chrisjb on February 06, 2011, 12:31:39 am
Post by: Hutchoo on February 12, 2011, 07:05:27 pm
How does a tax influence the allocation of resources?
Post by: Water on February 12, 2011, 07:13:41 pm
Think about this way,
If you have a 20% tax on alcohol, opposed to 5% tax on cigarettes, and the cost to produce both of them are the same. You would therefore, choose cigarettes rather than alcohol because you can produce more output from the same input therefore creating more revenue. This would almost mean, your effectively allocating your resources because your maximizing your PPF curve to the edge.
Therefore meaning, if your tax is greater, this reduces your ability to produce more output from the same input, thus reducing allocative efficiency.
Post by: schmalex on February 12, 2011, 07:18:54 pm
Post by: Hutchoo on February 12, 2011, 07:46:25 pm
What is a good example of a free rider problem?
Many come to mind but I can't think of anything that is short and sharp.
I would choose a longer answer; but going into all that detail isn't really worth 1 mark.
Thanks.
Post by: sam.utute on February 12, 2011, 07:49:58 pm
Thanks a heap for that, Water and schmalex.
What is a good example of a free rider problem?
Many come to mind but I can't think of anything that is short and sharp.
I would choose a longer answer; but going into all that detail isn't really worth 1 mark.
Thanks.
One of the easier ones is street lighting. Obviously, if no one provided street lighting and you paid the $3000 or so to get it installed, there is no way you could exclude your neighbours from benefiting. They would benefit despite the fact they did not pay for the privilege. Another example could be national defense (army, navy, air force).
Post by: schmalex on February 12, 2011, 08:27:10 pm
The uni textbook uses the example of a fireworks show. If a town wanted fireworks for New Years, they could ask people for $5 each so that the town could have a fireworks show, but the people who don't pay will still see the fireworks, so some people might hope that other people and they don't have to.
Post by: Hutchoo on February 12, 2011, 09:02:47 pm
Love VN.
You make these questions so simple and pro.
Much love :D
I'll have more questions soon.
Post by: chrisjb on February 13, 2011, 07:12:57 pm
This MC question is from economics down under p30:
Faced with a rise in prices, the supply of fresh nectarines may be inelastic in the short term because:
A) Time needed to grow extra trees
B) The fruit has a limited storage Life
C) The resources of fruit growers are immobile
D) All of the above
The answer is obviously D, but I only got that because it's clear from the other options. What I don't understand is why a change in price can trigger a change in suply elasticity. Why doesn't the gradient of both curves stay the same, but just have the lines change their positions to create a new equilibrium?
Post by: sam.utute on February 13, 2011, 08:26:46 pm
Here to demonstrate my ignorance again...The question is not implying that the supply elasticity of the nectarines has changed. It is merely asking "Why is it inelastic?"
This MC question is from economics down under p30:
Faced with a rise in prices, the supply of fresh nectarines may be inelastic in the short term because:
A) Time needed to grow extra trees
B) The fruit has a limited storage Life
C) The resources of fruit growers are immobile
D) All of the above
The answer is obviously D, but I only got that because it's clear from the other options. What I don't understand is why a change in price can trigger a change in suply elasticity. Why doesn't the gradient of both curves stay the same, but just have the lines change their positions to create a new equilibrium?
Post by: chrisjb on February 14, 2011, 05:27:52 pm
Assume that Coke and Pepsi are very close soft drink substitutes, then an increse in the price of Coke would most likely tend to cause:
A) an increase in the demand for Pepsi
B) a contraction in the demand for Coke
C) no effect on the demand for Pepsi
D) Both A and B are correct
I answered D but apparantly the answer is A... I can't work it out.
Post by: Hodgeyhodgey on February 14, 2011, 06:07:01 pm
Post by: chrisjb on February 14, 2011, 06:15:13 pm
Maybe because they're close substitutes, an increase in the price of coke means people will choose pepsi as it is the cheaper alternative?yeah... but that would make A and B correct (a fall in demand for Coke and a rise in demand for pepsi)... Perhaps just a typo.
Post by: Hodgeyhodgey on February 14, 2011, 06:36:34 pm
Post by: schmalex on February 14, 2011, 06:44:21 pm
Post by: Hodgeyhodgey on February 14, 2011, 07:24:58 pm
It's a tricky question, but generally "a contraction in demand for coke" means that the actual deman curve for coke has shifted inwards, but what has actually happened is that the quantity of coke bottles demanded has shifted ALONG the demand curve to a lower quantity. So the demand for coke at any given price is the same, but the QUANTITY of coke bottle demanded is reduced. Tricky question.
Ouch, hate to have something like that on an exam.
Post by: Hutchoo on February 14, 2011, 07:30:06 pm
It's a tricky question, but generally "a contraction in demand for coke" means that the actual deman curve for coke has shifted inwards, but what has actually happened is that the quantity of coke bottles demanded has shifted ALONG the demand curve to a lower quantity. So the demand for coke at any given price is the same, but the QUANTITY of coke bottle demanded is reduced. Tricky question.
Ouch, hate to have something like that on an exam.
Very tricky question... Had me like "0.o" for ages..
Also; for the exam... is it the whole of unit 3 and 4 in one paper or is it just unit 4?
Honestly, I don't know how the structure is for economics :F. Can someone please help me understand?
Thanks.
Post by: schmalex on February 14, 2011, 07:38:46 pm
Post by: davyp3 on February 14, 2011, 08:02:00 pm
It's a tricky question, but generally "a contraction in demand for coke" means that the actual deman curve for coke has shifted inwards, but what has actually happened is that the quantity of coke bottles demanded has shifted ALONG the demand curve to a lower quantity. So the demand for coke at any given price is the same, but the QUANTITY of coke bottle demanded is reduced. Tricky question.
Ouch, hate to have something like that on an exam.
Very tricky question... Had me like "0.o" for ages..
Also; for the exam... is it the whole of unit 3 and 4 in one paper or is it just unit 4?
Honestly, I don't know how the structure is for economics :F. Can someone please help me understand?
Thanks.
The exam has tended to be more even in terms of unit 3 and 4 content of recent times
Post by: chrisjb on February 14, 2011, 08:17:38 pm
Just a quick one that has been troubling me for a little while (promise that this will be the last one for a little while :P)
With Opportunity cost, do you calculate ALL the possible alternatives or just the greatest one? Like if someone can choose to use an acre of farmland to rear either sheep, cattle or horses and they decide to rear sheep, is the opportunity cost the cost of the cattle+horses or just which ever one was worth more?
Post by: Hodgeyhodgey on February 14, 2011, 08:29:56 pm
Someone confirm? I'm still kinda new to this :P
Post by: Hutchoo on February 14, 2011, 08:40:01 pm
thanks for tha schlamex, I was stumped by that one... I always get screwed over by little bits like that in questions (it took me ages to get the whole 'change of quantity at any given price') concept into my brain...
Just a quick one that has been troubling me for a little while (promise that this will be the last one for a little while :P)
With Opportunity cost, do you calculate ALL the possible alternatives or just the greatest one? Like if someone can choose to use an acre of farmland to rear either sheep, cattle or horses and they decide to rear sheep, is the opportunity cost the cost of the cattle+horses or just which ever one was worth more?
Next best alternative, meaning the next best thing.
I'm pretty sure it's the next best possibility; not all of the other possibilities put in one.
Post by: schmalex on February 14, 2011, 09:15:41 pm
thanks for tha schlamex, I was stumped by that one... I always get screwed over by little bits like that in questions (it took me ages to get the whole 'change of quantity at any given price') concept into my brain...
Just a quick one that has been troubling me for a little while (promise that this will be the last one for a little while :P)
With Opportunity cost, do you calculate ALL the possible alternatives or just the greatest one? Like if someone can choose to use an acre of farmland to rear either sheep, cattle or horses and they decide to rear sheep, is the opportunity cost the cost of the cattle+horses or just which ever one was worth more?
It's the next best option. So he cost would be opportunity of using the farmland to rear horses. So the farmer would work out what he could make from a horse, cow and pig farm. If a horse farm could make $100,000 a year, a pig farm $80,000 a year, a cow farm $50,000 a year, the opportunity cost of farming horses would be the value of the pig farm, if it was set up, or even the opportunity cost of selling the land, if that was the next best option.
Post by: Hutchoo on February 14, 2011, 09:28:38 pm
Seriously, I'm so confused T_T
This question is from Economics Down Under.. found on page 34 I think.
It's under "An essay".
Explain at the microeconomic level how the operation of the price system in Australia allocates scarce resources between alternative uses. Illustrate your answer by reference to appropriate current examples of markets. If you wish, use fully labelled diagrams to help your explanation. (20 marks)
I don't understand what they mean by "price system" and how to draw a diagram for it.
In addition to that... how can you break down that question into 20 marks?
I think if someone went through this or possibly wrote a thread on "How to write an economics essay" it would greatly help all of the people doing Economics on VN.
Sorry for the long message; as you can tell.. I'm quite incompetent.
Post by: schmalex on February 14, 2011, 09:47:29 pm
Post by: Hutchoo on February 14, 2011, 09:54:16 pm
Yes, the question makes sense now.
I'm glad that there aren't any essay questions in the study design... They're seriously fked.
Thank you so much schmalex, you're seriously a great guy/girl (?) for helping all of VN's economics students.
Many more questions to come :D
Post by: schmalex on February 14, 2011, 10:20:20 pm
let's just go with great for now
And I have to write essays this year for second year economics and I'm a little freaked out myself at the idea :P
Post by: DNAngel on February 19, 2011, 03:10:44 pm
Just a question I'm having difficulty in answering (This is in preparation for my SAC in about a week and a half's time ;D).
It goes like this:
Giving an Australian example, explain what is meant by a restricted market. Why might this sometimes cause inefficiency in resource allocation?
I've been thinking that the 'restricted market' may be referring to a pure monopoly, however, I'm not too sure about examples in Australia.
Post by: chrisjb on February 19, 2011, 09:45:54 pm
Hey guys,I think that a restricted market is one in which the government is regulating it (i.e. not free). A good example of this is the labour market, where in some instances the minumum wages set by the government are above equliibrium price. If you were to graph this then you can see that it results in unemployment (i.e. a glut/oversuply of workers). That's the generic example given I think, see if you can think of another one because it's good to be different.
Just a question I'm having difficulty in answering (This is in preparation for my SAC in about a week and a half's time ;D).
It goes like this:
Giving an Australian example, explain what is meant by a restricted market. Why might this sometimes cause inefficiency in resource allocation?
I've been thinking that the 'restricted market' may be referring to a pure monopoly, however, I'm not too sure about examples in Australia.
Also, if someone could confirm that then it'd be great (I'm always cautious with economics :P)
I also have a question of my own to ask, I got this in a multiple choice thing again:
If demand is price elastic:
A) a rise in price willdecrease total expenditure
B) A rise in price will increase total expenditure
C) a rise in price will not change the total expenditure
D) the demand curve will tend to be vertical
I somehow always manage to guess ones I don't know through sheer blind luck, and I got the answer A (which is apparantly right)... But I don't actualy understand the question. What is expenditure (I thought it was a term for spending money- but... it... doesn't... make... sense in my head), and how does elasticty affect it?
Thanks in advance.
Post by: Water on February 19, 2011, 10:24:59 pm
But i'm going think very basic atm,
If demand is price elastic:
A) a rise in price willdecrease total expenditure
B) A rise in price will increase total expenditure
C) a rise in price will not change the total expenditure
D) the demand curve will tend to be vertical
A) would be considered the right answer, as , when you rise the price, your quantity is lowered, hence, your total expenditure decreased
B) A Rise in price will not mean increase quantity, thus total expenditure cannot increase
C) A Rise in price, will not mean your quantity will stay the same amount
D) Is wrong by Default.
I was thinking too complex before, about price elastic, and thought it'd refer to price elasticity of demand. But it just means, that the price of the demanded item, can be shifted either to be more expensive or cheaper.
Post by: Hutchoo on February 19, 2011, 10:55:30 pm
In this question, demand is price elastic meaning that a small change in price will result in a large change in the expenditure/supply.
It's ultimately saying that if the price of the good/service is increased, the change in supply costs will decrease meaning that companies will spend less money (expending) meaning that less of the product/service will be supplied.
It's a really rough/sketchy answer, but I hope it helped in some way.
Post by: Water on February 19, 2011, 11:04:45 pm
It's pretty much the definition of when demand is based on price elasticity.
In this question, demand is price elastic meaning that a small change in price will result in a large change in the expenditure/supply.
It's ultimately saying that if the price of the good/service is increased, the change in supply costs will decrease meaning that companies will spend less money (expending) meaning that less of the product/service will be supplied.
It's a really rough/sketchy answer, but I hope it helped in some way.
I think your delving too much into the question, I don't think you can refer price elasticity to the question. Just knowing its price elastic, meaning that the change in prices is enough for the question.
As the question doesn't say whether the product has high price elasticity, or low elasticity, and if you regard it that way, then your just merely putting your own assumption.Thus the PED is irrelevant to the question and will only confuse your answer. Yeh, now that I said that, this question only requires us to think simply, thinking too much would overcomplicate an otherwise simple question, merely thinking about the demand curve is enough, on where it movements along the demand curve.
Btw PED = Percentage Change in Demand / Percentage change in price (pricing of your product that is)
Furthermore, PED is irrelevant to the question because it does not address the the supply / expenditure side, which a demand curve would, and if so, is only vaguely touched on through "price elastic".
PS: MY Reasoning and logic could be totally rubbish though in answering the question, and I could be totally wrong in my explanation above. Lol. HOPEFULLY NOT.
Post by: DNAngel on February 24, 2011, 08:34:01 pm
What exactly is Gross Domestic Product (GDP), i.e, what's the exact definition and how does it apply to each country's economy?
Post by: Hutchoo on February 24, 2011, 10:53:24 pm
GDP is an indicator of the value of a nation's output. GDP represents the total market value of final goods and services produced by a country over a period of time (usually a year) minus the costs of inputs used up in production, other than the cost of capital equipment. GDP applies to every countries economy as every country has goods and services that can be measured and put into a national output.
Post by: chrisjb on February 25, 2011, 07:01:06 pm
My question is about opportunity cost. If someone chosses to invest their resources in a way which is not the most profitable means, is the opportunity cost the next best alternative allocation (going down in terms of price) or the best alternative allocation?
If that didn't make much sense, here's an example. A farmer can choose to rear sheep, cattle or pigs on his farm.
Cattle= $10 profit
Sheep= $20 profit
Pigs= $30 profit
If the farmer then chooses to rear sheep, is the opportunity cost $10 (the next best alternative) or $30 (the best alternative)?
Post by: gs on February 25, 2011, 11:38:42 pm
If that didn't make much sense, here's an example. A farmer can choose to rear sheep, cattle or pigs on his farm.
Cattle= $10 profit
Sheep= $20 profit
Pigs= $30 profit
If the farmer then chooses to rear sheep, is the opportunity cost $10 (the next best alternative) or $30 (the best alternative)?
The opportunity cost would be pigs @ $30 being the best alternative IMO.
Post by: Hutchoo on February 26, 2011, 12:26:53 am
The opportunity cost would be pigs @ 30.
Post by: Hutchoo on February 26, 2011, 11:45:48 pm
Explain the laws of demand and supply (4 marks)
How would you answer that in a SAC?
Post by: chrisjb on February 26, 2011, 11:58:26 pm
1) the law of demand
2) the factors causing this
3) the law of supply
4) the factors causing this
Something like:
The law of demand is that generaly as the price of a good or service increases, the quantity of that good or service demanded will decrease. Likewise, as price decreases, demand will increase. The law of demand results from the fact that consumers have limited budgets and that when price exceeds the amount a consumer considers a product to be worth they (when rational) will not buy it.
The law of supply is that generaly as the price of a good or service increases, the quantity of that good good or service supplied will increase. Likewise, as the price of a good or service decreases suply will decrease. This is becuase firms will seek to exploit profits in an industry and if the price of a product increaes without production costs increasing to the same degree, it will be more profitable to produce and therefore more will firms will be seduced into making it.
Post by: Water on February 26, 2011, 11:59:44 pm
This one is really quite simple and should be well known, but...
Explain the laws of demand and supply (4 marks)
How would you answer that in a SAC?
Wouldn't I get full marks if I just said???
Law Of Demand
-As Prices Increase, Quantity Decrease
-As prices increases, there is greater opportunity cost. Hence Quantity decrease along the way
Law Of Supply
- As Prices Increases, Quantity Increases
- As companies increase supply, incentive for companies to make more more revenue.
Hoping, I would, I hate writing alot for ecos. Lol, Makes the marker tired, and makes my hands tired ):
Post by: Hutchoo on February 27, 2011, 12:01:45 am
I would think that an answer like that is only worth two marks.
Law of demand = 1 mark.
Law of supply = 1 mark.
Where are the other 2?
Post by: Water on February 27, 2011, 12:05:59 am
Let you know on Monday. :)
PS @ Below Post: Good Luck, Rofl! Ask your eco teacher, before the SAC :)
Post by: Hutchoo on February 27, 2011, 12:13:38 am
Post by: Hutchoo on February 27, 2011, 12:27:15 am
Post by: Water on February 27, 2011, 12:30:30 am
Formula to calculate PED : %Change in Quantity Demanded / % Change in Price.
Good Revision stuff for me :)
Post by: Hutchoo on February 27, 2011, 12:36:56 am
What does the elasticity of supply measure?
Post by: Water on February 27, 2011, 12:41:04 am
Elasticity of Supply is a measure of the responsive nature of change in the quantity supplied to change in price.
Formula: %Quantity Supplied/ %Change in Price
Post by: Hutchoo on February 27, 2011, 12:49:32 am
I'll just give you these last two questions and then I'll be good :D
Describe three characteristics of good for which demand is price elastic (3 marks)
and
Describe three characteristics of good for which demand is price inelastic (3 marks)
Post by: Water on February 27, 2011, 12:55:29 am
Describe three characteristics of good for which demand is price elastic (3 marks)
and
Describe three characteristics of good for which demand is price inelastic (3 marks)
a) - Has None - Weak Brand Loyalty
- Is perceived to be a Want by the consumers
- Has many substitutes
b) -Has Strong Brand Loyalty
- is perceived to be a Need by consumers
- Does not have many substitutes.
Post by: Hutchoo on February 28, 2011, 06:44:57 pm
I had my SAC today. It wasn't too bad...
I know that I got 12/15 for the multiple choice and the guy at the top of the class got 15/15 D:
There is either 11 or 14 in my class... If I get ranked in the top 3 and 'rape' the end of year exam; what kind of score would I get?
Can you answer questions like that this early on?
Thanks guys.
Starting chapter 2 of the Economics Down Under very shortly!
Good luck for your upcoming SACs! Show VCAA your superiority ;D.
Post by: Hodgeyhodgey on February 28, 2011, 06:50:05 pm
Post by: Water on February 28, 2011, 06:57:30 pm
Sac is on Friday, let you all know :)
Post by: Phenotype on February 28, 2011, 07:02:23 pm
Post by: Water on February 28, 2011, 07:20:37 pm
Post by: Hutchoo on February 28, 2011, 07:52:19 pm
We only had 15 MC and the rest were all short answer questions..
It went for about 1 hour and 30 minutes...
I got a cramp in my shoulder during the SAC ==.. TALK ABOUT BAD LUCK T-T
Post by: chrisjb on February 28, 2011, 08:03:01 pm
Wow, you guys are lucky LOL.My first sac is tomorrow and my teacher hasn't told us the layout/given us any meaningfull practice questions (perhaps I'm expecting too much)... I've just been searching our school library for the previous 5 years of economics textbooks to get practice questions...
We only had 15 MC and the rest were all short answer questions..
It went for about 1 hour and 30 minutes...
I got a cramp in my shoulder during the SAC ==.. TALK ABOUT BAD LUCK T-T
I'm so goddam excited for it!
Post by: schmalex on February 28, 2011, 09:01:53 pm
Wow, you guys are lucky LOL.My first sac is tomorrow and my teacher hasn't told us the layout/given us any meaningfull practice questions (perhaps I'm expecting too much)... I've just been searching our school library for the previous 5 years of economics textbooks to get practice questions...
We only had 15 MC and the rest were all short answer questions..
It went for about 1 hour and 30 minutes...
I got a cramp in my shoulder during the SAC ==.. TALK ABOUT BAD LUCK T-T
I'm so goddam excited for it!
Just go through the study design and make sure you know everything for the first outcome (or whatever part of the outcome you've learnt). That way they can't really ask you about something you don't know.
Post by: Hutchoo on February 28, 2011, 10:41:28 pm
Post by: chrisjb on March 01, 2011, 03:29:07 pm
I'd just like to edit that MC was only 15 marks out of 95 LOL.My MC was 15 marks out of 30 if I remember correctly. My sac was prety easy but I made one silly mistake (a graph showed an increase in demand and I was going to write advertising as a factor but got cocky and thought I'd write about intrest rates instead and then promptly forgot that it was an increase in demand- not a decrease) and the freaking teacher decided to fuck wtih our minds by making one of the multiple choice questions 'how many states are there in Australia?'
I'm one hundred percent sure he's not allowed to do that...
Post by: DNAngel on March 01, 2011, 04:25:17 pm
I'd just like to edit that MC was only 15 marks out of 95 LOL.My MC was 15 marks out of 30 if I remember correctly. My sac was prety easy but I made one silly mistake (a graph showed an increase in demand and I was going to write advertising as a factor but got cocky and thought I'd write about intrest rates instead and then promptly forgot that it was an increase in demand- not a decrease) and the freaking teacher decided to fuck wtih our minds by making one of the multiple choice questions 'how many states are there in Australia?'
I'm one hundred percent sure he's not allowed to do that...
^ Lol how is that even remotely related to Economics? More states does not necessarily mean more income.
Post by: chrisjb on March 01, 2011, 04:48:42 pm
I know! I'm hoping that it was a joke or something and it's not being counted because lots of people in the class got it wrong (said 7 or 8 states). It's just not fair if they lose marks for something like that.I'd just like to edit that MC was only 15 marks out of 95 LOL.My MC was 15 marks out of 30 if I remember correctly. My sac was prety easy but I made one silly mistake (a graph showed an increase in demand and I was going to write advertising as a factor but got cocky and thought I'd write about intrest rates instead and then promptly forgot that it was an increase in demand- not a decrease) and the freaking teacher decided to fuck wtih our minds by making one of the multiple choice questions 'how many states are there in Australia?'
I'm one hundred percent sure he's not allowed to do that...
^ Lol how is that even remotely related to Economics? More states does not necessarily mean more income.
Post by: chrisjb on March 03, 2011, 09:40:31 pm
I'm very confused :(
Post by: Hutchoo on March 03, 2011, 10:55:26 pm
Post by: Water on March 03, 2011, 11:18:57 pm
You can only calculate GDP based on past economic activity, on what has already occurred.
Since the calculation of GDP is the total annual production of goods and services per year, Calculated, per quarter.
By calculating per quarter <<< It makes it a lagging indicator, because we are calculating past events.
Whereas coincident indicators would be something like stock market, advertisement, etc etc.. Things happening now, that can reflect on economic activity levels
@chrisjb,
Don't put my word on this,
but my teacher taught that, economies of scale, is the volume in which a firm must produce to cover it fixed cost and to be effectively efficient.
Say Toyota produces 200,000 cars, at a $20,000 rate per car.
Assume this is the most cost effective way of tackling car production, then every company must produce at this quantity, in order to survive in the car market. Then any firm that produces more or less than this amount, and it wouldn't be cost effective. Means cost per unit of car would go up, meaning less profits/ or no profits if in very competitive oligopoly, means bad business > Go Bust.
Having said that, my teacher is somewhat unreliable.
For the terms of barrier, I guess, what you can say, if involved in entering the markets of oligopolies and monopolies, the the economy of scale would involve large set up costs.....and if fail, could mean huge losses. Therefore many competitors shy away? << blah blah blah? (Clarify this with your teacher, our teacher just spent 2 - 3 mins on this crummy topic)
PS: anyone playing stock market for the asx, cause I am :smitten:
Post by: Hutchoo on March 03, 2011, 11:38:29 pm
Thanks Water!
P.S Your bio box about economists made me laugh LOL. <3
Peace (Y)
Post by: schmalex on March 04, 2011, 01:41:23 pm
@Hutchoo
You can only calculate GDP based on past economic activity, on what has already occurred.
Since the calculation of GDP is the total annual production of goods and services per year, Calculated, per quarter.
By calculating per quarter <<< It makes it a lagging indicator, because we are calculating past events.
Whereas coincident indicators would be something like stock market, advertisement, etc etc.. Things happening now, that can reflect on economic activity levels
@chrisjb,
Don't put my word on this,
but my teacher taught that, economies of scale, is the volume in which a firm must produce to cover it fixed cost and to be effectively efficient.
Say Toyota produces 200,000 cars, at a $20,000 rate per car.
Assume this is the most cost effective way of tackling car production, then every company must produce at this quantity, in order to survive in the car market. Then any firm that produces more or less than this amount, and it wouldn't be cost effective. Means cost per unit of car would go up, meaning less profits/ or no profits if in very competitive oligopoly, means bad business > Go Bust.
Having said that, my teacher is somewhat unreliable.
For the terms of barrier, I guess, what you can say, if involved in entering the markets of oligopolies and monopolies, the the economy of scale would involve large set up costs.....and if fail, could mean huge losses. Therefore many competitors shy away? << blah blah blah? (Clarify this with your teacher, our teacher just spent 2 - 3 mins on this crummy topic)
PS: anyone playing stock market for the asx, cause I am :smitten:
When it is inefficient to increase production, this is called diseconomies of scale, so it's not really relevent to the concept.
Economies of scale occur when it's more efficient to increase production because fixed costs can be spread more thinly.
If you have a big factory that costs a lot of money to maintain, and you're only producing a few units of a good in the factory, you'll have to charge a lot of money for each unit to cover the cost of the factory, and the marginal cost of producing each unit. If you produce more units of a good, each will be cheaper, because the cost hasn't increased by much, so your revenue doesn't have to increase by as much.
Say I spent $100 maintaining my factory and it cost $10 per unit to produce whatever I'm making.
If I made one, it would cost $110 ($100+$10)
If I made two, it would cost $120 ($100+$10+$10), which is equivalent to $60 per unit.
If I made three, the total cost would be $130, and so my costs would be spread even thinner.
Does that make more sense?
Post by: Hodgeyhodgey on March 04, 2011, 04:55:12 pm
I've been reading over this and it just isn't sinking in..
Post by: Hodgeyhodgey on March 06, 2011, 03:24:30 pm
Really need this question answered ASAP ^^^
Post by: chrisjb on March 12, 2011, 06:00:19 pm
Market Failure Occurs when:
A)Monopolies and oligopolies encourage competion
B)There is not enough production of luxury goods
C)There is limited production of public goods
D)There are no restrictions on the production of harmfull goods
Shouldn't both C and D be correct? Isn't D just negative externalites? Or is it that D is considered a government failure to regulate rather than a market failure of producing harmfull goods? I can't work it out.
Thanks fory our help and anyone who knows the answer to hodgey's question above, get on it!
Post by: Hodgeyhodgey on March 12, 2011, 06:10:10 pm
...took me a page to explain the answer though :S
Post by: DNAngel on March 14, 2011, 07:56:52 pm
'Australians enjoy cheap water relative to many countries. However, if the price of water in Australia was set solely by market forces and actually reflected its relative scarcity, it would be many times higher than it currently is. This would dramatically affect how our nation's resources are used in the future.'
a) Why would the cost of water rise if changes were made so that its price was determined by the free operation of market forces?
b) Into which specific types of industries would more resources flow, if water were dearer? Explain your reasons.
c) From which specific types of industries would resources be repelled, if water were dearer? Explain your reasons.
Post by: chrisjb on March 14, 2011, 09:47:07 pm
b) Water production (increased profits (although they are probably subsidised as it is))
Substitute products- De-sal plants? artificial water production?- not sure if these count as substitutes...
c) Complimentary products and products for which water is a factor of production- beer, agriculture, water bottles, salty foods, taps, shower curtains, showers, toilets, bath-tubs, anything else that uses water or needs water to be created.
P.S. +1 for eco down under :D
Post by: Water on March 14, 2011, 09:49:06 pm
I've thought bout that question for a great length....
Post by: chrisjb on March 14, 2011, 09:56:07 pm
Post by: Water on March 14, 2011, 10:03:20 pm
If we are going by book by book definition
Market Failure = Mis allocation of Resources
Then D would be wrong because it is a deregulation illustrated by "There are no restrictions" and not, the actual "action" of mis allocation of resources.
Whereas C is actually the "action" illustrated by "There is limited production" of public goods.
Very Tricky question, I thought you meant C and D weren't right and I went WTF!
Post by: Hodgeyhodgey on March 28, 2011, 06:14:23 pm
Post by: Water on March 28, 2011, 10:23:27 pm
Post by: chrisjb on March 28, 2011, 10:40:53 pm
Post by: Water on March 29, 2011, 08:06:57 pm
Volume = Volume of goods and services, self explanatory.
However, I suspect Chain is derived from the comparison of one volume to the other, which is somewhat symbolic of a chain linking to one another.
Post by: Hutchoo on March 30, 2011, 10:58:44 pm
Anyway, the question asks:
Apart from its effect on the level of AD, what is the connection between private investment spending and the economy's productive capacity (AS).
Thanks in advanced (Y)
Post by: chrisjb on March 30, 2011, 11:08:28 pm
Hi guys, this is question 6C (Short answer) for chapter 2 in the Economics down under book.This was my thought process:
Anyway, the question asks:
Apart from its effect on the level of AD, what is the connection between private investment spending and the economy's productive capacity (AS).
Thanks in advanced (Y)
1)private investment spending would usually equal spending on capital/ something else that a business thinks will help it produce stuff.
2) Therefore private investment expenditure should increase if businesses plan on making more stuff.
3) Since much of private investment expenditure would be capital equipment, I'm gonna assume that productivity will also increase.
4) therefore greater productivity + businesses planning on making more stuff means greater AS.
Anyone able to confirm this? I haven't actually looked at this and just wrote what I thought the answer should be.
Post by: Water on March 30, 2011, 11:10:45 pm
We know that AD = C + I + G + X -M
The question is tackling Investment, so from what we know so far, Investment is part of an aggregate demand. It is an aggregate demand, because firms demand capital items for future productions.
Over a long period of term, the economy will see the Investments of firms come to fruit. How is this so? This is because, as your investing into new equipment, this stretches your productivity. In effect, as you increase your productivity(amount of output for fixed input), you will see a shift to your AS curve to the right, as firms will be willing to produce more at a lower price.
Post by: Hutchoo on March 30, 2011, 11:35:09 pm
@Water - What do you mean by "... of firms come to fruit"?
Post by: Water on March 30, 2011, 11:49:41 pm
For Example "All my hard work is finally coming to fruit!"
Post by: Hutchoo on March 31, 2011, 12:09:13 am
As in, when your investing in new equipments. It takes a number of years or months before we actually see the results. Like seedings, being grown to eventually become a fruit to eat. Its a saying xDROFL == I didn't know it was a saying :D
For Example "All my hard work is finally coming to fruit!"
Thanks Mr.Hokage :3
EDIT:
Another question :)
What do interest rates on loans represent? (2 marks).
Post by: Water on March 31, 2011, 12:45:35 am
What do interest rates on loans represent?
In terms of AD/AS
Interest Rates generally affect the amount of discretionary income available to a consumer. Because of this, as interest rates decrease/increase, this will directly affect AD, impacting on the consumption side. This can also impact on the supply side of firms/businesses as this would directly increase/decrease the costs of factors of production.
Post by: sam.utute on March 31, 2011, 06:46:34 pm
Interest on loans...
Different perspective to Water. Interest rates represent to cost of credit (i.e. the cost businesses and consumers must pay in order to access credit), as determined by demand and supply forces. For example, the lack of savings in Australia means interest rates will be increased (shift in the supply curve to the left). Just some general knowledge stuff you hopefully already know.
Post by: Hutchoo on March 31, 2011, 10:58:17 pm
I was doing these so late that I forgot some of the stuff I knew already.
Post by: Hodgeyhodgey on April 02, 2011, 01:13:21 pm
Muchly appreciated! Haven't been able to think up a damn one..
Post by: schmalex on April 02, 2011, 03:13:01 pm
Can I just say that these threads shouldn't be the first place you go to with a tricky problem. You should really make sure you've gone through your notes and your textbook and only when you're sure you're completely stuck should you come here. You'll learn a lot better that way.
Post by: Hodgeyhodgey on April 02, 2011, 04:12:36 pm
There are two questions. The first asked me to list the limitations of using GDP as a measure of economic activity (exclusion of black market activity, home duties, etc) which I have done. The second question, which I am having trouble with, says to 'give examples of the problems of using GDP as a measure of economic activity from your list above'. The part that's confusing me is what are examples of these 'limitations'? Is it just asking the same question, or am I to create scenarios where these limitations apply?
Post by: schmalex on April 02, 2011, 05:28:48 pm
Post by: Hutchoo on April 02, 2011, 06:23:30 pm
Post by: sam.utute on April 02, 2011, 11:44:33 pm
Post by: Water on April 02, 2011, 11:55:31 pm
But in summary, based on my understanding, its
the index for Price of exports/ Price of imports x 100.
Say your trading 100 dollars worth of apples to a particular country, and importing 100 dollars worth oranges. Suddenly the other country demands more apples, and is willing to pay at a higher price. Then your new value for that apple will rise to 102 dollars worth for the same volume of $100 apples.
The Previous TOT Index was $100/$100 x 100 = 100
The New Tot Index now is $102/$100 x 100 = 102
If your TOT increases above 100 > Then that means, your country's exports is at a greater value than the other country's as your exports are worth more for the same volume.
Vice Versa TOT < 100 means your country's exports is worth less for the same worth of imports that is being brought in.
I"m doing this at a micro sense. At a macro sense, with all the bazillion amount of exports and stuff, I don't know how it works unfortunately, I cannot comprehend, and the VCE Economics book is vague about it.
But so long you can apply the theory in a general sense, it should be fine! For year 12 that is!
TOT and Exchange Rates are two different things. Exchange Rates will affect the Volume. TOT will not.
Post by: Hutchoo on April 03, 2011, 07:50:45 pm
Also, what is meant by RULCs?
Post by: Water on April 03, 2011, 08:13:10 pm
Not sure which chapter TOT is mostly involved in.
RULC = Real Unit labour costs.
Labour Costs / Productivity Adjusted for Inflation
= Adjusted for Inflation (Real) Cost in labour to produce a unit of output.
If you need anymore info on it, just hit back on the forum.
Post by: Hutchoo on April 03, 2011, 08:24:28 pm
Post by: Water on April 03, 2011, 08:56:08 pm
Whats the benefits and disadvantages as a consumer or as a business.
Post by: Hutchoo on April 03, 2011, 10:42:39 pm
I was reading the chapter review for chapter 2 of economics down under and it says this:
"Per capita GDP, consumption or income are not good measures of living standards (especially non-material living standards) so other more informative measures have been devised like GPI and MAP."
What is GPI and MAP?
Thanks.
Post by: chrisjb on April 04, 2011, 04:43:14 pm
Post by: Water on April 04, 2011, 04:56:13 pm
What is GPI and MAP? Should be in your book. But they are just indicators that involve the non material things/social costs. I reckon they are unreliable.
Post by: Hutchoo on April 04, 2011, 05:02:01 pm
Why is GDP regarded as a lagging indicator of economic activity?
@Hutchoo
You can only calculate GDP based on past economic activity, on what has already occurred.
Since the calculation of GDP is the total annual production of goods and services per year, Calculated, per quarter.
By calculating per quarter <<< It makes it a lagging indicator, because we are calculating past events.
Whereas coincident indicators would be something like stock market, advertisement, etc etc.. Things happening now, that can reflect on economic activity levels
Haha, asked that question before Chrisjb; look at this post if you wanted a more in depth answer.
Anyone have any idea what is meant by GPI/MAP?
Post by: sam.utute on April 05, 2011, 09:37:25 am
"Genuine Progress Indicator (GPI)
This measure uses the same personal consumption data contributing to GDP, but it then makes both negative and positive adjustments to values to reflect the good or bad effects on society's welfare of some different types of activity and spending."
So basically, you take the GDP per capita figure and subtract negatives such as pollution, environmental damage, reduced leisure times etc.
Then we add positive things such as voluntary work, infrastructure etc.
So you end up with a figure that has taken into account things that effect non-material living standards, not just material living standards.
MAP = Measuring Australia's Progress
Has four categories that it looks at to assess our living standards:
1. Individuals - health, education etc.
2. The economy - GDP, housing
3. The environment - pollution, resources
4. Living together - crime, family indicators
For the exam, you will need to be able to describe one of the two, and also mention some of their weaknesses.
Post by: Hutchoo on April 06, 2011, 04:49:54 pm
For my SAC tomorrow; we should know demand side factors etc.
I have chosen ~5 demand side factors and I get confused between Aggregate wealth and disposable income.. they seem the exact same.
Post by: Water on April 07, 2011, 05:02:05 pm
Disposable Income = Income received - direct tax.
Post by: Hutchoo on April 07, 2011, 05:55:08 pm
I had my second SAC today on chapter 2 of Economics Down Under, only 1 more chapter left until unit 3 is complete.
Post by: Jdog on April 14, 2011, 03:32:37 pm
In the book it says that increases in overseas rates of growth place upward pressures on inflation since they increase the export component of AD. I understand what they are saying and understand that it increases AD but I don't understand why an increase in exports would necessarily contribute to an increase in the general price level of goods and services here.
The book also makes mention of the fact that increases in the I component of AD contributes to inflation. Although it makes sense if we look at the graph and observe AD increasing, wouldn't increases in investment serve to increase productivity and hence decrease costs of production, placing downward pressures on inflation? and by increasing investment in capital wouldn't that mean productive capacity is increased therefore demand inflation wouldn't occur?
Post by: Jdog on April 25, 2011, 11:03:40 am
Post by: Hutchoo on April 26, 2011, 10:47:36 pm
I have some questions, they're quite basic.. but here they are:
If the CPI for a country in 2009-10 was 90 index points, while in 2010-11 it was 120 points, the annual inflation rate measure by the CPI would be:
A) 40 per cent.
B) 30 per cent.
C) 20 per cent.
D) None of the above percentages.
What are index points?
How would you work out this question?
Also, what is meant by "real terms"? For example: "Rise by about 3-4 per cent annually in real terms".
Thanks in advanced.
Post by: Water on April 26, 2011, 10:56:12 pm
Real terms - is used to remove any inflation from the previous period. This is used to indicate the level of production that has actually been made in a country.
JDog.
a) As export increase, this can cause inflation in our domestic country as the products supplied to our country will decrease, as it is sold overseas. This will therefore mean, as supplies decrease, relative scarcity comes into play.
b) Investment, in its initial stages will cause a rise in inflation however in the long term will not. This is because, as investments are made, they do not increase productivity however come at a cost to the firm. To tackle this, inflations may rise to subsidize the initial costing of investments.
Post by: Hutchoo on April 26, 2011, 11:10:52 pm
Hutcho, is the answer B.My book says that the answer is D?
Real terms - is used to remove any inflation from the previous period. This is used to indicate the level of production that has actually been made in a country.
You didn't explain what index points are :(
Post by: Water on April 26, 2011, 11:21:23 pm
Hutcho, is the answer B.My book says that the answer is D?
Real terms - is used to remove any inflation from the previous period. This is used to indicate the level of production that has actually been made in a country.
You didn't explain what index points are :(
Okay, I just did a quick read up on this chapter, because I thought it'd be easy but I underestimated it.
Anyways, the index points for CPI is used as a measure of a inflation indication.
100 = no inflation.
>100 = inflation percentage
<100 = deflation percentage.
The reason you cannot calculate the annual rate of inflation is because you require two quarters of one present and past. Say March 1953 and March 1952. As you do not have two quarters, you cannot calculate the annual rate of inflation in this question.
Post by: Hutchoo on April 27, 2011, 12:15:12 am
Post by: Spectral on April 27, 2011, 08:07:27 pm
1)Discuss how production classifications as Consumption or Investment can depend on how it is used in the economy.
2)Define the terms ‘jobless growth’
3)Explain how a reduction in interest rates adds to inflationary pressure over time
4)Outline two reasons why changes in real GDP may not accurately reflect changes in economic living standards
Could this be GDP fails to distinguish between monetary transactions that actually improve welfare and those that detract from welfare such as money spent on tobacco.
Thanks.
Post by: TrueTears on April 27, 2011, 08:18:01 pm
Hi, could I get some help on these questions2. Jobless growth is where a macroeconomy experiences growth while maintaining or decreasing its level of employment.
1)Discuss how production classifications as Consumption or Investment can depend on how it is used in the economy.
2)Define the terms ‘jobless growth’
3)Explain how a reduction in interest rates adds to inflationary pressure over time
4)Outline two reasons why changes in real GDP may not accurately reflect changes in economic living standards
Could this be GDP fails to distinguish between monetary transactions that actually improve welfare and those that detract from welfare such as money spent on tobacco.
Thanks.
3. The Fisher equation states that
Where
If we assume
Post by: Hutchoo on April 27, 2011, 09:40:11 pm
Post by: Hutchoo on May 29, 2011, 12:49:04 pm
Discuss the impact on Australia's economic growth if our trading partners were experiencing recession.
I talked about how our imports would be higher, meaning that we'd have high CAD repayments which leads to an economic slowdown and unemployment.
Is that the right answer?
Post by: schmalex on May 29, 2011, 01:04:49 pm
Post by: Hutchoo on May 29, 2011, 01:14:18 pm
Uhm
I have another few questions T_T
Questions:
Explain what the balance of payments represents.
Distinguish between the allocation of resources and efficient allocation of resources.
Thanks.
Post by: TrueTears on June 02, 2011, 12:09:42 am
An allocation of resources is a transfer of resources between individuals which often involves a trade-off, ie, one side becoming better off while other side becoming worse off. However an efficient allocation of resources is which makes at least one individual better off without making any other individual worse, this is often called the Pareto efficiency.
You might ask how can we achieve an efficient allocation of resources? Well it is explained by the two fundamental theorems of welfare economics.
The first fundamental theorem is that any Walrasian (competitive) equilibrium is in fact a Pareto efficiency.
The second fundamental theorem states that, if we assume that every production set
The proof for the second fundamental theorem is much beyond the scope of things, however it is a quite interesting branch of theoretical economics.
Post by: DNAngel on June 19, 2011, 10:11:47 pm
Post by: Hutchoo on June 19, 2011, 10:19:07 pm
Post by: TrueTears on June 19, 2011, 10:25:58 pm
Post by: DNAngel on June 19, 2011, 10:26:59 pm
Post by: TrueTears on June 19, 2011, 10:42:36 pm
Post by: Hutchoo on July 24, 2011, 12:28:11 pm
I don't really understand it though.
Could someone go through this question and explain to me why it has to be C and not A,B or D?
Thanks.
Post by: TrueTears on July 24, 2011, 04:43:01 pm
The answer to this question is C.It's just a simple question to calculate the percent of personal tax income.
I don't really understand it though.
Could someone go through this question and explain to me why it has to be C and not A,B or D?
Thanks.
Go through the options like this:
A. For an income of 10000, the tax charged is
For an income of 20000, the tax charged is
B. For an income of 10000, the tax charged is 10%
For an income of 20000, the tax charged is
C. For an income of 10000, the tax charged is 10%
For an income of 20000, the tax charged is
D. For an income of 10000, the tax charged is
For an income of 20000, the tax charged is
Now since these are direct taxes on income, we expect a higher income to have a higher tax rate (or at least the same tax rate as the previous lower income). As we can see for C, for the 10000 we charged a tax of 10% yet for a higher income of 20000 we charged a tax rate of only 7.5% which is lower than 10%. This is an uneven distribution of wealth (the poor has to pay more money as tax than the rich)
Post by: Hutchoo on July 24, 2011, 05:01:59 pm
FASYIDUAWIOJ <3 love ya man. Ty for the help (once again)
Post by: Hutchoo on August 20, 2011, 04:34:52 pm
Monetary policy is an aggregate demand management policy. It involves the RBA's measures that focus mainly on altering the cost, availability and demand for credit, and the rate at which it flows between the financial and other sectors of the economy.
These questions are usually marked out of 2-3, so could you help me a bit on "perfecting" the definition?
Thanks.
Post by: Saur11 on August 20, 2011, 06:10:36 pm
This is the text book definition, might be worth just sticking to that. Regardless, i don't think the examiners would be pedantically checking definitions, so yours would be fine.
Post by: Hutchoo on August 20, 2011, 06:40:13 pm
Post by: sam.utute on August 23, 2011, 11:16:31 am
Make sure you have a long and short definition for everything. You should really be defining the key concepts (the policies and the goals) every time a relevant question comes up. For 6-8 mark questions, have a really, really detailed definition (including measure, target, elements etc.). For the 4 mark questions, you can use a simple one sentence definition.
Post by: Hutchoo on September 14, 2011, 06:42:12 pm
Anyway, in relation to the policy mix, can someone give me a few GOOD examples of a conflicting and non-conflicting policy mix?
All of my examples are too similar :/
Thanks :)
Post by: hala_madrid on September 21, 2011, 01:11:23 pm
Also, to those that got 50 or high 40s if you're reading this... did you use any specific stats on the exam? i know examples are important, but is it necessary to know specific numbers, because there's so many of them
Post by: chrisjb on September 24, 2011, 05:59:50 pm
So... when people talk about positive output gaps (greater than 1)... how is that possible? In my head GDP cannot exceed potential GDP, therefore there cannot be a positive output gap, but every source i've looked at says there can be, but doesn't explain why there can be.
EDIT: I also cannot understand this statement from the 2008 assessors report:
As surpluses usually act as a restraint on aggregate demand through the government collecting more in revenues (example
higher taxes) than they outlay, it is likely that demand for imports may be reduced.
Post by: Jdog on September 25, 2011, 11:08:04 am
automatic stablizers are called the cyclical component of budgetary policy; aren't they counter cyclical in their approach to macro-economic demand management e.g transfer payments decrease in times of economic prosperity which reduces spending hence downward pressure on eco-growth.
If this is the case, I don't quite understand why it is refeerred to as Cylical
Post by: Water on September 25, 2011, 11:19:41 am
okay question:
automatic stablizers are called the cyclical component of budgetary policy; aren't they counter cyclical in their approach to macro-economic demand management e.g transfer payments decrease in times of economic prosperity which reduces spending hence downward pressure on eco-growth.
If this is the case, I don't quite understand why it is refeerred to as Cylical
Cyclical just refers to the economic/business cycle.
With regards to counter cyclical/pro cyclical, its a more defined approach.
So for example
Apple Can have Red or Green Apple (But surely they'll have different textures)
Post by: Jdog on September 25, 2011, 11:22:16 am
okay question:
automatic stablizers are called the cyclical component of budgetary policy; aren't they counter cyclical in their approach to macro-economic demand management e.g transfer payments decrease in times of economic prosperity which reduces spending hence downward pressure on eco-growth.
If this is the case, I don't quite understand why it is refeerred to as Cylical
Cyclical just refers to the economic/business cycle.
With regards to counter cyclical/pro cyclical, its a more defined approach.
So for example
Apple Can have Red or Green Apple (But surely they'll have different textures)
so cyclical refers to the fact it changes as the economic cycle changes.
Post by: Water on September 25, 2011, 11:26:37 am
okay question:
automatic stablizers are called the cyclical component of budgetary policy; aren't they counter cyclical in their approach to macro-economic demand management e.g transfer payments decrease in times of economic prosperity which reduces spending hence downward pressure on eco-growth.
If this is the case, I don't quite understand why it is refeerred to as Cylical
Cyclical just refers to the economic/business cycle.
With regards to counter cyclical/pro cyclical, its a more defined approach.
So for example
Apple Can have Red or Green Apple (But surely they'll have different textures)
so cyclical refers to the fact it changes as the economic cycle changes.
Not sure if we're on the same page here, but I"ve always understood this as.
Cyclical Component of the Budgetary Policy refers to the Policies that tackle the fluctuations within the economic cycle.
The fact that they are in (pro cyclical/counter cyclical) manner is an evaluation.
And I"m not sure what your referring to "it" as???
PS: If I'm talking rubbish, then please correct me
Post by: Jdog on September 25, 2011, 11:49:13 am
Post by: Water on September 25, 2011, 12:57:58 pm
I thought cyclical component of budgetary policies were Automatic stablizers, and that they change automaticcaly according to the business cycle. So they are cyclical in that sense but affect the economy in a counter cyclical way; this is because in times of economic prosperity they automaticall reign in growth but in times of economic recession they promote growth
Yes that, because the cyclical component is non discretionary.
Post by: Hodgeyhodgey on September 26, 2011, 12:58:50 pm
I know one is immigration policy, but I can't think of another. Can someone please help?
Post by: Hodgeyhodgey on September 26, 2011, 03:38:33 pm
What are the economic costs/threats posed by climate change for the Australian economy?
Also, what is the difference between the Carbon Tax and the CPRS?
Thanks!
Post by: sam.utute on September 26, 2011, 09:33:56 pm
Identify and explain 2 important supply policies that might help minimise the impact of an ageing population.The examiners can only test you on content expressly stated in the study design. If you see the words "supply policies", go through each one you should know to see if it fits. In this case, as you have mentioned, immigration policy is the most appropriate response.
I know one is immigration policy, but I can't think of another. Can someone please help?
Now go through the remaining policies to see if they fit (Trade Lib or another MER, CPRS/Carbon Tax, Budgetary Policy).
The only possible answer is Budgetary policy. You need to discuss how the government can provide incentives for people to remain in the workforce (participation rate) and use discretionary measures to minimise the negative impacts of the ageing population (budget pressures, labour force etc.).
Post by: Hodgeyhodgey on September 28, 2011, 09:56:23 pm
Thanks heaps Sam, that makes for a logical way to solve a question like this! Is there any chance you could also answer my other questions?Identify and explain 2 important supply policies that might help minimise the impact of an ageing population.The examiners can only test you on content expressly stated in the study design. If you see the words "supply policies", go through each one you should know to see if it fits. In this case, as you have mentioned, immigration policy is the most appropriate response.
I know one is immigration policy, but I can't think of another. Can someone please help?
Now go through the remaining policies to see if they fit (Trade Lib or another MER, CPRS/Carbon Tax, Budgetary Policy).
The only possible answer is Budgetary policy. You need to discuss how the government can provide incentives for people to remain in the workforce (participation rate) and use discretionary measures to minimise the negative impacts of the ageing population (budget pressures, labour force etc.).
What are the economic costs/threats posed by climate change for the Australian economy?
Also, what is the difference between the Carbon Tax and the CPRS?
Thanks in advance, and I will be looking forward to the lecture for more help!
Post by: Saur11 on October 09, 2011, 02:09:12 pm
I might not be right so you probably should check with someone else.
Post by: chrisjb on October 10, 2011, 09:20:06 pm
A. the value of the Australian dollar appreciates.
B. there is an increase in the skilled immigration program.
C. the federal government reduces the size of Budget surplus.
D. consumers are faced with water shortages.
I don't understand why the answer is C. I get that expansionary fiscal policy may add to inflationary pressures, but if the government is adopting an expansionary stance, chances are the economy is experiencing a downturn... which would result in more expansionary monetary policy. Did the RBA raise the cash rate when the we saw the massive budget deficits in 2008-9?
SO... faced with these options I argue that the answer should be D, because water shortages will add to costs of firms who need water to operate (which would be every firm to an extent) AND although this is a SUPPLY side problem that is out of the RBA's control, if we assume there is no other option to slow AS, slowing AD could alleviate some of the price pressures.
Post by: Water on October 10, 2011, 09:28:24 pm
B) Increase in skilled immigration Program = Healthy
C) A Less Budget Surplus = expansionary stance, will mean that there is a stimulation in the economy. Tighter Monetary Policy is possible, because the budget may perhaps be pro-cyclical in the future.
D) Consumers are faced with water shortages. This increases the cost for consumers. Unless the Water inflation is extremely high, the RBA Is unlikely to intervene. It is a volatile event and only affects consumers, not businesses. Example was severe droughts and the RBA did not increase cash rates because of these things. IT WILL intervene if there is a serious consequence to inflation as a whole.
= C is the only contractionary answer possible/ most likely
Post by: Jdog on October 10, 2011, 10:11:07 pm
therefore when budgetary is contractionary, monetary will most likeley be contractionary
therefore C
Post by: costa on October 11, 2011, 12:41:13 pm
Post by: sam.utute on October 11, 2011, 12:44:42 pm
Long-term: Improved as a result of increased international competitiveness, efficiency and productivity, which results in increased output and a greater demand for workers.
Sorry for the short response. Let me know if you want me to elaborate.
Post by: chrisjb on October 12, 2011, 03:12:08 pm
Two commodities are complements in consumption. If due to a fall in production costs resulting from improvements in technology, the price of one commodity falls, which of the following is the most likely outcome for the other commodity?:
a) a reduced demand due to its lower price
b) a greater demand due to its higher price
c) a greater supply due to its lower price
d) a reduced supply due to its higher price
I answered 'b' on the basis that there should be an increase in demand due to the lower price of the complimentary product (but I understand that is the incorrect methodology for this question as it doesn't explain the second part of answer b)... And apparently 'b' is the correct answer, but to be honest I didn't think that any of them made much sense.
So, can someone explain it? THANKS GUYS, YOU'RE THE BEST!
Post by: TrueTears on October 12, 2011, 03:58:46 pm
Post by: costa on October 12, 2011, 05:01:07 pm
Post by: chrisjb on October 12, 2011, 06:09:18 pm
How does immigration affect the budget?I can't remember directly studying this, but off the top of my head I can think of these points:
Increased skilled immigration can solve skills shortages, and increase productive capacity, both of which should result in stronger economic growth which might act through automatic stabilisers (business tax, for example and increased income tax from immigrants' wages) to change budgetary outcomes.
Greater immigration and hence, a greater population (to a limited extent) can put extra strain on public infrastructure and public goods, leading to increased provisions thereof. This might be seen in some areas more so than others (extra strain on whatever services are target at getting immigrants on their feet).
Post by: Saur11 on October 12, 2011, 09:44:45 pm
Post by: chrisjb on October 13, 2011, 06:11:39 pm
Over 2009, the government loosened monetary policy on a number of occasions. This means that:
a) The RBA increased liquidity in the cash market
b) The RBA reduced the interest rate on all loans
c) The RBA increased its purchase of Australian dollars to help slow the rate of decline in its value
d) The RBA lowered individual tax rates
I answered 'a'.
Which of the following is not a supply factor affecting the rate of inflation in Australia?
a) Slow growth experienced by Australia's trading partners
b) Higher productivity in the economy
c) A lower cash rate
d) Lower level for real wages
I said 'a', but I can see 'a' being justified as a supply side factor. Also, I was told only to talk about interest rates from the demand side, so I was a bit confused.
THANKS GUYS!
Post by: Saur11 on October 13, 2011, 07:23:42 pm
The second is also A (i think)- increase/decrease in pace of EA overseas - should be a demand factor although you could make supply side argument, but it is listed as a demand side factor in the text book so i think you're right
Pretty much just agreed with what you said so i don't think it will be much help, but i think you're right nonetheless
Post by: sam.utute on October 13, 2011, 07:30:31 pm
They will increase/decrease businesses interest expense, thereby affecting their profit levels, which in turn will affect their willingness to supply.
You should have explored this when looking at budgetary policy and its supply-side initiatives (national savings).
Post by: chrisjb on October 13, 2011, 10:49:29 pm
Post by: the sean on October 16, 2011, 11:14:15 pm
In a competitive market, explain one factor that might cause a change in relative prices.
Can someone please explain how to answer this? Like which factors are best to use ie. price of substitutes, preferences/tastes, or supply factors?
Post by: chrisjb on October 17, 2011, 05:14:41 pm
From last year's exam...All of the above would be acceptable. Whenever something asks me to choose and explain a factor I just do the first one that comes to my head. There is no preference for supply side or demand side factors... That said, don't choose something really obscure like 'the positioning of items on shelves making products appear more attractive'. Choose one that everyone knows that you can explain in detail quickly.
In a competitive market, explain one factor that might cause a change in relative prices.
Can someone please explain how to answer this? Like which factors are best to use ie. price of substitutes, preferences/tastes, or supply factors?
Post by: the sean on October 17, 2011, 05:55:42 pm
Post by: Hutchoo on October 17, 2011, 06:02:44 pm
Thanks man, I had asked my teacher about it a while back and he may have mis-interpreted my question but he said to only use demand factors, which made me quite confused.I think that's because students tend to find demand side factors a lot easier to remember.
Post by: Andiio on October 17, 2011, 06:08:44 pm
Post by: chrisjb on October 18, 2011, 09:16:59 pm
A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth
I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.
They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...
What do you guys think?
Post by: chrisjb on October 18, 2011, 10:36:19 pm
What are enterprise bargaining agreements and how do they affect equity in income distribution?
Post by: Hutchoo on October 18, 2011, 10:51:15 pm
Which of the following economic goals may be more difficult to achieve in the short run when microeconomic reforms change the structure of the Australian economy?Compak 2011?
A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth
I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.
They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...
What do you guys think?
I got this MC question wrong as well, and I chose A too :P
Tbh, the compak 2011 exam is pretty crap. The first MC question (imo) is wrong as well. You have to make toooooooooooooooo mannnnnnnny assumptions when answering the questions in that exam.
For your other question: (just to get you rolling)
- Enterprise (bargaining) agreements simply refer to when an individual and firm/company negotiate over work conditions and wages.
- The wages are (usually) reflected by the workers productivity.
- This affects the equity in income distribution as workers with more bargaining power enjoy the benefit of an increased income whilst workers with less bargaining power do not reap this benefit.
Post by: chrisjb on October 19, 2011, 02:47:39 pm
Thanks for your help Hutchoo! :)Which of the following economic goals may be more difficult to achieve in the short run when microeconomic reforms change the structure of the Australian economy?Compak 2011?
A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth
I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.
They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...
What do you guys think?
I got this MC question wrong as well, and I chose A too :P
Tbh, the compak 2011 exam is pretty crap. The first MC question (imo) is wrong as well. You have to make toooooooooooooooo mannnnnnnny assumptions when answering the questions in that exam.
For your other question: (just to get you rolling)
- Enterprise (bargaining) agreements simply refer to when an individual and firm/company negotiate over work conditions and wages.
- The wages are (usually) reflected by the workers productivity.
- This affects the equity in income distribution as workers with more bargaining power enjoy the benefit of an increased income whilst workers with less bargaining power do not reap this benefit.
one more definition for my hyper extended glossary :P
Post by: ANILBALA on October 23, 2011, 04:16:01 pm
Post by: Hutchoo on October 23, 2011, 05:39:26 pm
I was wondering whether a CAD is "financed" by capital and financial account and does this add to NFD? If it is financed why is it? I thought CAD was a flowHey man, good question!
First of all, I suggest you understand the sub-accounts of the Current Account/Capital and financial accounts reallllllllly well because there's a good chance it'll be on the exam.
There is a current account deficit when the total amount of debits in the 4 sub accounts are larger than the credits.
The Balance of Payments (BoP) states that when all components of the BOP accounts are included they must sum to zero with no overall surplus or deficit. Meaning that if there is a CAD (for a country like Australia), the Capital and Financial accounts must equal the deficit by being in surplus. This is done by increasing borrowings from abroad (increasing NFD) and using the borrowed money to pay off current account deficit.
This should help you a bit:
http://en.wikipedia.org/wiki/Balance_of_payments
Should help you understand the BoP etc.
Hope this helps a bit.
Post by: ANILBALA on October 23, 2011, 10:30:23 pm
So a lower CAD means that it has to be offset by a lower surplus in the capital and financial account, which involves reduced borrowing from overseas and thus a lower CAD is likely to reduce NFD.
Post by: chrisjb on October 25, 2011, 06:03:41 pm
The market failure from asymmetric information is unlikely to be minimised by:
a) use of independent reviews by customers
b) the formulation of a firm's code of conduct
c) legislation which entitles consumers to a refund if they purchase a faulty product
d) stringent penalties on those firms who engage in misleading and deceptive conduct.
In my mind i've narrowed it down to B or C, but I'm not sure :(
thanks in advance for your help! :D
Post by: ANILBALA on October 25, 2011, 06:57:43 pm
Post by: Hutchoo on October 25, 2011, 07:46:00 pm
Post by: chrisjb on October 26, 2011, 05:30:23 pm
Post by: ANILBALA on October 27, 2011, 10:02:34 pm
Post by: chrisjb on October 28, 2011, 04:59:36 pm
Um, tssm 2009 answers suggest a high terms of trade has a uncertain impact on external stability due to high $A and conflicting boost of net export values. does anyone know which one has a greater impact (positive or negative).I'd say that high TOT would improve external stability. Look at our current balance of trade, it's in the black largely because of the spike in commodity prices. Because so many of our exports are commodities with inelastic demand from China and India, the AUD doesn't affect them so much. It's true that manufacuting, tourism etc. have all contracted significantly, however this effect has been less significant than the expansion in the mining industry.
Also, higher AUD can reduce inflationary pressures leading to more competitive exports (but the first two effects are more important than this one).
Post by: Water on October 28, 2011, 05:01:18 pm
Eg Tourism Education
Post by: chrisjb on October 28, 2011, 09:29:46 pm
I thought Higher AUD (Exclude TOT) leads to reduced international competitive as our final goods and services become more expensive?
Eg Tourism Education
Yes, it does. Except I'm saying that there are two effects of a high TOT:
1) High AUD worsens international competitiveness
2) High export prices increases value of credits in net goods and services, improving international competitiveness.
I think that in most economies (and this is just a guess) there would be a 'J' curve effect with a high TOT, in the short term we would see the second good effect improve international competitiveness, however in the long run the high dollar would worsen export competitiveness.
However, because so much of Australia's exports are demand inelastic (commodities to china), the TOT causing a high dollar is less influential than the skyrocketing export prices we are receiving which result in an improvement in net merch.
In the exam, I reckon you could take either view as long as you recognised both sides of the argument.
Post by: Saur11 on October 28, 2011, 10:05:39 pm
Post by: chrisjb on October 28, 2011, 10:16:40 pm
Also it is worth noting that a high AUD can reduce upward pressure on the structural CAD, by paying off NFD (provided that debt is is in AUD), there should be decreased interest in the net incomes in the CAD. Logically, this should help with external stability.oh yeah, I'd forgotten about that point!
Post by: Hutchoo on October 29, 2011, 01:11:57 am
Try to mention the net incomes component of the CAD, seeing as it's the most important/biggest cause of the deficit when answering questions about ES.Also it is worth noting that a high AUD can reduce upward pressure on the structural CAD, by paying off NFD (provided that debt is is in AUD), there should be decreased interest in the net incomes in the CAD. Logically, this should help with external stability.oh yeah, I'd forgotten about that point!
Post by: chrisjb on October 29, 2011, 03:15:56 pm
If asked on monetary policy effects on external stability, should we talk about the potential for the RBA to manipulate the exchange rate if it's fluctuating too much? Or should we just stick to the good ol' cash rate effects?
Post by: Hutchoo on October 29, 2011, 03:19:07 pm
A question about monetary policy questions:Yeah, it'd be okay, but if you're talking about the dirty float, it's kinda 'meh'. The last time the RBA manipulated the AUD by a dirty float was like 20 years ago.
If asked on monetary policy effects on external stability, should we talk about the potential for the RBA to manipulate the exchange rate if it's fluctuating too much? Or should we just stick to the good ol' cash rate effects?
I'd actually talk about how the changes in the cash rate alter the transmission mechanism (focusing on the exchange rate channel), thus changing the AUD (depreciation if IR is low/Appreciation if the IR is high).
Post by: Hutchoo on October 29, 2011, 05:02:54 pm
I know that lowering of the interest rates allows the lower quintiles to have more purchasing power, and those in the upper quintiles make less due to interest repayments declining, but what else is there?
Thanks
Post by: Water on October 29, 2011, 05:23:44 pm
How can monetary policy be used to achieve equity in income distribution?
I know that lowering of the interest rates allows the lower quintiles to have more purchasing power, and those in the upper quintiles make less due to interest repayments declining, but what else is there?
Thanks
Lol, good exam practice. (I'll skip the defining parts) PS: Correct me if I'm wrong (Cheated on the tranmissions, I forgot about the cash flow channel D:
Monetary Policy can be used to achieve equity in income distribution through the lowering of cash rate at a level that does not promote demand inflation (maintaining low inflation in the 2-3% CPI annually) to stimulate economy activity. Through this, it will affect the price of credit channel, cash flow channel and availability of loans channel. Lowering average costs of production should lead to expansion in Investment and increased consumption due to higher discretionary income which should directly increase the levels of aggregate demand. As a result of this, unemployment will decrease, and thus, allow more people to have greater access to basic good and services, avoid absolute poverty and enjoy a reasonable standard of living.
Post by: Hutchoo on October 29, 2011, 05:27:11 pm
Thanks
EDIT: Is there some type of real example that you know of that can be applied to this?
Do you need stats/examples with every question?
Edit x2: By loans channel, did you actually mean cash flow channel?
Post by: Water on October 29, 2011, 05:42:00 pm
During the GFC, the RBA acted to set against the contracting economy through adopting an expansionary stance. This saw a severe decrease from a high cast rate of 7.25% to a low 3.00% over the course of 2009. Unemployment peaked at 5.8% during the GFC, however by 2010, declined to 5.1%. Evidently, a decrease in unemployment, meant that those who became employed shifted away from unemployment benefits, and enjoyed an increase in disposable income. This has meant a relatively better equitable outcome when compared to the onset of GFC
b) Ava liability of loan channels ... High interest rates = People can't have loans = ridiculous channel = Its part of the course.
PS: Changed: added relative* There's alot of holes in my answer, but thats the jist of it basically
Post by: Saur11 on October 29, 2011, 05:48:13 pm
Post by: Hutchoo on October 29, 2011, 05:59:58 pm
Post by: BigFunt on October 29, 2011, 06:04:12 pm
talk about how maintaining inflation betwee 2-3% means that international competitiveness of firms is steady. Whereas if inflation gets out of hand international competitiveness drops. This means that exports are likely to drop --> reduced balance on trade ---> Improved Current account --> lowered need to borrow ---> low NFD ----> MORE EXTERNALLY STABLE
There is quite an obvious link between equity and monetary policy:
Lower income earners have a higher marginal propensity to spend. This means when inflation they are high, they are more affected. Furthermore, Maintaining inflation in between the target means that that the real purchaing power of income earners is maintained. This is particularly pertinent to low income earners, since they are less likely to have union power to demand for raises in nominal income in the even that inflation does indeed rise. Furthermore, some pensions are not indexed to the CPI hence, by using monetary policy to control inflation, RBA can protect some pension earners from losing income
correct me if im wrong
Post by: chemkid_23 on October 31, 2011, 04:19:13 pm
Post by: Hutchoo on October 31, 2011, 05:47:22 pm
Romeo Salla (Policy Mix):: "CURRENTLY:
These relatively restrictive settings for both monetary and budgetary policy continued into 2011 despite the negative economic impact stemming from the 2011 natural disasters. The estimated Budget deficit for 2011-12 will be significantly lower and the RBA is keeping the cash rate at a relatively restrictive level of 4.75%. The RBA remains focussed on controlling medium term inflationary pressures, despite signs of disinflationary forces at work over the latter part of 2011. The Government also remains committed to its medium term fiscal strategy, with fiscal consolidation expected to assist RBA efforts to contain any inflationary pressures and to promote ‘sustainable’ growth into the future. Numerous supply side measures continue to be delivered in order to boost participation and productivity and therefore increase the nation’s productive capacity over time (or prevent it from slowing down or falling in the future – re the carbon tax package)."
Just understand the general trend and be able to go in depth/explain why they would have used this policy mix etcetc.
Post by: Hutchoo on October 31, 2011, 09:54:41 pm
Question 4, 2010: http://www.vcaa.vic.edu.au/vcaa/vce/studies/economics/pastexams/2010/2010economics-w.pdf
What the fuck is "different"? LIKE WAIHWWDJSCIUJ21.
The answer is C, so don't bother looking up accessors reports.
Please explain this concept of "different" to me, because I always get the MC question wrong when it talks about "different than the other 3" and it pisses me off :@
Post by: Saur11 on October 31, 2011, 10:16:13 pm
b. depreciation AUD - generally makes necessary imported inputs more difficult to obtain for Australian business, reduces technial efficiency and AS - upwards pressure on prices meaning cost inflation.
c. an increase in labour productivity - means given labour inputs are being used for efficiently, producing more. Increase in AS less cost inflation.
d. increase in energy costs - same as the first one -increase in cost inflation.
So, A,B and D all increase cost inflation, meaning C is the only logical answer.
Hope it is helpful
Post by: BigFunt on October 31, 2011, 10:48:56 pm
i
t just means that 3 of them have a similar effect and the other one will do something different to the other 3
most likely it will be positive vs negative i.e with external stab. one will be improving whilst the other three will be worsening.
im not quite sure why they are "stupid" and "ambiguous"
Post by: TrueTears on November 01, 2011, 01:57:46 pm
shit vce eco is shit
Post by: Hutchoo on November 01, 2011, 02:49:11 pm
Cash rate is now at 4.5%!
This means that the policy mix is conflicting, YO.
Post by: BigFunt on November 01, 2011, 03:02:05 pm
thoughts?
Post by: Hutchoo on November 01, 2011, 03:04:23 pm
i was told we could still say that 4.5 is mildly restrictiveWhen you say 'mildy restrictive' are you talking about restrictive towards BP's goals 0-o or as in IR's at 4.5% are contractionary/restrict eco growth?
thoughts?
Post by: BigFunt on November 01, 2011, 03:06:17 pm
Post by: chemkid_23 on November 01, 2011, 03:11:15 pm
http://www.rba.gov.au/
Cash rate is now at 4.5%!
This means that the policy mix is conflicting, YO.
how so? and do we mention it in exam to show off?
Post by: BigFunt on November 01, 2011, 03:11:53 pm
Post by: chrisjb on November 01, 2011, 10:02:37 pm
i don't think the policy mix is conflicting.me either. I'd say that BP is contractionary with a view to becoming fairly neutral over the next two years and MP is simply neutral. They're taking a 'wait and see' approach imo. BUT if you listen to some of the economists talking on news24, they're saying that they're EXPECTING the rba to continue to cut rates through next year which would represent a conflicting stance... but i'm not convinced.
Post by: Hutchoo on November 01, 2011, 10:18:51 pm
Not only that, but even if the IR's are neutral, that means that it is conflicting in a way because it isn't allowing the full potential of Budgetary policy to achieve it's goals (surplus budget)?
Post by: BigFunt on November 01, 2011, 10:21:11 pm
Hence they the current policy mix, is niether complementary nor conflicting.
In the exam, I will talk about how for the majority of the year, it was complementary, however because of recent factors, shits changed.
Post by: Hutchoo on November 01, 2011, 10:27:50 pm
Post by: chrisjb on November 01, 2011, 10:27:59 pm
I do see it as somewhat conflicting. I mean, if the IR's are cut down to a more expansionary stance, but is viewed as 'neutral' by the RBA's standards... and the government wants to reduce the deficit (run a surplus budget) by 2012, isn't that a bit conflicting?I see your point. The RBA made an expansionary move while treasury is making a contractionary move.. I suppose in my head I was thinking that it's impossible to have a conflicting stance to neutral... But you've convinced me actually. In the shortest of time frames it is a conflicting stance, but we'll have to wait until well after the exam to see if this is a one off occurrence (which I suspect) or whether it is indicative of a longer term expansionary mindset of the RBA.
Not only that, but even if the IR's are neutral, that means that it is conflicting in a way because it isn't allowing the full potential of Budgetary policy to achieve it's goals (surplus budget)?
Post by: chrisjb on November 01, 2011, 10:29:01 pm
ARGHHHHH. We need Sam to help us xD.Yeah, I haven't seen Sam around these parts for a while!
WHERE ARE YOU SAM!?
Post by: Saur11 on November 01, 2011, 11:02:13 pm
Thought?
Post by: Saur11 on November 01, 2011, 11:22:14 pm
Post by: Water on November 01, 2011, 11:24:41 pm
Ahh yes, you're right. However, the thing is the RBA don't want to encourage spending. They merely want to discourage saving to a certain extent.
Short Term Decrease in the "cash rate".... It is clear they will increase the cash rate, as the global economic activity increases and as a result increase Australia's level of AD (we are a commodity exporting country) . Directly, this will lead to decreased spending, inadvertently, increase saving.
Post by: ANILBALA on November 05, 2011, 11:02:16 am
Also, with a neutral cash rate it makes discussing channels harder. I mean if the RBA are not encouraging spending or saving and are just waiting what should we even be writing. For the exam it seems easier and more logical to accept them as mildly restricitve/tight and just make a statement in passing about MP neutrality.
Thought?
Umm.. u still talk about it as an expansionary move but say overall the higher AD resulting from it is just being counteracted by other subdued demand side conditions and global uncertainty leading to AD growing at a steady rate.
Post by: chrisjb on November 06, 2011, 12:32:11 pm
Discuss how the government has used one aggregate supply policy and one aggregate demand policy as part of the policy mix to achieve to goal of strong and sustainable economic growth.
Do I talk about just one aggregate supply policy and one aggregate demand policy in achieving the goal....
OR because is says 'as part of the policy mix' do I have to choose another couple of random policies (immigration, microeconomic reform, environmental policy etc.) to talk about as well?
Post by: RossiJ on November 06, 2011, 12:51:14 pm
Righty-o, I have a question about policy mix questions... If I get a question like this:
Discuss how the government has used one aggregate supply policy and one aggregate demand policy as part of the policy mix to achieve to goal of strong and sustainable economic growth.
Do I talk about just one aggregate supply policy and one aggregate demand policy in achieving the goal....
OR because is says 'as part of the policy mix' do I have to choose another couple of random policies (immigration, microeconomic reform, environmental policy etc.) to talk about as well?
One AS policy and one AD policy is all I would personally do.
Possibly would talk about a micro-economic policy and then a budget initiative
Post by: soldier_on16 on November 06, 2011, 12:56:13 pm
Probably Trade Lib for Microeconomic reform, discussing cuts to tariffs on Motor industrry and textiles. AD I'd discuss infrastructure spending.
Post by: Saur11 on November 06, 2011, 01:54:53 pm
Post by: chrisjb on November 06, 2011, 02:19:21 pm
Post by: the sean on November 07, 2011, 03:01:35 pm
Firstly, can they even ask this question on the real exam? The study design says only knowledge is needed of the 'role of relative prices in the allocation of resources'. If so, discard the rest of this post.
But anyway, the model answer says "in the presence of inflation prices or not only affected by supply + demand, but also by changes in the general price level. Inflation creates 'static' in the price system, obscuring information transmitted by prices and redicing the efficiency of the market system."
My answer talked about how inflation causes people to invest in items that are protected against inflation, such as gold, and away from the production of goods and services. Thus as a result of inflation, resources aren't allocated efficiently because price signals caused by demand and also inflation are ignored to protect against a loss of purchasing power.... Is that ok?
Post by: Saur11 on November 07, 2011, 04:06:54 pm
Post by: tigerfan11 on November 07, 2011, 06:54:57 pm
When referring to Monetary Policy are the following figures and concepts correct ?
2011-12: slightly contractionary/neutral after the RBA chose to lower rates from 4.75% to 4.5%
Conflicting relationship with BP
2010-11:neutral until November 3 when the RBA finally took a contractionary stance increasing the cash rate to 4.75%
Compatible relationship with BP until November 3
2009-10: expansionary, continuing to recover from the onset of the GFC
Compatible relationship with BP
Post by: tigerfan11 on November 08, 2011, 08:46:58 pm
Post by: Hutchoo on November 08, 2011, 09:22:32 pm
Someone PLEASE give me some help with the following;Yeah, from a quick glance it's quite fine.
When referring to Monetary Policy are the following figures and concepts correct ?
2011-12: slightly contractionary/neutral after the RBA chose to lower rates from 4.75% to 4.5%
Conflicting relationship with BP
2010-11:neutral until November 3 when the RBA finally took a contractionary stance increasing the cash rate to 4.75%
Compatible relationship with BP until November 3
2009-10: expansionary, continuing to recover from the onset of the GFC
Compatible relationship with BP
Remember, when two policies conflict whilst trying to achieve the same goal, talk about it in terms of the 'policy mix'.
http://www.rba.gov.au/statistics/cash-rate.html
The numbers match ;D
Post by: tigerfan11 on November 08, 2011, 09:42:54 pm
Thankyou ! can be very confusing hahaSomeone PLEASE give me some help with the following;Yeah, from a quick glance it's quite fine.
When referring to Monetary Policy are the following figures and concepts correct ?
2011-12: slightly contractionary/neutral after the RBA chose to lower rates from 4.75% to 4.5%
Conflicting relationship with BP
2010-11:neutral until November 3 when the RBA finally took a contractionary stance increasing the cash rate to 4.75%
Compatible relationship with BP until November 3
2009-10: expansionary, continuing to recover from the onset of the GFC
Compatible relationship with BP
Remember, when two policies conflict whilst trying to achieve the same goal, talk about it in terms of the 'policy mix'.
http://www.rba.gov.au/statistics/cash-rate.html
The numbers match ;D
Post by: DiMennzzaa on August 06, 2012, 06:26:55 pm
What happends when the rba increase cash rates?
Post by: TrueTears on August 07, 2012, 03:44:58 pm
Post by: batra555 on August 08, 2012, 07:35:35 pm
Post by: sam.utute on August 09, 2012, 07:54:58 pm
Why is it that the rba is adopting an expansionary stance and the government is adopting a Contractionary stance at a time of relatively low economic growth in australia?I wouldn't say that the government is adopting a contractionary stance. While we generally look at surpluses as being contractionary, it's not always that black and white.
E.g. the government shifts from a big surplus, to a small surplus. You could say that the government has adopted a contractionary stance in both years. However, it would be more appropriate to say that the government's stance has shifted to be less contractionary.
In the same vein, it could be argued that the current stance is merely less expansionary, not contractionary per se.
The gov't and the RBA tend to have conflicting policies quite regularly. In fact, you will always be able to find particular policies that contradict the other's stance. One of the main reasons for this is the different objectives. For example, the RBA's focus on inflation can impinge on the government's pursuit of higher growth.
Post by: sam.utute on August 11, 2012, 02:02:08 pm
As Ross explains, the budget is definitely more contractionary (from a big deficit, to a small surplus).
http://www.smh.com.au/business/federal-budget/the-sleight-of-hand-behind-the-budget-figures-20120511-1yhld.html
Post by: DiMennzzaa on September 11, 2012, 10:14:08 pm
Post by: Hutchoo on September 11, 2012, 11:16:02 pm
Post by: sam.utute on September 12, 2012, 12:00:23 am
do you ever see things at the beginning of AOS 1 E.G. ppf, relative scarcity, oppurtunity cost on an exam?
Usually tested in the MC section.
Post by: DiMennzzaa on September 12, 2012, 02:21:11 pm
Yeah, I think there was a 1-2 mark question on relative scarcity on last years exam.
example?
Post by: Hutchoo on September 12, 2012, 04:11:31 pm
http://www.vcaa.vic.edu.au/Documents/exams/economics/2011economics-w.pdf
Post by: DiMennzzaa on September 13, 2012, 09:50:25 pm
Is an initiative something the government has in mind or wants to put in place while a policy is a direct change?
Post by: ezye21 on September 27, 2012, 08:14:31 pm
Post by: Deleted User on October 02, 2012, 02:44:51 pm
Post by: Hutchoo on October 02, 2012, 07:22:44 pm
Post by: Deleted User on October 03, 2012, 12:47:50 pm
Post by: monkeywantsabanana on October 17, 2012, 07:50:12 pm
Post by: redxman on October 20, 2012, 08:39:05 pm
Post by: miraj753 on November 02, 2012, 08:00:15 am
Post by: morantz on November 02, 2012, 10:37:40 am
Post by: sam.utute on November 04, 2012, 09:26:25 am
I've done 4 so far and halfway thorugh my 5th. I'm aiming for 6 altogether from now til the exam.Good job!
Doing tons of practice exams isn't essential for Economics (I did 0 after all).
What's important is practicing MC and your approach to the 6-8 mark questions.
:)
Post by: morantz on November 04, 2012, 01:21:06 pm
God, do I dread those questions. They seem so difficult to obtain the full marks, considering they require a lot more prowess and knowledge when approaching them.I've done 4 so far and halfway thorugh my 5th. I'm aiming for 6 altogether from now til the exam.Good job!
Doing tons of practice exams isn't essential for Economics (I did 0 after all).
What's important is practicing MC and your approach to the 6-8 mark questions.
:)
Post by: Deleted User on November 04, 2012, 04:04:48 pm
I've done 4 so far and halfway thorugh my 5th. I'm aiming for 6 altogether from now til the exam.Good job!
Doing tons of practice exams isn't essential for Economics (I did 0 after all).
What's important is practicing MC and your approach to the 6-8 mark questions.
:)
Is there a specific structure you should adopt when answering those questions? And how long should you spend on them?
Post by: Deleted User on November 04, 2012, 04:05:32 pm
Post by: morantz on November 04, 2012, 07:25:58 pm
My teacher suggests spending no more than 8 minutes for an 8 mark question. For 6 marks, a bit less.I've done 4 so far and halfway thorugh my 5th. I'm aiming for 6 altogether from now til the exam.Good job!
Doing tons of practice exams isn't essential for Economics (I did 0 after all).
What's important is practicing MC and your approach to the 6-8 mark questions.
:)
Is there a specific structure you should adopt when answering those questions? And how long should you spend on them?
When a questions asks about the "current" context (for example, the current policy mix), is it referring to the past 4 years or just the past year?The budget is reviewed every year, with the monetary policy being considered every month. Therefore, when they refer to the 'current' relationship between the two, I'd think that they're talking about the past year. Questions relating to a 4-year period are usually relating to trends shown on a graph or providing and explaining a policy implemented recently.
Post by: JCurmi on November 05, 2012, 04:28:45 pm
With reference to the role of the price mechanism, describe how resources are allocated in a competitive market economy. 4 marks
Post by: morantz on November 05, 2012, 07:15:49 pm
Can someone give me a hand with this question from the 2011 exam?In short form, this question requires you to state the fact that the price determines the quantity of goods and services supplied by the supplier, and the quantity of demand which is the amount of consumers who are able to afford the product. When the consumer and supplier come together to negotiate within the market, they would come to the equilibrium point where both parties agree on a price on the product and the quantity at which the supplier is willing to supply towards the amount of people able to buy the product, which have been narrowed down in the process.
With reference to the role of the price mechanism, describe how resources are allocated in a competitive market economy. 4 marks
Post by: JCurmi on November 06, 2012, 11:04:33 am
The assessment report says to mention relative prices. How would you link that?
Post by: morantz on November 06, 2012, 02:31:25 pm
Thanks ^Relative price is the cost of production of the product relative to its sale price. When relative prices rise, supply decreases and shifts to the left. This creates movement of demand on the supply curve towards the left. The equilibrium point is now higher than before in terms of price, and lower in terms of quantity supplied and demanded. The opposite will occur when prices decrease. With this knowledge, all you have to state is how the change in prices change the behaviour of consumers and suppliers within the market.
The assessment report says to mention relative prices. How would you link that?
Hope that helps.
Post by: redxman on November 06, 2012, 08:06:02 pm
Relative price is the cost of production of the product relative to its sale price. When relative prices rise, supply decreases and shifts to the left. This creates movement of demand on the supply curve towards the left. The equilibrium point is now higher than before in terms of price, and lower in terms of quantity supplied and demanded. The opposite will occur when prices decrease. With this knowledge, all you have to state is how the change in prices change the behaviour of consumers and suppliers within the market.
Hope that helps.
I don't think that definition of prices is right. Relative Prices are the cost of one item compared to another. Sort of like a ratio. Relative Prices is like the thing in this course I don't understand, so I may be wrong.
Can we start making up hard questions for practice. I'll start
How can the principles of choice based on opportunity cost be related to the decisions parents with small children about whether or not to seek paid employment.
Post by: JCurmi on November 06, 2012, 08:20:44 pm
Relative price is the cost of production of the product relative to its sale price. When relative prices rise, supply decreases and shifts to the left. This creates movement of demand on the supply curve towards the left. The equilibrium point is now higher than before in terms of price, and lower in terms of quantity supplied and demanded. The opposite will occur when prices decrease. With this knowledge, all you have to state is how the change in prices change the behaviour of consumers and suppliers within the market.
Hope that helps.
I don't think that definition of prices is right. Relative Prices are the cost of one item compared to another. Sort of like a ratio. Relative Prices is like the thing in this course I don't understand, so I may be wrong.
Can we start making up hard questions for practice. I'll start
How can the principles of choice based on opportunity cost be related to the decisions parents with small children about whether or not to seek paid employment.
That's what I've been taught as well. Relative prices confuses me as well. I think it links to the allocation of resources through consumers purchasing the products with a lower relative price, as there is higher demand for those items. So more resources are allocated to those items with lower relative prices??
I have no idea, would love for someone to further clarify this.
Post by: Deleted User on November 07, 2012, 04:17:23 pm
Post by: redxman on November 07, 2012, 05:32:11 pm
e.g. Trade Liberalisation is done by the RBA. It would be part of the discretionary part of the budget.
Post by: Hutchoo on November 07, 2012, 07:15:27 pm
(http://sphotos-e.ak.fbcdn.net/hphotos-ak-ash4/s480x480/3454_173640336107403_1364801357_n.jpg)
Post by: JCurmi on November 07, 2012, 08:47:02 pm
Just forwarded that to my teacher.
Post by: Deleted User on November 09, 2012, 06:20:29 pm
Post by: sam.utute on November 09, 2012, 07:10:05 pm
If you want to just mention trends, find out the peaks and troughs of the data, so you can say: "... rising to a high of 3.1%" or "with unemployment peaking at 5.8% as a result of the slower growth."
Post by: HiddenUser on November 10, 2012, 01:24:42 am
Post by: morantz on November 10, 2012, 09:31:02 am
On that note, do we need to know a variety of statistics from the last 4 years or just particular stats that help bring out our theory?you wouldn't want to quote stats that date back to more than 4 years ago, since those events no longer have any relationship with the current economic climate. I've been told that stating the GFC which occured 4 years ago is pushing it, since its too far back. It's worth remembering many events that occured in that 4 year duration, especially the ones that are often assessed on and the ones you speculate will be on the exam.
Post by: Saur11 on November 10, 2012, 10:56:27 am
Post by: Deleted User on November 10, 2012, 02:45:25 pm
Post by: Deleted User on November 10, 2012, 05:08:30 pm
Post by: morantz on November 11, 2012, 10:44:30 am
"... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013.
"Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?Past 2 years, hence its prior to the this year's budget which is 2012-2013.
Post by: HiddenUser on November 11, 2012, 05:48:35 pm
Post by: Deleted User on November 11, 2012, 06:37:16 pm
"... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013."Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?Past 2 years, hence its prior to the this year's budget which is 2012-2013.
Yes, but policies implemented in the 2012-13 budget have already begun to be implemented, so they do count as being "past", no?
Post by: sam.utute on November 11, 2012, 06:41:33 pm
I disagree. This year's budget is the most relevant one to discuss."... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013."Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?Past 2 years, hence its prior to the this year's budget which is 2012-2013.
When I sat the exam, I pretty much only quoted policies from the budget that was released earlier that year (e.g. 2010-11 budget).
You ARE DEFINITELY allowed to use this year's budget.
Post by: redxman on November 12, 2012, 11:45:39 am
In a competitive market economy, explain one factor that might cause a change in relative prices.
Explain how a change in relative prices would result in a reallocation of resources.
Post by: dantan on November 12, 2012, 12:13:58 pm
In a competitive market economy, explain one factor that might cause a change in relative prices.
Here I would then discuss microeconomic demand factors, as you need a factor that increases demand in a single market (rather than on a macro level) for relative prices to increase. Say for example, a particular g+s comes into style, then more people will demand it. Given that the demand for other g+s in other markets stay relatively stable, the price of the 'cool' g/s will rise relative to other g+s.
Explain how a change in relative prices would result in a reallocation of resources.
I would start here by defining the price mechanism as 'the system whereby the free forces of demand and supply interact to set relative prices at the point of market equilibrium.'
Then talk about how a rise in the relative price of a g/s creates a price signal for producers, signalling underproduction and hence more profit opportunities. As such, to take advantage of these opportunities, firms will wish to allocate more resources to its production, and they will allocate their resources away from other markets where relative prices have fallen.
Post by: Deleted User on November 12, 2012, 06:49:27 pm
I disagree. This year's budget is the most relevant one to discuss."... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013."Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?Past 2 years, hence its prior to the this year's budget which is 2012-2013.
When I sat the exam, I pretty much only quoted policies from the budget that was released earlier that year (e.g. 2010-11 budget).
You ARE DEFINITELY allowed to use this year's budget.
So if a questions asks... "Discuss a policy that has been implemented...." This includes policies from the 2012/13 budget?
Post by: dantan on November 12, 2012, 07:37:46 pm
Post by: sadboy222 on November 12, 2012, 07:49:33 pm
Post by: morgs21 on November 12, 2012, 08:05:48 pm
anyone know a demand and supply factor effecting external stability in last 12 months?
AD - Slowing growth in China has led to decreased demand for our exports, hence a worsening current account.
AS - Relatively high labour productivity levels (over 3% per hour worked compared with -2% in 2009) has allowed for increased productive efficiency, hence lower production costs. This may lead to firms lowering selling costs, which makes Australian goods/services more internationally competitive, which can increase export sales hence improve current account.
Post by: dim_sim on December 06, 2012, 01:05:11 pm
I could ramble on for ages, but I have no idea how to get the marks and write a nice, structured answer. :-\
Post by: dantan on December 06, 2012, 05:04:14 pm
How does the free operation of the market normally allocate resources efficiently? (6 marks)
I could ramble on for ages, but I have no idea how to get the marks and write a nice, structured answer. :-\
Hmmm, for six marks I would probably include the following:
- Definition of the price mechanism and relative prices, because this is the crux of how the free market operates in the allocation of resources
- The other thing would be to talk about consumer sovereignty, the essential idea that firms will produce only what consumers are buying or risk going bankrupt
- Finally, I would then give a theoretical example of how the price mechanism sets relative prices, and how the subsequent price signals affect resource allocation
Hopefully you should be able to structure something from those points :)
Post by: LazyZombie on December 29, 2012, 10:10:32 pm
Post by: Kuchiki on December 29, 2012, 10:14:37 pm
Post by: abcdqdxD on December 29, 2012, 10:22:03 pm
Post by: Kuchiki on December 29, 2012, 11:36:29 pm
By the end of the year, though, you'll have practised the structure so much that it will probably come naturally to you anyway.
And if you do feel like changing your response in the middle of writing, you can always just cross it out.
Post by: abcdqdxD on January 27, 2013, 09:18:49 am
I have both, which one should I use as my "main" textbook?
thanks :)
Post by: morantz on January 27, 2013, 09:29:42 am
Does anyone know the difference between the economics fundamentals textbook and economics downunder?I used the Economics Down Under variant last year which was selected by my teacher who managed the economics curriculum. He swore by it compared to many other textbooks used in the past.
I have both, which one should I use as my "main" textbook?
thanks :)
Post by: Hutchoo on January 27, 2013, 05:54:34 pm
Post by: monkeywantsabanana on January 29, 2013, 02:58:41 am
Does anyone know the difference between the economics fundamentals textbook and economics downunder?
I have both, which one should I use as my "main" textbook?
thanks :)
Economics Fundamentals Textbook - worst textbook ever.
Post by: Sebby on January 30, 2013, 03:46:53 pm
Economics Fundamentals Textbook - worst textbook ever.
Why do you say that?
Post by: abcdqdxD on January 30, 2013, 04:13:26 pm
Post by: Sebby on January 30, 2013, 04:25:05 pm
That being said, if my school's economics curriculum is using fundamentals, would you recommend just buying the down-under textbook liverpool?
Post by: abcdqdxD on January 30, 2013, 04:42:42 pm
Hmm fair enough.
That being said, if my school's economics curriculum is using fundamentals, would you recommend just buying the down-under textbook liverpool?
Hmm, yeah I guess so. I thought you were super cheapo :P
Post by: Notes4me123 on January 30, 2013, 06:03:58 pm
HsWhat is the book which has a paperback green cover for 3/4?
Post by: sam.utute on February 01, 2013, 05:45:52 pm
Down Under is definitely more user friendly. The Salla/MacGregor book is published by CPAP, which may be a reason that the overall publication quality of the text is not as good. They use WordArt for some of their headings :P
Personally, I found the employment explanations in the Fundamentals book to be excellent. For everything else, I relied on Down Under.
Post by: abcdqdxD on February 04, 2013, 12:20:57 am
Post by: Hutchoo on February 04, 2013, 05:34:22 am
In fact, sam.utute and schmalex (VN users who scored 50 raw in eco) both went to schools that weren't private/selective :)
Keep your hopes high and study hard, you should be fine.
Post by: Notes4me123 on February 04, 2013, 05:53:49 pm
Anyone got any Economics notes though ;)
Post by: abcdqdxD on February 05, 2013, 04:27:46 pm
Post by: Kuchiki on February 05, 2013, 06:11:11 pm
Just curious - whats the difference between the cash rate and the interest rate?
Interest rates are those set by banks and other financial institutions, like the interest rate charged on a loan, for example, which will vary from bank to bank.
The cash rate is set by the RBA (currently at 3.0%). You can think of this as the interest rate given to banks when they borrow from the RBA.
Post by: abcdqdxD on February 05, 2013, 06:49:26 pm
You can think of this as the interest rate given to banks when they borrow from the RBA.
The banks don't actually borrow money from the RBA do they? If they did, it wouldn't make sense for them to have their rates similar to the cash rate because they won't make much profit?
Post by: Kuchiki on February 06, 2013, 11:53:35 am
The banks don't actually borrow money from the RBA do they? If they did, it wouldn't make sense for them to have their rates similar to the cash rate because they won't make much profit?
There's actually an article about this that was published today on MrWood (http://economics.mrwood.com.au/article.asp?id=494):
Quote
The cash rate is a type of interest rate. When banks borrow money in the overnight money market, they borrow at the cash rate. At the moment this rate is 3.0%. In a way you can think of this as the wholesale price of money – the banks can borrow for 3.0%, so when they lend money to us, they will charge a higher rate so that they can make a profit.
Yes, the banks do like to set their interest rates higher than the cash rate, which is why there were so many news articles and reports last year questioning whether the banks were being greedy and inflating their profits by not passing on the cash rate cuts in full.
Post by: dantan on February 07, 2013, 04:03:53 pm
In terms of interest rates diverging so heavily from the set cash rate, you can look at it in the context of overseas borrowing the banks undertake to make up the savings investment gap. Due to economic instability in Europe (mainly), more money is being locked up in the sense that it's harder to borrow money from such places and it's charged at a much higher interest rate, which is a higher business cost for banks. This is the reason they cite anyway, though many are skeptical about the accuracy of this reasoning though.
Post by: abcdqdxD on February 09, 2013, 11:16:01 am
A) motor mechanics
B) chocolate
C) recorded music
D) petrol
I don't think its B or D, so I'm tossing up between A and C. I'm slightly learning towards A because they have no brand differentiation, while music kind of does. What do you guys think?
Post by: dim_sim on February 09, 2013, 11:43:46 am
Assuming that the production costs faced by oil producers were moderately steady since 2002, explain the effects on the allocation of resources of generally higher crude oil prices. In your answer explain (giving reasons) which particular industries or types of production would attract extra resources and which areas would repel resources as a result of this price signal. (4 marks)
Thinking about the effects on resource allocation, give one reason why it would be dangerous for the government to remove its excise tax on petrol, or to pay petrol users a subsidy of 50 cents per litre to help make petrol cheaper. (3 marks)
Post by: dantan on February 09, 2013, 11:19:55 pm
Which of the following industries is likely to have the highest degree of competition:
A) motor mechanics
B) chocolate
C) recorded music
D) petrol
I don't think its B or D, so I'm tossing up between A and C. I'm slightly learning towards A because they have no brand differentiation, while music kind of does. What do you guys think?
I'm just thinking aloud here, I'm really not entirely sure either but this is what I think:
A - I think you're pretty close to the mark here, after all it is a homogeneous product of sorts (though there are brands in a sense), but it's not like people can simply go down the road to a new mechanic.
B - Chocolate, hmmmm. I think this is quite similar to recorded music in a way but considering brand loyalty and that there aren't that many when you think about it, I again think you're probably right.
C - I think it's most likely recorded music. There are so many artists, recording companies, genres, stores, methods of buying it to cater for many tastes.
D - Given that the amount of petroleum is controlled at a supply level, I think it's unlikely and there isn't that much competition anyway.
Where did you get the question from? Hope this helps!
Examine figure 1.31 ( http://content.jacplus.com.au/secure/ebooks/07303/0730338886/images/lightwindow/01.31_fmt.jpg ..I don't know if the link will work for other people :S) showing changes in the market price of crude oil (used to make petrol, synthetic fabrics and plastics) since 1970.
Assuming that the production costs faced by oil producers were moderately steady since 2002, explain the effects on the allocation of resources of generally higher crude oil prices. In your answer explain (giving reasons) which particular industries or types of production would attract extra resources and which areas would repel resources as a result of this price signal. (4 marks)
Thinking about the effects on resource allocation, give one reason why it would be dangerous for the government to remove its excise tax on petrol, or to pay petrol users a subsidy of 50 cents per litre to help make petrol cheaper. (3 marks)
I remember doing these questions last year, and my teacher and I both came to the conclusion that they were incredibly ambiguous.
Anyway, for the four marker, I simply talked about how the higher price indicates a shortage of oil in this market and how it would increase the cost of transport. I think you could give an example of how more resources might be put into the production of greener transport (i.e. hybrid cars, smaller cars) and taken away from more polluting older cars etc.
For the three marker, I just talked about how getting rid of of excise taxes or bringing in subsidies simply encourage use of unclean methods of transport leading to CO2 emissions and all the consequences that follow. Hence it's not a good idea to do those things because it'll encourage an even greater allocation of resources to an unclean energy source. It's exactly the opposite of why the carbon tax was introduced.
Hope that helps you out a bit! :)
Post by: abcdqdxD on February 10, 2013, 11:38:41 am
I'm not 100% sure about this one:
Which of the following items is likely to have the highest price elasticity of supply?
A) Oil
B) Milk
C) Strawberries
D) Electrical Appliances
I think it's D
Post by: dantan on February 10, 2013, 03:04:35 pm
Hi,
I'm not 100% sure about this one:
Which of the following items is likely to have the highest price elasticity of supply?
A) Oil
B) Milk
C) Strawberries
D) Electrical Appliances
I think it's D
Yeah I think it's D as well. You can instantly eliminate B and C because they are perishable items of food, so they can't really be stored (you could also argue that increasing strawberry production quickly is not easy).
Oil is a hard one because arguably supply is controlled by OPEC but it is easy to store. But it might be hard to increase production/might not be excess?
So I would go with D because electronic appliances are easily stored and generally for manufactured goods it's easy to increase production quickly.
Post by: abcdqdxD on February 24, 2013, 06:19:31 pm
Post by: morantz on February 24, 2013, 10:04:38 pm
Why and how is a positive externality a market failure?Positive externalities are usually things that the government invests in in order to gain positive living standards for its civilians. For example the insulation scheme; Rudd brought out an incentive whereby the federal government would subsidise the cost of installing a house with insulation packs to all households. This proved to gain a better environment for everyone else considering less pollution would be produced due to less fan or heater use. However, this exploits the competitiveness within the market of those insulation packs as the market is now run by one supplier and one buyer which are the producer of the product and the government respectively, thus being market failure.
Post by: dantan on February 25, 2013, 08:06:41 am
Positive externalities are usually things that the government invests in in order to gain positive living standards for its civilians. For example the insulation scheme; Rudd brought out an incentive whereby the federal government would subsidise the cost of installing a house with insulation packs to all households. This proved to gain a better environment for everyone else considering less pollution would be produced due to less fan or heater use. However, this exploits the competitiveness within the market of those insulation packs as the market is now run by one supplier and one buyer which are the producer of the product and the government respectively, thus being market failure.
While this isn't wrong per se, I don't think it addresses the general question of how a positive externality is actual a failing of the market. Externalities refer to a level of production that is less than optimal in some way or another. In the case of negative externalities, something is overproduced, e.g. CO2 emissions were a negative externality, because prior to taxing it, there was no internalized cost to firms for producing lots of CO2. Therefore they had no incentive to reduce this type of production even if it was harmful to 3rd parties (future generations) so therefore CO2 emission intensive goods were over-produced.
So in the case of positive externalities, there is an underproduction of these goods which advantage 3rd parties in some cases. Take 'university education' as an example. By going to get educated at university, this will positively influence 3rd parties such as employers and colleagues who will benefit from my extra knowledge/expertise. However, when I apply for uni and pay for uni, this isn't foremost of my concern, as there is no internal benefit. However, if everyone considered the benefits for third parties (or there was a way to internalize the benefit), economic rationalism dictates that more people would take up uni education. (I know this isn't the best example). Therefore, the market has failed, because there is an underproduction of uni education which is a good service that we need more of. This hence results in less third party benefit because people getting uni education don't have an internal benefit (other than their own personal).
I hope this helps in some way. I'll try find a better example!
Post by: abcdqdxD on February 25, 2013, 08:22:41 am
Post by: dantan on February 25, 2013, 10:39:32 am
A positive externality is a benefit to a third party which is not necessarily felt by either of the immediate parties involved. So they are good, we want them. However, as the benefits of consumption are not felt by us (the direct party), we don't take that into account when we decide whether or not to purchase something, so they are not produced as much and as a result, on the whole, we miss out on having this 'good thing.'
Consider: Solar Panels. They are a good thing, they have a positive impact on the environment and hence the people around us and the people of the future (3rd parties). However, as someone looking to buy solar panels, I don't think about other people, I think about me, and for me, installing solar panels is an expensive undertaking. As a result, I probably won't buy solar panels (as it's expensive and there is not apparent reward for helping benefit others). As a result, solar panels, something that is good for society is underproduced heavily and thus the market has failed to produce an optimum level of solar panels (less than is good).
Is that a little clearer?
Post by: chasej on March 10, 2013, 11:17:33 pm
Can someone also explain how relative prices effect allocation of resources?
(Want to check my notes are correct, SAC on wednesday) Thanks :)
Post by: Sebby on March 17, 2013, 11:03:25 am
Relative prices change constantly in the market. If relative prices for a good increase, due to the rising demand for it, then this sends a signal to suppliers that it is more profitable to produce this good. This leads to suppliers re-allocating their resources to the highly demanded good due to their profit motives, and thus effects the allocation of resources.
Post by: abcdqdxD on March 17, 2013, 11:37:44 am
The market mechanism is how the forces of supply and demand determine relative prices, which then ultimately determine the allocation of resources. Essentially, it is just how the market 'works'. Theoretically, the market mechanism achieves an efficient allocation of resources, as the buyers demand on what price they are willing to pay for the product, ensuring that suppliers have to be more cost efficient in producing that good in order to meet the expectations of buyers. Thus, suppliers will be competitive and efficient in trying to produce goods in order to sell them. This leads to an efficient allocation of resources.
Relative prices change constantly in the market. If relative prices for a good increase, due to the rising demand for it, then this sends a signal to suppliers that it is more profitable to produce this good. This leads to suppliers re-allocating their resources to the highly demanded good due to their profit motives, and thus affects the allocation of resources.
^ 50SS
Post by: sam.utute on March 17, 2013, 04:27:31 pm
The market mechanism is how the forces of supply and demand determine relative prices, which then ultimately determine the allocation of resources. Essentially, it is just how the market 'works'. Theoretically, the market mechanism achieves an efficient allocation of resources, as the buyers demand on what price they are willing to pay for the product, ensuring that suppliers have to be more cost efficient in producing that good in order to meet the expectations of buyers. Thus, suppliers will be competitive and efficient in trying to produce goods in order to sell them. This leads to an efficient allocation of resources.Note this down guys!
Relative prices change constantly in the market. If relative prices for a good increase, due to the rising demand for it, then this sends a signal to suppliers that it is more profitable to produce this good. This leads to suppliers re-allocating their resources to the highly demanded good due to their profit motives, and thus effects the allocation of resources.
Post by: chasej on March 27, 2013, 11:00:27 pm
"Effects of changes in supply and demand on equilibrium price and quantity:"
I know what they are but just don't know what to write down in my notes about it.
Post by: millie96 on April 14, 2013, 12:46:29 pm
"It does not take a genius to realise that without appropriate government policies (that protect the natural environment) to limit economic growth, the world will soon run out of resources"
Post by: chasej on April 14, 2013, 08:17:14 pm
What are some arguments for and against this essay topic?
"It does not take a genius to realise that without appropriate government policies (that protect the natural environment) to limit economic growth, the world will soon run out of resources"
This is about the issue of sustainable growth. Managing growth and being able to improve our material living standards by producing more goods and services which use finite resources balanced with our need to ensure we are not damaging the environment (reducing pollution, managing waste) or depleting resources which are needed to fulfil the needs and wants living standards of future generations and thus future generations living standards both material and non-material (inter-temporal efficiency). keeping growth limited is also important as of course excess production and use of resources can damage our health and that of nature as we mess with the natural environment and use resources much much faster than the earth is able to replenish them.
What I highlighted in bold is probably one of the biggest contemporary economic issues that is thrown around a lot in politics and can be very controversial (e.g. carbon tax).
Why do you need arguments both for and against an essay topic? My teachers always tell me you always argue only one point of view in an essay.
Post by: millie96 on April 15, 2013, 12:07:20 pm
This is about the issue of sustainable growth. Managing growth and being able to improve our material living standards by producing more goods and services which use finite resources balanced with our need to ensure we are not damaging the environment (reducing pollution, managing waste) or depleting resources which are needed to fulfil the needs and wants living standards of future generations and thus future generations living standards both material and non-material (inter-temporal efficiency). keeping growth limited is also important as of course excess production and use of resources can damage our health and that of nature as we mess with the natural environment and use resources much much faster than the earth is able to replenish them.
What I highlighted in bold is probably one of the biggest contemporary economic issues that is thrown around a lot in politics and can be very controversial (e.g. carbon tax).
Why do you need arguments both for and against an essay topic? My teachers always tell me you always argue only one point of view in an essay.
thanks for your answer! Not sure why we need both arguments, it just says on the sheet we have to.
Post by: dantan on April 16, 2013, 11:15:19 pm
What should I put down in my exam revision notes for this section?:
"Effects of changes in supply and demand on equilibrium price and quantity:"
I know what they are but just don't know what to write down in my notes about it.
Hey I don't know if you've had you question answered, but I would literally just write:
Increase supply: Increased quantity, decreased price
And basically do that for every possible change (there are only four). Other than that, that knowledge should be intuitive, so if you already know it I don't think there's a huge need to write it in your notes?
Post by: chasej on April 20, 2013, 07:14:27 pm
Hey I don't know if you've had you question answered, but I would literally just write:
Increase supply: Increased quantity, decreased price
And basically do that for every possible change (there are only four). Other than that, that knowledge should be intuitive, so if you already know it I don't think there's a huge need to write it in your notes?
Thanks. I knew what it was, just couldn't figure out how to put it down in my notes. I probably don't need to write it down but I just like to make sure I have notes that cover all the key knowledge for exam preparation.
Post by: Deleted User on April 20, 2013, 08:35:43 pm
Post by: abcdqdxD on April 20, 2013, 08:41:04 pm
Post by: chasej on April 20, 2013, 10:40:39 pm
Out of the 4 market types, would you say that the market for cars is monopolistic competition?
No. The only difference between a perfectly competitive market and monopolistic competition is the fact that in a monopolistically competitive market the products sold are NOT homogenous whereas in a perfectly competitive market they are. Monopolistic competition retains all the other charrecteristics of a perfectly competitive market, including ease of entry and exit. Car manufacturing is not a business that one can easily enter and exit the market of due to the cost of initially starting up manufacturing.
I would say the car market is an oligopoly. The definition of an oligopoly is fairly loose, requiring that "a few firms dominate the market". That definition allows for a few large companies (Toyota, ford etc) to hold a majority of the market share collectively, while many other lesser known companies exist in the market however have very little market power, which is very much what the Australian car market is like today.
Post by: abcdqdxD on April 21, 2013, 12:17:01 am
Quote
No. The only difference between a perfectly competitive market and monopolistic competition is the fact that in a monopolistically competitive market the products sold are NOT homogenous whereas in a perfectly competitive market they are. Monopolistic competition retains all the other charrecteristics of a perfectly competitive market, including ease of entry and exit. Car manufacturing is not a business that one can easily enter and exit the market of due to the cost of initially starting up manufacturing.
Oligopoly in Australia? Possibly. In the world? Don't think so. Monopolistic competition does not retain all other characteristics of PC other than product differentiation, there are moderate barriers to entry and exit and they have relatively more market power.
Quote: A simple example of monopolistic competition can be seen in car sales. Cars are all designed for the same purpose, which is to provide transport for people and goods. However, there are many different types of cars on the market. Consumers can choose between different body types, price points, colors, and so forth.
Post by: chasej on April 21, 2013, 06:54:17 pm
This was my answer but it seems very sub-standard and the example is childish, even if it were corrected by the most generous examiner in the world I can't see it getting more than 2 marks:
When we seek to improve non-material living standards often we have to sacrifice the ability to improve out material living standards. For example if a government decided to ban fishing in a certain area of water as the boats were causing too much pollution which was destroying people's enjoyment of the area, even though an increase in the happiness of people was occurring, we would be sacrificing the ability to access the fish and we will be therefore missing out on eating the fish. These trade offs between environmental awareness, our own wellbeing, and out desire to produce and access more goods and services are very common in the modern world.
Post by: abcdqdxD on April 21, 2013, 07:07:58 pm
Explain, using an example, how an improvement in non-material living standards might jeopardise an improvement in material living standards? (4 marks)
This was my answer but it seems very sub-standard and the example is childish, even if it were corrected by the most generous examiner in the world I can't see it getting more than 2 marks:
When we seek to improve non-material living standards often we have to sacrifice the ability to improve out material living standards. For example if a government decided to ban fishing in a certain area of water as the boats were causing too much pollution which was destroying people's enjoyment of the area, even though an increase in the happiness of people was occurring, we would be sacrificing the ability to access the fish and we will be therefore missing out on eating the fish. These trade offs between environmental awareness, our own wellbeing, and out desire to produce and access more goods and services are very common in the modern world.
Maybe start by defining living standards and explain the difference between material and non-material living standards with an example. Then explore the conflict between material and non material living standards.
Post by: dantan on April 22, 2013, 08:22:47 am
Maybe start by defining living standards and explain the difference between material and non-material living standards with an example. Then explore the conflict between material and non material living standards.
Seconded. I think a definition will make it more explicit what you're trying to explain.
Also, as for your example (@chasej) , I think looking at the trade-off between things like working and gaining income v leisure time, working v stress etc. I think the trade off is much more explicit here.
Post by: abcdqdxD on April 27, 2013, 07:46:50 am
Does the CPI figure take into account price changes of imports? Or is the CPI only measuring changes in the cost of Australian made goods and services that are in the regimen?
Is inflation caused by natural events such as droughts and cyclones considered demand-pull inflation or cost-push inflation?
Post by: Kuchiki on April 27, 2013, 12:04:07 pm
Does the CPI figure take into account price changes of imports? Or is the CPI only measuring changes in the cost of Australian made goods and services that are in the regimen?Yes, imports are taken into account.
Is inflation caused by natural events such as droughts and cyclones considered demand-pull inflation or cost-push inflation?There would be both. I'd say there's generally more cost-push inflation (due to the shortage of raw materials), but there would also be demand-pull inflation (due to spending on repairs and rebuilding, etc).
Post by: unihigh1 on May 24, 2013, 10:58:45 pm
Post by: chasej on May 24, 2013, 11:27:02 pm
could someone please explain the effect of an appreciation of the exchange rate on income and employment?
An appreciation of the exchange rate will tend to decrease levels of employment and therefore reduce incomes. This is because as the dollar appreciates imports become cheaper thus consumers are likely to reduce demand for locally made products and switch to international products. And people overseas are likely to stop purchasing Australian goods and services as they have become more expensive.
Both these factors cause a decrease in aggregate demand thus less production will occur in the economy meaning there is less need for employees, thus the unemployment rate is increasing and factors of production are receiving less income.
BTW a question like this is unlikely to appear on the end of year exam as the key knowledge stipulates you need to know AD/AS factors and not specific ones. A question more likely to appear is something like "explain one aggregate demand and one aggregate supply factor that has influenced the achievement of the goal of full employment over the last 4 years".
Also a good way to figure out the effects factors have on the achievement of economic goals is to draw a little chart mapping out the effect and the chain reaction is causes (hard to explain, maybe I'll write up a tutorial or something sometime to explain it, because it really does make it easier to work out).
Post by: abcdqdxD on May 24, 2013, 11:31:15 pm
Re the income bit of the question, it's also important to mention that as more individuals lose their jobs and move onto lower unemployment benefits, their disposable income declines, thus reducing material living standards as their access to goods and services become more limited.
Post by: dantan on May 25, 2013, 10:09:14 am
Re the income bit of the question, it's also important to mention that as more individuals lose their jobs and move onto lower unemployment benefits, their disposable income declines, thus reducing material living standards as their access to goods and services become more limited.
Ding ding ding!! 100% absolutely :p That is the kind of statement which will distinguish your A from your A+, so take note.
@chasej, I know the study design doesn't specifically stipulate the $A as a factor you have to know, but it is very very important. Besides, firstly, teachers like asking about it on SACs or review questions, and secondly, knowledge of the operations of the exchange rate/$AUD is expected in the study design under 'External Stability'.
Finally, the 'chain method' is (to me) the only way you should be going about answering AD/AS analysis questions. It's the only way you can really be sure that you've stepped out every single link and explained why, but you do need to practice getting good at it. You can even just draw a whole bunch of factors out of a hat and draw quick 30 second arrow diagrams to help you out.
Post by: chasej on May 25, 2013, 05:29:11 pm
@chasej, I know the study design doesn't specifically stipulate the $A as a factor you have to know, but it is very very important. Besides, firstly, teachers like asking about it on SACs or review questions, and secondly, knowledge of the operations of the exchange rate/$AUD is expected in the study design under 'External Stability'.
I know. I was just making the point that you don't have to worry about memorizing absolutely every AD/AS factor listed in the textbook.
Post by: abcdqdxD on May 25, 2013, 06:23:58 pm
Post by: LazyZombie on May 25, 2013, 08:13:56 pm
And maybe some links for reading on it?
Can you say that a market has high levels of consumer sovereignty? I assume you can't?
Post by: chasej on May 25, 2013, 10:01:48 pm
Can someone please outline what consumer sovereignty is, its characteristics, and how it relates to/if it has any relationship to market power?
And maybe some links for reading on it?
Can you say that a market has high levels of consumer sovereignty? I assume you can't?
Consumer soveriegnty just means that consumers can vote with their money as to what they choose to buy and therefore the way resources are allocated. Basically it means that consumers can choose what goods and services they get.
You can say a market has high levels of CS. A market where CS is most prevalent would be a perfectly competitive market as in this type of market producers are likely to be dynamically effiecient and will only produce products that consumers want and therefore would make them a profit. In a monopoly situation companies may not have as much incentive to follow what consumers want as they can already control all or most of the resources in the market so have no real reason to need to switch resources around to keep up with the market.
http://www.businessdictionary.com/definition/consumer-sovereignty.html
Post by: abcdqdxD on May 25, 2013, 11:13:03 pm
Basically it means that consumers can choose what goods and services they get
I liked the earlier part of your explanation more. Consumers don't necessary choose what they get - they choose what is produced by private entities.
CS means that consumers signal to private firms the goods and services they like to see produced through the idea of relative prices (remembering that the key assumption in our economic model is that firms are motivated by greater profits and hence are *in theory* reactive to consumer demand)
Post by: unihigh1 on May 26, 2013, 05:08:08 pm
Post by: dantan on May 27, 2013, 12:32:09 pm
thanks for clearing that up guys! could someone explain the 'chain' method?
It's basically the most standard method of analysing the effect of particular events on AD/Goals etc. etc. You're probably already doing it anyway:
1. Identify and explain the event
2. Identify which component of AD this will affect and explain why
3. Identify how this component will affect AD (increase or decrease)
4. Identify how the movement of AD will impact whatever the question is asking
So basically people (and I) practice/d it with simple abbreviations and arrows:
Increased CC --> Increased C --> Increased AD --> Increased inflation (for example)
You're probably already doing it, but this method means that you're unlikely to miss a link in your explanation and you can do it for AS too.
Hope this helps! Feel free to message me if you need more help with this :)
Post by: chasej on May 30, 2013, 06:43:24 pm
Explain the effect of a more equitable distribution of income on the allocation of resources?
Edit: never mind, asked my teacher today. Was just to do with equity vs. efficiency which I hadn't properly revised yet.
Post by: chasej on July 22, 2013, 08:51:56 pm
A. The value of the Australian dollar should rise.
B. The price of imports should fall.
C. The price of exports should fall.
D. The rate of savings should increase.
Post by: abcdqdxD on July 22, 2013, 09:13:49 pm
With regard to transmission mechanisms, which of the following is most likely to occur when monetary policy is loosened?
A. The value of the Australian dollar should rise.
B. The price of imports should fall.
C. The price of exports should fall.
D. The rate of savings should increase.
Just started monetary policy so I'm not that familiar with transmission mechanisms.
But if you had to break it down:
A) would expect depreciation in AUD so not A
B) if dollar is worth less, price of imports will rise
D) savings will fall as return on investment though term deposits is less
C) I think it's C. Lower int rates -> depreciate dollar -> exports cheaper for foreign countries to purchase
Post by: chasej on July 23, 2013, 01:48:24 am
Just started monetary policy so I'm not that familiar with transmission mechanisms.
But if you had to break it down:
A) would expect depreciation in AUD so not A
B) if dollar is worth less, price of imports will rise
D) savings will fall as return on investment though term deposits is less
C) I think it's C. Lower int rates -> depreciate dollar -> exports cheaper for foreign countries to purchase
Thanks. Problem is the resource says the answer is B, the argument for C being correct is pretty convincing, and it's the same logic I had when answering the question, so I think it's a misprint on the sheet.
Post by: chasej on August 01, 2013, 09:08:02 pm
Would the answer to this be that the increase in public savings would add to the pool of national savings causing the private sector to be crowded in and therefore borrow and spend more?
SAC TOMORROW :O
Post by: Sebby on August 02, 2013, 07:12:15 pm
An increase in public sector savings would mean the government is not spending/financing the budget as much, meaning that they are not taking funds from the Australian people/banks. As such, there would be more supply in the cash market for the economy, and as such (from monetary policy knowledge), there would be downward pressure on the interest rates. A reduction in interest rates would encourage people to spend and buy goods and services due to having more discretionary income (income less tax and interest rates) from the transmission channels. Thus, private consumers and businesses spend/buy more and thus save less.
I assumed this was the answer due to my knowledge that an increase in government spending (generally from an expansionary budgetary policy or a need to fund the budget deficit) leads to greater competition for public funds (reduced cash supply in the cash market) . Thus interest rates rise and the effect of "crowding out" (where private businesses become discouraged to invest due to higher interest rates) begins to kick in. So i just applied the opposite effects of everything in the scenario that the government spends less (as your question implies, i.e greater savings).
Hope this helps, and if someone could confirm the validity of the statement that would be cool.
Post by: abcdqdxD on August 02, 2013, 07:18:49 pm
Not 100% sure if this is right, this is just what i think.
An increase in public sector savings would mean the government is not spending/financing the budget as much, meaning that they are not taking funds from the Australian people/banks. As such, there would be more supply in the cash market for the economy, and as such (from monetary policy knowledge), there would be downward pressure on the interest rates. A reduction in interest rates would encourage people to spend and buy goods and services due to having more discretionary income (income less tax and interest rates) from the transmission channels. Thus, private consumers and businesses spend/buy more and thus save less.
I assumed this was the answer due to my knowledge that an increase in government spending (generally from an expansionary budgetary policy or a need to fund the budget deficit) leads to greater competition for public funds (reduced cash supply in the cash market) . Thus interest rates rise and the effect of "crowding out" (where private businesses become discouraged to invest due to higher interest rates) begins to kick in. So i just applied the opposite effects of everything in the scenario that the government spends less (as your question implies, i.e greater savings).
Hope this helps, and if someone could confirm the validity of the statement that would be cool.
^50 economics right there
Post by: p.taaa on August 02, 2013, 07:26:18 pm
hope this helps!
seb, that only occurs if the government repays private debt, not saving with the RBA (pg 180, economics down under)
Post by: Sebby on August 02, 2013, 07:42:27 pm
Greater public savings will decrease the supply of credit in the short term money market. This is because private sector savings are transferred into public sector savings, hence an increase in government saving will decrease private sector savings
hope this helps!
seb, that only occurs if the government repays private debt, not saving with the RBA (pg 180, economics down under)
Fair call Peter! Re-reading my post i did jump the gun assuming the gov repays private debt (and the opposite effect blah), could you just explain your point a bit more like how the private sector savings are being transferred into public saving and about the effects of the gov saving with the RBA. :o
Post by: p.taaa on August 02, 2013, 08:08:55 pm
i believe that the government has something called a 'Official public account' which is used by the government to meet obligations. This is treated as private sector savings, not sure why though. when surpluses are not needed, balances of the OFA are transferred into the RBA in the form of term deposits/ money market investments. When the money is needed again to fund deficits, then they can be redeemed.
Post by: Kilik on August 09, 2013, 09:06:09 pm
we are focusing on employment and population.
Post by: millie96 on August 20, 2013, 03:09:20 pm
Post by: vceishard on August 20, 2013, 03:49:05 pm
Post by: abcdqdxD on August 20, 2013, 03:59:51 pm
Post by: chasej on August 20, 2013, 05:43:36 pm
How difficult is economics 3/4? If i am ok at the 1/2, (about b+ average), do you think it would be ok? I get this is not much information to go off... just really wondering how difficult you guys find it in comparison to other subjects.
Unit 3 is more or less the same as 1/2. Somewhere around 65% or so of Unit 3 you would likely already know from 1/2 if you worked relatively well in the 1/2. And the bits of Unit 3 you wouldn't already know just build slightly on the stuff you already know. *There are some challenging parts of Unit 3 though, quite a few people need to spend some extra time on External Stability and Equity, before they feel comfortable with it, but then again there's hard bits in every subject pretty much.
Unit 4 again builds on Unit 3 and in fact Unit 4 exam questions often relate back to stuff you learnt in Unit 3, simply due to the nature of economics of everything linking together.
I assume you would study more/harder for a 3/4 than a 1/2 so if you are getting B+ at 1/2, I can't see why with a little extra study you couldn't be able to pull A/A+'s in 3/4.
Don't be fooled though eco isn't an easy subject nor is it a very hard one. If you put in the hard work, you would get the marks.
I would recommend that you don't do it. Its the most painstaking subject apart from History Revs, but do as you wish! Its pretty useless... unless your going into public relations, commerce or are becoming a politician then its pretty useless. Wishing I was one of those dumb kids who didn't over think the government too much. I cant be bothered changing the world. VOTE FOR LABOR (is what my teacher always says lol... thinking they are brain washing me... its ok thou, I have a brain that can at least tell me the most basic thing in the world... 'don't vote labor' ha.)I disagree. Economics is useful for a plethora of things and can vastly improve your knowledge of many political/social issues. The rest of your post just goes of on a tangent which is probably more appropriate in the water cooler so I won't even bother.
Post by: abcdqdxD on September 08, 2013, 10:55:15 am
I know the definition is "the ability to innovate and adapt the allocation of resources based on the current economic environment" but I don't really understand the idea all that well.
A common example of dynamic efficiency is using the latest technology, what are some other examples?
Thanks
Post by: LazyZombie on September 08, 2013, 06:29:56 pm
Can someone explain the idea of "Dynamic efficiency".I don't know if this will help but -
I know the definition is "the ability to innovate and adapt the allocation of resources based on the current economic environment" but I don't really understand the idea all that well.
A common example of dynamic efficiency is using the latest technology, what are some other examples?
Thanks
From what I gather, an example of dynamic efficiency is the ability of a company to adapt to change, and to be flexible in order to keep up with the market or risk falling behind - technology is the best example. The company will often need to consider long term goals in conjunction with short term goals by investing etc in order to do this.
For example, kodak went from dominating the photography market to having to file for bankruptcy recently.
Also another example is myspace dying out once facebook 'revolutionised' the social media platform. (lack of a better term)
Dynamic efficiency I think is also related to how quickly an economy can reallocate its resources from one sector to another, if there was a need to. E.g. moving resources from manufacturing to services and considering how quickly people can be retrained and if the capital can be used in the other sector directly.
tldr how companies and the economy in general copes with change.
I have that written in my notes, anyhow :P
An irrelevant question - if an economy goes from positive to negative rates of growth (in an analysis question) would it be correct to say that 'the rate of economic growth decreased from e.g. 1% to -4.3%"?
Post by: chasej on September 08, 2013, 10:24:32 pm
An irrelevant question - if an economy goes from positive to negative rates of growth (in an analysis question) would it be correct to say that 'the rate of economic growth decreased from e.g. 1% to -4.3%"?
Doubt you would lose marks for saying it like that but it does sound better to say "economic growth fell from 1% to a negative growth rate of 4.3%".
Because -4.3%, isn't really economic growth but, is negative economic growth.
Post by: LazyZombie on September 08, 2013, 11:01:56 pm
Doubt you would lose marks for saying it like that but it does sound better to say "economic growth fell from 1% to a negative growth rate of 4.3%".thanks! I knew it was technically wrong, I just wasn't sure how to phrase it. I feel like half the battle is just phrasing my answers correctly.
Because -4.3%, isn't really economic growth but, is negative economic growth.
Post by: TrueTears on September 10, 2013, 01:13:52 am
Can someone explain the idea of "Dynamic efficiency".
I know the definition is "the ability to innovate and adapt the allocation of resources based on the current economic environment" but I don't really understand the idea all that well.
A common example of dynamic efficiency is using the latest technology, what are some other examples?
Thanks
There are many definitions of dynamic efficiency, depends on what kind of assumptions you make. Consider the most simplistic framework.
Assume we have some input vector
Dynamic efficiency is achieved iff:
We have some
A word of caution is that these maximisation problems can be very non-linear at high dimensions and usually some sort of approximation or numerical techniques need to be applied.
Post by: abcdqdxD on September 11, 2013, 05:15:44 pm
A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong
any ideas?
Post by: chasej on September 14, 2013, 03:01:50 pm
Increase in maternity leave payments will;
A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong
any ideas?
A) people would if anything leave the workforce as they have greater ability to stay out home on these payments.
B) possible as people may have more children as it is more financially viable with the increased payments.
C) this seems the most likely to me as due to people leaving the labour force there would be less labour resources available.
It's either b or c. A bit of an ambiguous question though. What does to book or wherever it's from say the answer is?
Post by: abcdqdxD on September 14, 2013, 03:05:56 pm
A) people would if anything leave the workforce as they have greater ability to stay out home on these payments.
B) possible as people may have more children as it is more financially viable with the increased payments.
C) this seems the most likely to me as due to people leaving the labour force there would be less labour resources available.
It's either b or c. A bit of an ambiguous question though. What does to book or wherever it's from say the answer is?
SAC question ugh
Post by: p.taaa on September 14, 2013, 03:18:23 pm
but thats my personal opinion
Post by: Wu on September 19, 2013, 09:21:22 pm
Increase in maternity leave payments will;
A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong
any ideas?
a) mothers will most likely leave the labour force to take advantage of it ↓participation rate
b) females may decide to have children as they believe that they will retain some income through the policy introduced
c) "current levels". It takes nine months to have a baby so it's not exactly true if they were meaning the current immediate time.
I'd probably go with b but preferably, none of the above, haha. I really dislike ambiguous questions like these.
---
I've got my own question that I'd like to ask. When a question asks about aggregate supply side policies, are we supposed to refer to: immigration/environment/MRPs OR infrastructure/manipulation of taxes/education and up-skilling or, perhaps any? I've currently been writing about actual AS policies that have been in the budget ($24b infrastructure 2013/14, $2b reconstruction efforts after Cyclone Oswald in Queensland, $1b 'A plan for Australian jobs') but I want to be certain for my sac tomorrow.
Post by: chasej on September 19, 2013, 09:47:24 pm
I've got my own question that I'd like to ask. When a question asks about aggregate supply side policies, are we supposed to refer to: immigration/environment/MRPs OR infrastructure/manipulation of taxes/education and up-skilling or, perhaps any? I've currently been writing about actual AS policies that have been in the budget ($24b infrastructure 2013/14, $2b reconstruction efforts after Cyclone Oswald in Queensland, $1b 'A plan for Australian jobs') but I want to be certain for my sac tomorrow.
You'd probably be better of asking your teacher if you still can. But when a question asks about AS policies in general I imagine it would be OK to draw examples form all the different types of AS policies studied. Obviously when specific questions are asked though you need to talk about only what's relevant. Talking about current policies are best as you probably know.
Good luck for your SAC.
Post by: Wu on September 19, 2013, 10:06:57 pm
You'd probably be better of asking your teacher if you still can. But when a question asks about AS policies in general I imagine it would be OK to draw examples form all the different types of AS policies studied. Obviously when specific questions are asked though you need to talk about only what's relevant. Talking about current policies are best as you probably know.My teacher isn't very tech-savvy so he wouldn't reply to me in time anyway, haha. I'll stalk him tomorrow morning before the SAC if possible then.
Good luck for your SAC.
Thanks for your reply. My friend said that going with what is implemented in the budgets is a good idea. If a question really calls for an AS side policy, I think that I should only discuss environmental/immigration/trade lib if it has actually been in the budget so the carbon tax (2012/13) but other than that, I've memorised policies for infrastructure.
Thank you once again.
Post by: sam.utute on September 21, 2013, 09:24:07 am
Post by: chasej on October 14, 2013, 09:37:31 pm
(First question in eco I've really ever had absolutely no clue on, allocation of resources has been taught as a more microeconomic thing but this question links it in with the external stability part of the course :/ )
I get how more imports into Australia, and less exports out of Australia would occur with an appreciation of the AUD but I can't see how it would affect the domestic allocation of resources other than resources becoming under utilised as net exports and therefore AD fall. But underutilisation isn't really allocation of resources as if resources aren't being used than they aren't allocated any where really :/
*confusion*
Post by: abcdqdxD on October 14, 2013, 09:47:17 pm
How does an appreciation of the Australian dollar affect the allocation of resources?
(First question in eco I've really ever had absolutely no clue on, allocation of resources has been taught as a more microeconomic thing but this question links it in with the external stability part of the course :/ )
I get how more imports into Australia, and less exports out of Australia would occur with an appreciation of the AUD but I can't see how it would affect the domestic allocation of resources other than resources becoming under utilised as net exports and therefore AD fall. But underutilisation isn't really allocation of resources as if resources aren't being used than they aren't allocated any where really :/
*confusion*
Where did you get this question from?
Post by: chasej on October 14, 2013, 09:54:20 pm
Where did you get this question from?
VCTA 2011 prac exam. question 2.b.ii. also noticed it in a few other prac exams around.
Post by: abcdqdxD on October 14, 2013, 09:58:06 pm
Post by: sam.utute on October 15, 2013, 08:17:58 am
I think it's just referring to reallocation of resources away from the export sector to other areas i.e. the domestic industry or even speculative assets
Yep, correct. If demand in the export sector falls, export-orientated businesses will become less profitable, and will look to reallocate resources into sectors with better prospects.
Post by: Sebby on October 15, 2013, 02:50:48 pm
Post by: chasej on October 15, 2013, 03:08:34 pm
The carbon tax would be an appropriate environmental policy to use for this year's exam right?
Yes. I plan on using carbon tax myself.
Post by: abcdqdxD on October 15, 2013, 03:36:44 pm
Post by: chasej on October 15, 2013, 04:01:49 pm
Is it possible for the exam to force you to use the ETS instead of the carbon tax?
I doubt it as the study design explicitly states you only need to know one environmental policy, in theory a student could have learnt something completly different from the carbon tax.
Quote
• how one environmental policy is designed to influence aggregate supply, long-term economic prosperity and living standards;
Post by: abcdqdxD on October 15, 2013, 04:24:15 pm
Post by: chasej on October 16, 2013, 11:16:45 pm
Thanks.
P.s. TWO WEEKS TOMORROW :'( I can't help but feel grossly underprepared even though I know I'm probably alright.
Post by: sam.utute on October 19, 2013, 07:16:11 am
The carbon tax would be an appropriate environmental policy to use for this year's exam right?
Yep, definitely!
Post by: sam.utute on October 19, 2013, 09:21:40 am
Does anyone know of any good polices which worked to reduce unemployment and increase participation rate? As well as any designed to assist with external stability?
Thanks.
P.s. TWO WEEKS TOMORROW :'( I can't help but feel grossly underprepared even though I know I'm probably alright.
Any upskilling programs and training for workers will help.
The government rarely has initiatives specifically designed to help external stability, but you could probably just talk about any policy that improves export conditions.
Post by: abcdqdxD on October 21, 2013, 02:51:24 pm
The removal of tariff protection is likely to improve which of the following policy goals?
A) Allocative efficiency
B) Full employment
C) External stability
D) Equity in the distribution of income
My gut instinct was A because micro reform is targeted at improving efficiency, but as a by-product of efficiency gains, external stability is also improved. The fact that the question had the word "goal" implied that it was one of the 5 economic goals, which allocative efficiency clearly isn't. What do you think? This was on VCAA 2010 and the correct answer is A.
Post by: chasej on October 21, 2013, 03:02:58 pm
I was quite puzzled when I did this question. Although I got it right, I wasn't 100% sure of my answer.
The removal of tariff protection is likely to improve which of the following policy goals?
A) Allocative efficiency
B) Full employment
C) External stability
D) Equity in the distribution of income
My gut instinct was A because micro reform is targeted at improving efficiency, but as a by-product of efficiency gains, external stability is also improved. The fact that the question had the word "goal" implied that it was one of the 5 economic goals, which allocative efficiency clearly isn't. What do you think? This was on VCAA 2010 and the correct answer is A.
Definitely one of the harder questions like you said.
I think the key word is "policy goals" it is my understanding that a policy goal isn't necessarily an economic goal that was studied in U3 AOS2 for example budgetary policy can be used to target allocative efficiency by reallocating resources.
Trade liberalisation (I didn't do TL in U4 as a MRP, only in U3 AOS2 so my knowledge isn't that detailed) is done in order to cause Australian industry to reallocate resources into areas which Australia is most efficient, thus the main policy goal (not necessarily an economic goal) is allocative efficiency, obviously once resources are allocated efficiently the economic goals are likely to follow but the first effect is greater allocative efficiency.
Post by: abcdqdxD on October 21, 2013, 03:14:12 pm
Post by: abcdqdxD on October 23, 2013, 11:29:59 am
The SD states:
limitations of GDP and alternative measures of living standards, including Genuine Progress
Indicator (GPI) and Measuring Australia’s Progress (MAP)
Does the word "and" imply we need to know both?
Post by: chasej on October 23, 2013, 12:10:19 pm
Do we have to know BOTH the GPI and MAP?
The SD states:
limitations of GDP and alternative measures of living standards, including Genuine Progress
Indicator (GPI) and Measuring Australia’s Progress (MAP)
Does the word "and" imply we need to know both?
Yes, you need to know both according to study design. I doubt they would ask a question that requires you to know both but probably better not to take the risk (i.e. in previous years they asked "Explain how GPI or MAP can.....") You don't really need to know much for them so probably worth learning both.
Less related, but if they ever ask a question asking either or; it's probably better to go with MAP as there's less similarities with GDP, so more differences to talk about.
Post by: abcdqdxD on October 23, 2013, 12:34:14 pm
Post by: sam.utute on October 24, 2013, 09:01:09 am
Yes, you need to know both according to study design. I doubt they would ask a question that requires you to know both but probably better not to take the risk (i.e. in previous years they asked "Explain how GPI or MAP can.....") You don't really need to know much for them so probably worth learning both.
Less related, but if they ever ask a question asking either or; it's probably better to go with MAP as there's less similarities with GDP, so more differences to talk about.
You DON'T need to know both in detail. I pretty much ignored MAP and focused on GPI because it has less content and is much easier to explain. I would recommend you pick ONE of them and learn it inside out, and have a cursory knowledge of the other one.
I would probably go with GPI because its much easier to explain. Personal preference really..
Good choice! Easiest one IMO. :)
Post by: chasej on October 26, 2013, 11:05:08 pm
Quote
Which of the following factors is not an aggregate demand factor affecting economic activity?
A. an increase in the company tax rate
B. an increase in interest rates
C. an increase in production costs
D. an increase in the amount of disposable income.
Answer to paper says the answer is C. I think however both A and C are exclusively supply factors, thereby the writer of the paper made a mistake. Am I correct or is there a way company tax affects AD?
Post by: Kuchiki on October 26, 2013, 11:49:04 pm
Am I correct or is there a way company tax affects AD?
Remember that AD = C + I + G + X - M, where I represents private investment spending by companies. As the ability and willingness of companies to invest would be affected by the company tax rate, it would be classified as an AD factor, in the same way that the personal income tax rate is also an AD factor because it affects private consumption spending.
Post by: chasej on October 27, 2013, 12:40:21 am
Remember that AD = C + I + G + X - M, where I represents private investment spending by companies. As the ability and willingness of companies to invest would be affected by the company tax rate, it would be classified as an AD factor, in the same way that the personal income tax rate is also an AD factor because it affects private consumption spending.
Wouldn't an increase in production costs have the same effect as the company tax rise? Making them all AD factors in that case.
Post by: abcdqdxD on October 27, 2013, 12:23:13 pm
Remember if in doubt, select the "best" answer
Post by: sam.utute on October 27, 2013, 11:15:31 pm
Wouldn't an increase in production costs have the same effect as the company tax rise? Making them all AD factors in that case.
A and C can both be classed as supply factors. This question is extremely poorly worded.
I cry a little inside when I see questions like this. :(
Post by: TenaTe on October 28, 2013, 06:53:01 pm
Post by: abcdqdxD on October 30, 2013, 11:55:00 pm
Cheers
Post by: Politics on November 01, 2013, 09:03:39 pm
I am picking up Economics 3/4 without doing 1/2, i spoke to a couple of people in my Year level / outside mates
and they said it should be fine, for preparation i am going to use MrWood.com.au and go through Unit 1/2/3/4,
is there anything else that you recommend i should go through the summer holidays?
Secondly, i am buying AN Study Guides for all my subjects, however there is not one for Economics,
i am searching for some eco books. Would anyone with experience be able to point me in the direction of
a decent book?
Any responses would be much appreciated, cheers!
Post by: abcdqdxD on November 01, 2013, 09:59:20 pm
Hey Guys, just a couple of questions i thought i would ask here before making a new thread!
I am picking up Economics 3/4 without doing 1/2, i spoke to a couple of people in my Year level / outside mates
and they said it should be fine, for preparation i am going to use MrWood.com.au and go through Unit 1/2/3/4,
is there anything else that you recommend i should go through the summer holidays?
Secondly, i am buying AN Study Guides for all my subjects, however there is not one for Economics,
i am searching for some eco books. Would anyone with experience be able to point me in the direction of
a decent book?
Any responses would be much appreciated, cheers!
Mr. Wood is actually shutting down in a month's time. Try the indigo study guide for economics. http://www.indigopublishing.com.au/book-economics-study-guide.htm
Post by: Politics on November 01, 2013, 10:14:49 pm
Mr. Wood is actually shutting down in a month's time. Try the indigo study guide for economics. http://www.indigopublishing.com.au/book-economics-study-guide.htmThanks for the indigo resource, and yeah a few of my classmates told me that it is shutting down, so i'm am in the process of copying all the theory from all four units into word document(s), its going to take a while ahah!
Post by: chasej on November 02, 2013, 01:34:33 am
Hey Guys, just a couple of questions i thought i would ask here before making a new thread!
I am picking up Economics 3/4 without doing 1/2, i spoke to a couple of people in my Year level / outside mates
and they said it should be fine, for preparation i am going to use MrWood.com.au and go through Unit 1/2/3/4,
is there anything else that you recommend i should go through the summer holidays?
Secondly, i am buying AN Study Guides for all my subjects, however there is not one for Economics,
i am searching for some eco books. Would anyone with experience be able to point me in the direction of
a decent book?
Any responses would be much appreciated, cheers!
Hey. In regards to preparation. I don't think you really need to learn units 1/2 if you are going to pre-learn unit 3 as unit 3 covers any units 1/2 knowledge you need and goes a bit further than 1/2 also. Learning unit 3 alone in the summer would probably mean you would know more than those who completed 1/2.
Unit 4 content isn't more than slightly touched on in 1/2 so I don't think it's imperative for you to learn u4 over summer unless you want to really get ahead. Personally I didn't do any preparation over the summer mainly due to the fact my textbook didn't arrive until like 3 weeks into term 1 (was so annoying).
In regards to study guides I found the CPAP VCE economics study guides to be helpful. In fact my marks improved from low-90% to high-90% after I started using the study guide to help me-probably mainly due to the fact the study guide provided me with some structured revision. If your class uses the CPAP published textbook than the study study guide may be of less use however I used the study guide and textbook and found they both complemented each other well.
Also another thing, which is often overlooked in preparation is to make sure you keep up with recent economic events/developments. There was a question that asked about a specific economic event (two speed economy) on the exam the other day-so it's pretty important.
I also think I have an archive of all the mrwood website content for unit 3/4 somewhere if you want.
I found the indigo study guide to be a bit vague to be honest and didn't use it much despite it being a prescribed text by my school. My advice is not to buy to many study guides etc. I bought a fair few books throughout the year and only ended up fully utilising about a third of them tbh
Post by: Politics on November 02, 2013, 07:18:27 am
Hey. In regards to preparation. I don't think you really need to learn units 1/2 if you are going to pre-learn unit 3 as unit 3 covers any units 1/2 knowledge you need and goes a bit further than 1/2 also. Learning unit 3 alone in the summer would probably mean you would know more than those who completed 1/2.
Unit 4 content isn't more than slightly touched on in 1/2 so I don't think it's imperative for you to learn u4 over summer unless you want to really get ahead. Personally I didn't do any preparation over the summer mainly due to the fact my textbook didn't arrive until like 3 weeks into term 1 (was so annoying).
In regards to study guides I found the CPAP VCE economics study guides to be helpful. In fact my marks improved from low-90% to high-90% after I started using the study guide to help me-probably mainly due to the fact the study guide provided me with some structured revision. If your class uses the CPAP published textbook than the study study guide may be of less use however I used the study guide and textbook and found they both complemented each other well.
Also another thing, which is often overlooked in preparation is to make sure you keep up with recent economic events/developments. There was a question that asked about a specific economic event (two speed economy) on the exam the other day-so it's pretty important.
I also think I have an archive of all the mrwood website content for unit 3/4 somewhere if you want.
I found the indigo study guide to be a bit vague to be honest and didn't use it much despite it being a prescribed text by my school. My advice is not to buy to many study guides etc. I bought a fair few books throughout the year and only ended up fully utilising about a third of them tbh
Thanks for all that, and yeah i just spent the whole night 'downloading' Mr.Wood so it wouldn't take me ages copy/paste. I will have a look into CPAP VCE Economics Guide, cheers!
Post by: abcdqdxD on November 02, 2013, 07:28:56 am
Because you haven't done 1/2 Eco, I think it will be a smoother transition if you used the Indigo study guide as a starting point over the holidays. Once you build up your conceptual knowledge, then you may want to get the CPAP guide.
Post by: sam.utute on November 02, 2013, 09:24:52 am
Post by: chasej on November 02, 2013, 02:05:58 pm
IMO the cpap study guide is overloaded with unnecessary jargon and too much info. Indeed Indigo isn't as sophisticated as CPAP - it aims to provide a general overview and build up a firm understanding of concepts.
Because you haven't done 1/2 Eco, I think it will be a smoother transition if you used the Indigo study guide as a starting point over the holidays. Once you build up your conceptual knowledge, then you may want to get the CPAP guide.
You have a point. I suppose which books are better are just a matter of personal preference really.
Post by: Politics on December 10, 2013, 04:02:04 pm
Post by: chasej on December 10, 2013, 04:10:52 pm
Just wondering for those who have finished 1-4, I have gone through Unit 1 completely, and am just wondering if it is worth going through all of Unit 2? Or going straight to Unit 3, in other words it is worth / relevant for me to learn Unit 2 content for 3/4?
Unit 3 is going to repeat unit 1 and 2 to be honest. I recommend you just start at unit 3.
Post by: abcdqdxD on December 10, 2013, 11:21:46 pm
Just wondering for those who have finished 1-4, I have gone through Unit 1 completely, and am just wondering if it is worth going through all of Unit 2? Or going straight to Unit 3, in other words it is worth / relevant for me to learn Unit 2 content for 3/4?
Are you in year 11?
Post by: chasej on December 10, 2013, 11:46:54 pm
Are you in year 11?
Iirc they're doing 3/4 next year without 1/2. Pretty sure they're 2014 grad.
Post by: Politics on December 11, 2013, 10:10:40 am
Iirc they're doing 3/4 next year without 1/2. Pretty sure they're 2014 grad.Yeap, 2014 Grad.
Post by: abcdqdxD on December 11, 2013, 06:39:30 pm
Yeap, 2014 Grad.
Start at unit 3 and learn it very very very very well. Make sure you understand why things work the way they do, don't fall into the trap of trying to rote-learn. Conceptual understanding is vital in this subject.
Also, I wouldn't recommend starting unit 4 until May at the earliest. So don't get too carried away over the holidays.
Good luck!
Post by: millie96 on February 06, 2014, 09:40:31 pm
Post by: unihigh1 on February 06, 2014, 10:03:02 pm
If you want me to explain any questions about economics further please don't hesitate to PM me.
Post by: chasej on February 06, 2014, 10:51:08 pm
Quote
Thereby goods and services are allocated between competing uses using the market mechanism where consumers determine levels of demand for goods and services, which set relative prices, and hence effect business's willingness/ability/desire to produce in one area or another.
Important to note that relative prices are set by the free forces of both demand and supply, not just demand.
Edit: Why was 90% of my post removed? Wtf
Post by: abcdqdxD on February 07, 2014, 11:43:39 am
Important to note that relative prices are set by the free forces of both demand and supply, not just demand.
Edit: Why was 90% of my post removed? Wtf
Hey sorry, pressed modify instead of quote :(
Post by: chasej on February 07, 2014, 12:08:45 pm
Hey sorry, pressed modify instead of quote :(
Is it possible to get the post back?
Post by: abcdqdxD on February 07, 2014, 02:23:34 pm
Is it possible to get the post back?
unfortunately not :(
Post by: Politics on February 16, 2014, 01:10:07 pm
I feel like this is a pretty simple question, however i do not really understand the correlation between the two, can anyone give me a hand and explain how the supply and demand for eggs would change?
Post by: abcdqdxD on February 16, 2014, 01:14:06 pm
"The price of eggs would be expected to increase given a fall in wheat production"
I feel like this is a pretty simple question, however i do not really understand the correlation between the two, can anyone give me a hand and explain how the supply and demand for eggs would change?
Yeah it is a bit ambiguous. Probably not the best example of supply and demand, so ignore it. The question is assuming people will consume more eggs (higher demand, higher price) if wheat becomes less readily available (which is debatable).
Post by: HawthornM8 on February 16, 2014, 01:42:44 pm
"The price of eggs would be expected to increase given a fall in wheat production"
I feel like this is a pretty simple question, however i do not really understand the correlation between the two, can anyone give me a hand and explain how the supply and demand for eggs would change?
LMFAO WHAT? I'm not exactly a redneck chicken breeder but from my vast experience in watching cartoons, it looks as though mother chickens who 'pop out' eggs are often sitting on a hay stack ... One of the major ingredients/components of hay can be wheat. A cost increase of wheat (due to a rise in wheat scarcity) could then in turn affect redneck chicken breeders chickens comfort if they were to take away that hay, so they would have to pay more to get that wheat. To equal out their loss, due to having to pay more money for their factors of production, the price of eggs would rise (law of supply) because I think eggs would be considered inelastic demand (which I think means the demand will always be there regardless of the price because it is a necessity like water and rent) because it is a commonplace household item and it the fall in wheat production would effect all egg suppliers.
A lot of that is probably wrong with me trying to be a smart ass - I think the correlation between the two is pretty stupid.
Post by: chasej on February 16, 2014, 03:33:05 pm
LMFAO WHAT? I'm not exactly a redneck chicken breeder but from my vast experience in watching cartoons, it looks as though mother chickens who 'pop out' eggs are often sitting on a hay stack ... One of the major ingredients/components of hay can be wheat. A cost increase of wheat (due to a rise in wheat scarcity) could then in turn affect redneck chicken breeders chickens comfort if they were to take away that hay, so they would have to pay more to get that wheat. To equal out their loss, due to having to pay more money for their factors of production, the price of eggs would rise (law of supply) because I think eggs would be considered inelastic demand (which I think means the demand will always be there regardless of the price because it is a necessity like water and rent) because it is a commonplace household item and it the fall in wheat production would effect all egg suppliers.
A lot of that is probably wrong with me trying to be a smart ass - I think the correlation between the two is pretty stupid.
The question is too ambitious and specific and not worth worrying about it my opinion. But if I had to answer that would have been my logic also.
In my opinion, you've been to harsh on chicken farmers, they do a good job.
Post by: TazzyGirl on February 16, 2014, 05:04:12 pm
What exactly are microeconomic demand factors?
Post by: chasej on February 16, 2014, 05:12:33 pm
I'm trying to complete this case study on relative prices, and I have to identify and explain microeconomic demand factors influencing costs to do with alcohol and entertainment...but I'm so confused.
What exactly are microeconomic demand factors?
Microeconomics is the study of certain individual markets/industries within an economy in general terms. Demand factors are factors which effect levels of demand. Thereby microeconomic demand factors are all the factors that effect
Individual markets demand levels and factors applicable to each market will change.
For example. An anti alcohol advertising campaign will likely reduce demand for alcohol. And a decrease in discretionary income is likely to reduce demand for entertainment.
Post by: TazzyGirl on February 16, 2014, 05:25:06 pm
Post by: chasej on February 16, 2014, 06:06:50 pm
Could some demand side factor be things like tastes and fashions, income levels and substitute/complimentary products? Or am I completely on the wrong track..
Everything you listed can be demand factors. You're on the right track.
Just think "does this have a direct effect on consumers willingness and/or ability to buy x thing?" If the answer is yes then it's a demand factor.
Post by: TazzyGirl on February 16, 2014, 06:28:23 pm
Post by: dantan on February 17, 2014, 02:35:58 pm
Post by: millie96 on February 18, 2014, 10:07:35 pm
market for oil. With reference to demand and supply (market theory), suggest two important reasons that would explain why the price of oil generally trended upwards between 2004 and late 2012. (2 + 2 = 4 marks)
Post by: dantan on February 18, 2014, 10:25:39 pm
Assume that there was a free and competitive international
market for oil. With reference to demand and supply (market theory), suggest two important reasons that would explain why the price of oil generally trended upwards between 2004 and late 2012. (2 + 2 = 4 marks)
Ok, so first thing to look at in this question is the structure; it's fairly clear cut. So basically they are just looking for a demand side and a supply side reason for which the price has risen.
So on the demand side, we know for the price to go up, the demand curve should be shifting to the right. Perhaps think of things like greater international demand from developing countries etc.?
On the supply side we're looking for a factor that resulted in a constraint in supply (something that shifts the supply curve to the left). So thinking of things like political civil disruption in the Middle East that might have resulted in less supply of oil.
Hope that helps :)
Post by: Politics on February 19, 2014, 08:04:48 am
Ok, so first thing to look at in this question is the structure; it's fairly clear cut. So basically they are just looking for a demand side and a supply side reason for which the price has risen.I had some issues with that question myself, that helped alot, thanks!
So on the demand side, we know for the price to go up, the demand curve should be shifting to the right. Perhaps think of things like greater international demand from developing countries etc.?
On the supply side we're looking for a factor that resulted in a constraint in supply (something that shifts the supply curve to the left). So thinking of things like political civil disruption in the Middle East that might have resulted in less supply of oil.
Hope that helps :)
Post by: Politics on February 19, 2014, 07:58:56 pm
"Like before, don't get confused about the relationship between price and quantity supplied. A price decrease will be associated with higher supply levels if the increase in supply is what came first (shift to the right). However a a price increase will be associated with a higher supply levels if the price increase is what cam first (shift to the right demand)"
Any help would be awesome, cheers!
Post by: abcdqdxD on February 19, 2014, 09:11:13 pm
Post by: millie96 on February 22, 2014, 12:16:07 pm
In relation to how Australia's price mechanism will allocate resources (5 marks)
1. Firms will originally allocate resources to what they assume will be the most profitable product (consider relative scarcity)
2. Consumers will respond with price signals (e.g. dollar votes) which represents the demand of a product, representing those products which are highly sought after compared to those who are not - thus, consumer sovereignty dominates the market.
3. Firms react to price signals and thus change relative prices between particular goods or services in order to create a new equilibrium point between supply and demand
4. Firms will identify which products have a high relative profit, and therefore reallocate their resources to these products to increase profit maximisation
Thanks
Post by: abcdqdxD on February 22, 2014, 12:36:13 pm
Could somebody please critique this answer and tell me what I'm missing?
In relation to how Australia's price mechanism will allocate resources (5 marks)
1. Firmss will originally allocate resources to what they assume will be the most profitable product (consider relative scarcity)
2. Consumers will respond with price signals (e.g. dollar votes) which represents the demand of a product, representing those products which are highly sought after compared to those who are not - thus, consumer sovereignty dominates the market.
3. Firms react to price signals and thus change relative prices between particular goods or services in order to create a new equilibrium point between supply and demand
4. Firms will identify which products have a high relative profit, and therefore reallocate their resources to these products to increase profit maximisation
Thanks
Looks good, but for 5 marks you really need an example. Theory explanation is not sufficient for 4 or 5 marks.
Post by: M_BONG on February 26, 2014, 08:49:51 pm
1. If a competitive market existed for vegetables, the price may fall as a result of:
A a poor growing season adversely affecting producers.
B the development and use of new higher yielding types of seed.
C a switch by consumers from meat to a vegetarian diet.
D lower labour productivity by vegetable growers.
Answer is A...
2.
Which of the following is unlikely to increase the free market price of woollen mini-skirts?
A A successful and compelling mini-skirt advertising campaign by models
B Rising consumer confidence and disposable incomes among teenage skirt buyers
C The implementation of a special report by the government’s Minister for Primary Industry (who followed the fashion industry closely), recommending the abolition of all taxes on clothing producers
D The government paying a cash subsidy to wool growers, designed to encourage higher production levels
I chose B because this increases demand and therefore reduces the price? Why is the answer C?
3.
Regarding the market or price mechanism, which statement is false?
A Relatively lower market prices for a good or service usually
indicate underproduction or shortages of the good or service.
B Relatively higher market prices for a good or service usually signal that firms have allocated too few resources towards the particular area of production.
C In general, the market does not efficiently allocate resources if factors such as monopolies and oligopolies restrict the free movement of prices up or down to reflect either shortages or overproduction.
D Changing market conditions of demand or supply may alter the equilibrium price of a particular good or service.
I chose B because when prices are high, suppliers are more willing to supply resources? Therefore, the statement is false Answer is A...
ALSO:
DISCUSS TWO REASONS FOR GOVERNMENT INTERVENTION IN MARKETS
My teacher said the two main reasons are: to redistribute income to reduce inequality AND to stabilise economic activity.
But I have never learned about those two... (didn't do 1/2)
All I know about income distribution is that income should be progressive so every individual can receive the most essential goods etc and I don't even know what economic stability is...
Can I talk about reducing asymmetric information and deregulating markets to increase competitions? Are those two valid points..
Post by: abcdqdxD on February 26, 2014, 10:40:36 pm
These questions are driving me crazy... Can anyone help explain to me..
1. If a competitive market existed for vegetables, the price may fall as a result of:
A a poor growing season adversely affecting producers.
B the development and use of new higher yielding types of seed.
C a switch by consumers from meat to a vegetarian diet.
D lower labour productivity by vegetable growers.
Answer is A...
2.
Which of the following is unlikely to increase the free market price of woollen mini-skirts?
A A successful and compelling mini-skirt advertising campaign by models
B Rising consumer confidence and disposable incomes among teenage skirt buyers
C The implementation of a special report by the government’s Minister for Primary Industry (who followed the fashion industry closely), recommending the abolition of all taxes on clothing producers
D The government paying a cash subsidy to wool growers, designed to encourage higher production levels
I chose B because this increases demand and therefore reduces the price? Why is the answer C?
3.
Regarding the market or price mechanism, which statement is false?
A Relatively lower market prices for a good or service usually
indicate underproduction or shortages of the good or service.
B Relatively higher market prices for a good or service usually signal that firms have allocated too few resources towards the particular area of production.
C In general, the market does not efficiently allocate resources if factors such as monopolies and oligopolies restrict the free movement of prices up or down to reflect either shortages or overproduction.
D Changing market conditions of demand or supply may alter the equilibrium price of a particular good or service.
I chose B because when prices are high, suppliers are more willing to supply resources? Therefore, the statement is false Answer is A...
ALSO:
DISCUSS TWO REASONS FOR GOVERNMENT INTERVENTION IN MARKETS
My teacher said the two main reasons are: to redistribute income to reduce inequality AND to stabilise economic activity.
But I have never learned about those two... (didn't do 1/2)
All I know about income distribution is that income should be progressive so every individual can receive the most essential goods etc and I don't even know what economic stability is...
Can I talk about reducing asymmetric information and deregulating markets to increase competitions? Are those two valid points..
2) "unlikely"
3) B is true because price increases signal an undersupply. A is false because underproduction/shortages result in higher market prices not lower market prices
govt intervention:
- adjust level of economic activity
- overcome market failures (free rider problem, asymmetric information, etc.)
economic stability means the economy is not growing too rapidly (which results in inflation) or too slowly (which results in high unemployment)
Post by: M_BONG on February 27, 2014, 10:05:51 pm
Which of the following is not a government attempt to correct market failures?
A- Competition and Consumer Act 2010
B - Charging $23/tonne to polluters for carbon emissions
C - The implementation of a personal income tax
D- Government provision of minor roads.
Spoiler
I chose C because D is the government contributing to a market failure? BUT I thought income redistribution is not an example of govt. correcting market failures?
ALSO, one quick question: Does opportunity cost have to be in dollars, or can it be just a policy?
Eg. NDIS - approx $500 mill
Gonski reform - approx $500 mill
Five F/A 18 Hornets for Defence - approx 500 mill
Assuming the government makes a rational decision, What is the opportunity cost from implementing Gonski reform if a feasibility study finds that the most value will be gained from the Gonski reform, followed by the NDIS then the F/A 18 Hornets.
A- Benefit gained from introducing a NDIS
B- $500 million
C- Impossible to tell
D - Benefit from NDIS and purchasing five F/A 18s.
Spoiler
I chose B because I think opportunity cost has to be assigned a monetary value. I am also leaning towards A.
Post by: abcdqdxD on February 27, 2014, 10:18:10 pm
This is a question from MHS SAC 2013 (no solutions given, unfortunately)
Which of the following is not a government attempt to correct market failures?
A- Competition and Consumer Act 2010
B - Charging $23/tonne to polluters for carbon emissions
C - The implementation of a personal income tax
D- Government provision of minor roads.SpoilerI chose C because D is the government contributing to a market failure? BUT I thought income redistribution is not an example of govt. correcting market failures?
ALSO, one quick question: Does opportunity cost have to be in dollars, or can it be just a policy?
Eg. NDIS - approx $500 mill
Gonski reform - approx $500 mill
Five F/A 18 Hornets for Defence - approx 500 mill
Assuming the government makes a rational decision, What is the opportunity cost from implementing Gonski reform if a feasibility study finds that the most value will be gained from the Gonski reform, followed by the NDIS then the F/A 18 Hornets.
A- Benefit gained from introducing a NDIS
B- $500 million
C- Impossible to tell
D - Benefit from NDIS and purchasing five F/A 18s.Thanks!!SpoilerI chose B because I think opportunity cost has to be assigned a monetary value. I am also leaning towards A.
first one is C - income redistribution is not a market fialure
second is A because it is the next best alternative
Post by: M_BONG on March 04, 2014, 09:18:18 pm
A. Falling petrol prices
B. Higher car prices of competitiors
C. A subsidy paid to producers of cars
D. Higher raw material prices in the production of cars.
I chose B. But the answer is A. Can anyone explain?
Post by: chasej on March 04, 2014, 10:35:11 pm
Which of the following will result in a shift in the demand curve for the new Kia Soul Car?
A. Falling petrol prices
B. Higher car prices of competitiors
C. A subsidy paid to producers of cars
D. Higher raw material prices in the production of cars.
I chose B. But the answer is A. Can anyone explain?
Very ambigious question both A and B could be considered correct. Because A decreases the cost of using a car, thus meaning more consumers are likely to use cars. An increase in the cost of a substitute to the car would also shift the demand curve.
Both A and B are correct in my opinion. Though A is probably the "best" answer if I absolutely had to choose as it is not clear what caused the higher car prices of competitors (it could have been a increase in demand for competitors cars and less demand for the kia), while petrol is more clear cut and clear as to it's cause and effect.
Post by: abcdqdxD on March 05, 2014, 08:33:00 pm
Which of the following will result in a shift in the demand curve for the new Kia Soul Car?
A. Falling petrol prices
B. Higher car prices of competitiors
C. A subsidy paid to producers of cars
D. Higher raw material prices in the production of cars.
I chose B. But the answer is A. Can anyone explain?
Higher prices set my competitors is a MOVEMENT along the demand curve, not a shift. Therefore, the only correct answer is A where demand has increased (shifted to the right) as cheaper fuel leads to greater demand for cars as a method of transportation. Technically speaking, you could argue for B and I must admit it isn't a great question.
Post by: chasej on March 05, 2014, 10:38:00 pm
Higher prices set my competitors is a MOVEMENT along the demand curve, not a shift. Therefore, the only correct answer is A where demand has increased (shifted to the right) as cheaper fuel leads to greater demand for cars as a method of transportation. Technically speaking, you could argue for B and I must admit it isn't a great question.
But it's saying higher car prices of competitors i.e. a substitute and the question is asking whether this would shift demand for a kia, a higher price for a substitute would likely cause a shift of demand to the right for kias.
Essentially, from the way I understand the question, the rise in price of competitors and the kia demand shift are on two separate supply/demand diagrams and being treated as two separate markets for products which are substitutes for eachother.
Post by: millie96 on March 08, 2014, 10:49:15 am
Post by: TazzyGirl on March 09, 2014, 01:36:39 pm
It means decisions about resource allocation can't be made either, so the market fails to work efficiently and society's overall wellbeing is reduced.
Governments can use legislation or laws to fix this, or things such as advertising campaigns in order to educate and inform consumers about the particular product. (QUIT campaign, which aims to encourage people to quit smoking)
Good luck, hope this helps :)
Post by: Politics on March 09, 2014, 03:27:53 pm
If there are a surplus of goods, then the suppliers drop the price to try to get rid of the shortage, while the prices are being lowered to try to restore eQ will the amount supplied increase or decrease? ?Also with the opposite way, if there is a shortage and suppliers are raising prices for profit, will the amount being supplied increase or decrease?
Any help would be much appreciated!
Post by: Summers on March 09, 2014, 04:14:41 pm
I'm kind of confused about when a market is attempting to restore equilibrium.
If there are a surplus of goods, then the suppliers drop the price to try to get rid of the shortage, while the prices are being lowered to try to restore eQ will the amount supplied increase or decrease? ?Also with the opposite way, if there is a shortage and suppliers are raising prices for profit, will the amount being supplied increase or decrease?
Any help would be much appreciated!
Hey you haven't been on Skype for a while,
Anywho, when there is a change in equilibrium as a result of a surplus/glut, the supplier will lower the price so demand will correspond with their current supply. The supplier will not increase or decrease their supply unless they experience a shortage as a result of the price lowering, and will thus increase their supply in the search for a more efficient equilibrium. To the second question, if there is a shortage and prices are raised, the supply would usually stay the same as demand will drop for the product. This is where you would start branching into hypothetical land where you would be like 'but, if this product had inelastic demand (PED is >1 I think, correct me if I'm wrong) the demand would stay the same with the shortage and the change in price, and a new equilibrium would be found with an increased price.' Always write about the e(a)ffect of a change too.
Post by: Politics on March 09, 2014, 06:06:15 pm
Hey you haven't been on Skype for a while,Thanks for explaining that, and yeah, my computer's psu blew up a month and a half a go (roughly) and i haven't got around to getting a new one yet, maybe in the holidays or sometime soonish. So i'm just using my mum's computer for surfing the web, hopefully will be back on soon though!
Anywho, when there is a change in equilibrium as a result of a surplus/glut, the supplier will lower the price so demand will correspond with their current supply. The supplier will not increase or decrease their supply unless they experience a shortage as a result of the price lowering, and will thus increase their supply in the search for a more efficient equilibrium. To the second question, if there is a shortage and prices are raised, the supply would usually stay the same as demand will drop for the product. This is where you would start branching into hypothetical land where you would be like 'but, if this product had inelastic demand (PED is >1 I think, correct me if I'm wrong) the demand would stay the same with the shortage and the change in price, and a new equilibrium would be found with an increased price.' Always write about the e(a)ffect of a change too.
Post by: M_BONG on March 10, 2014, 07:33:51 pm
Comment on the effect of SPC leaving the tomato processing industry on the price elasticity of demand. for Heinz canned tomatoes.
??
Someone help me pls. Price elasticity was not really covered well by our teacher.
Post by: chasej on March 10, 2014, 09:02:15 pm
"If a large oligopoly like SPC leaves the market, competitors like Heinz will have larger market share"
Comment on the effect of SPC leaving the tomato processing industry on the price elasticity of demand. for Heinz canned tomatoes.
??
Someone help me pls. Price elasticity was not really covered well by our teacher.
Explanation of elasticity:
Elasticity is the way in which demand and supply responds to price changes. Demand elasticity referring to the extent to which demand responds to price changes and supply elasticity the same for supply's responsiveness.
When supply/demand is inelastic it means S/D has a lower percentage change then the percentage change of prices. For example if prices went down 10%, and demand went up 2%, demand would be inelastic.
Elastic means the percentage of change in S/D occurring as a result of that price change would be greater than the change in price.
Unit elasticity means both percentages are equal.
Back to the question (this question requires a few levels of thinking-in a SAC situation I imagine it would be worth around 4 marks) :
Oligopoly is a market where a few large firms dominate the market. Thus a large firm like SPC leaving the market means the remaining large firms are likely to gain much more marketshare, thus competition would be greatly reduced and a duopoly/monopoly situation may occur.
SPC leaving the market would create less elasticity of demand (or in other words make demand more inelastic) in the market for Heinz, this is because with less competition in the market, consumers have no choice but to purchase from Heinz, meaning no matter what price changes occur it is likely consumers would still have to purchase tomatoes from Heinz (or their would be less options at minimum). Thus causing demand to be less responsive to price changes than before.
(If you look at problems associated with the market failure of market power this is actually one of the big problems, less competition=less options=firms can take advantage of that and charge high prices knowing consumers would probably still have to purchase their product, thus earning super normal profits (profits greater then they actually need to operate their business).
Post by: Summers on March 10, 2014, 10:11:46 pm
"If a large oligopoly like SPC leaves the market, competitors like Heinz will have larger market share"
Comment on the effect of SPC leaving the tomato processing industry on the price elasticity of demand. for Heinz canned tomatoes.
??
Someone help me pls. Price elasticity was not really covered well by our teacher.
Lol I got this on my first SAC ... COMPAK
Post by: TazzyGirl on March 11, 2014, 05:45:47 pm
Post by: chasej on March 11, 2014, 06:15:24 pm
I'm pretty confident in short answer questions for my upcoming SAC...but Multiple choice questions, I always stuff them up - I barely get half of them right. I have no idea how to fix this!
What's your current technique for answering MC? That's probably a good place to start.
Post by: Politics on March 11, 2014, 06:19:32 pm
I'm pretty confident in short answer questions for my upcoming SAC...but Multiple choice questions, I always stuff them up - I barely get half of them right. I have no idea how to fix this!Yeah i'm the same, through all my books i always seemed to stuff up basic, simple multiple choice questions, i think i am just going to make sure i double and triple check them to make sure i did them right, little marks like them can really make a difference.
Post by: chasej on March 11, 2014, 06:21:48 pm
Yeah i'm the same, through all my books i always seemed to stuff up basic, simple multiple choice questions, i think i am just going to make sure i double and triple check them to make sure i did them right, little marks like them can really make a difference.
Case in point: I probably would have got ~45 last year if I didn't make silly mistakes in MC in both SACs and the exam.
Post by: TazzyGirl on March 11, 2014, 07:50:55 pm
Post by: Summers on March 11, 2014, 09:34:24 pm
EDIT: MY technique is that I will do the multiple choice in reading time in my head and make the answers in my head. Then I'll go straight to short-answer and redo multiple choice after writing about all this stuff. Usually works well.
Post by: chasej on March 12, 2014, 12:05:19 am
Well I usually eliminate the options that definitely aren't the answer...but there's usually 1 that's almost right...so it confuses me!
Sometimes it can be useful to draw little diagrams or symbols next to the answers which are a bit unclear so you can get a better idea of the theory and figure out which answer is "best". Remember in cases where two possible answers appear to be partly correct you must always pick the "best" answer for the question. This is usually the effect that occurs as a direct result of whatever the question is about (sometimes another answer may be an effect of a scenario the question is posing however it is a indirect long term effect meaning the direct immediate effect is the best answer to the question).
It's critically important to learn the skill of being able to work the answers out for at least three quarters of the MC questions during reading time in my opinion however. But with practice you'll get their. If you have an iPhone you can buy an app called "economics tutor" which has hundreds of questions related to the study design and it gives you feedback/explanation of the correct answers. I found it a pretty good way to revise just when I was hanging around and wasn't bothered doing anything else other than playing with my phone.
Post by: TazzyGirl on March 12, 2014, 08:42:05 pm
Post by: alchemy on March 15, 2014, 11:45:35 pm
I have some questions for Unit 1/2.
What are some of the small and big problems stock markets can cause?
How are the laws of supply and demand similar/different in the stock market?
And also, what makes the idea of perfect competition not so realistic, although it forms the basis of economic theory?
I've tried researching these, but the internet is full of information that is way beyond what I know or what I'll need to know. Any help will be appreciated (+1 to all!)
Post by: millie96 on March 24, 2014, 09:53:53 pm
I understand that iron ore is considered inelastic to countries such as Japan and China, and therefore demand would remain constant despite the increase in price. i also understand that increasing price, balanced with inelastic demand, would increase profits to australia.
However in the answers it states that AD is increased due to a rise in export income????? What does this mean and why does AD increase?
Post by: chasej on March 24, 2014, 10:02:04 pm
hi everyone, i got this question in a practice sac and need help (5 marks)
I understand that iron ore is considered inelastic to countries such as Japan and China, and therefore demand would remain constant despite the increase in price. i also understand that increasing price, balanced with inelastic demand, would increase profits to australia.
However in the answers it states that AD is increased due to a rise in export income????? What does this mean and why does AD increase?
AD stands for aggregate demand. Was the question from an AOS1 sac or AOS2 sac? If it was an AOS1 sac, it's a bad question as AD is not part of the key knowledge for that AOS. If it was from a AOS2 SAC it's still a bit of a funny question as degree of elasticity/inelasticity isn't explicitly included in macroeconomics key knowledge in AOS2.
Aggregate demand is a macroeconomic concept and can be defined as "the total amount consumers, business and/or government are willing and able to spend on goods and services in an economy, during an given period of time".
The formula for aggregate demand is in the below spoiler:
Spoiler
AD=consumption expenditure (final goods and services purchased by consumers + Investment expenditure (essentially businesses purchasing capital)+G1 (government spending on final goods and services)+G2 (government spending on capital/investment items)+net exports (which is the total amount of exports from the economy less the total amount of imports into the economy.
In short AD=C+I+G1+G2+(X-M)
In short AD=C+I+G1+G2+(X-M)
Thus following the AD formula we can see that when export values increase, net export would increase, thus increasing aggregate demand.
Going further the inelasticity of the market for many of Australia's exports means that net exports is likely to increase during times of rising export prices, as demand would not fall, thus export values being quanity*price of exports would rise. Thus aggregate demand is likely to rise during times of inelastic export price rises.
Post by: millie96 on March 24, 2014, 10:23:25 pm
Thanks so much! So I guess you think of it as a chronological thing - instead of AD increasing due to increased prices, you could say that increased prices increases exports, which increases AD?
Post by: chasej on March 24, 2014, 10:34:14 pm
AOS2 sac!
Thanks so much! So I guess you think of it as a chronological thing - instead of AD increasing due to increased prices, you could say that increased prices increases exports, which increases AD?
The chain of events is, increased prices, increaes total export values, hence increase net exports this an increase in AD.
So yeh, to get full marks in a SAC/exam you really should be breaking down and explaining all the steps, as if you miss a step you aren't really demonstrating a knowledge in the way the theory is interrelating, which essentially is what economic assessments boil down to. You need to fully explain how a cause created the effect.
Post by: abcdqdxD on March 24, 2014, 10:40:26 pm
Post by: Summers on March 24, 2014, 10:48:33 pm
Post by: chasej on March 25, 2014, 12:14:48 am
Iron ore doesn't have inelastic demand. China's economic growth whilst still much better than most is in decline, and thus has been buying less iron ore than it has in the past from us. I'd say that inelastic demand would only be for goods/services for individual consumers, not for international firms or businesses.
All inelastic demand means is less reponsive to price changes, percentage wise then the price change itself. Just becuase demand decreases doesn't mean demand can't be inelastic.
The iron ore market is still fairly inelastic in terms of there being a need for iron ore regardless of price as iron ore is such a widely used material in many forms of production, thus demand is likely to be less responsive to changes in price as opposed to other markets.
Also Chinese economic growth, despite what many media reports have been saying, has remained relatively stable for the last few years and is likely to remain stable for at least the next year or two as per the chart in the below spoiler
Spoiler
(http://www.google.com.au/imgres?imgurl=&imgrefurl=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fbillconerly%2F2011%2F12%2F19%2Fchinas-economic-forecast-2012-2013-a-business-perspective%2F&h=0&w=0&tbnid=E7udJFFFoQ5_1M&tbnh=196&tbnw=257&zoom=1&docid=2WSKPpXu2wwcuM&ei=sS4wU4r-CMTHkwWSh4GYCQ&ved=0CAIQsCUoAA)
Post by: Summers on March 25, 2014, 08:28:24 pm
Post by: M_BONG on March 25, 2014, 10:45:08 pm
Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.
Having done three Commerce subjects (Acc, Legal, Eco) for some period in VCE, I definitely find Economics conceptually the hardest.
So perhaps you find it easy because your school SACs aren't difficult? Don't get complacent though, the VCAA exams looks really long and difficult so yeah you can't afford to do no work..
Post by: chasej on March 25, 2014, 10:57:08 pm
Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.
AOS1 is conceptually the hardest in my opinion, and historically the worst answered. If you nail AOS1 and can answer the exam style questions VCAA has thrown on the exam from that AOS, you're doing pretty well for AOS1.
The rest of the AOS's in my experience, were easier conceptually, however to do well in the other 3 AOS's you need need need need need to know current examples of economic events and policies and need to go beyond what the textbook provides, you really should learn the 2014-15 budget in extreme detail, in terms of the key policies and their effects, when the budget is released. This year is probably going to be a pretty difficult year to learn the budget also as I'm expecting the liberal gov. to really shake things up, this year would be the first year the new study design is applied to a liberal budget, so should be interesting to see how people go on the exam with them.
Post by: Summers on March 26, 2014, 03:33:58 am
Some things in economics absolutely stumped me - the most basic things, like how to draw a graph. But beyond that, for the first two SACS I just read the textbook pages once throughout on the morning of the SAC so I had an understanding, and through that understanding had the ability to tell a story. It surely isn't good for long term memory but it just seemed ridiculously easily. If AOS1 is the hardest conceptually I'm going to have a ball in this subject.
In saying that, I'm in quite a strong cohort and it is noticeable who actually tries and who doesn't as the results are at quite opposite ends with each other. I was told that you were unable to do well without practice questions but I'm finding as long as you have the knowledge you don't really have to apply it.
I literally know nothing about economic events and the word 'policy' makes me cringe. Hopefully I can get it under my belt though.
[Guess what I'm doing at 3:33AM in the morning when I have a SAC in a few hours :D Wonders of cramming]
Post by: millie96 on March 26, 2014, 06:48:41 pm
following the equation AD = C+I+G1+G2+[X-M]
Post by: chasej on March 26, 2014, 06:51:41 pm
Would you say that an increase in value for the $AUD decreases aggregate demand as exports (X) are decreased and imports (M) are increased?
following the equation AD = C+I+G1+G2+[X-M]
Yes. But remember you have to disucss the reasons as to why demand for imports would increase and demand overseas for Aussie exports would decrease.
That is one Australia dollar purchases more overseas currency, hence decreasing the price of imports denominated in foreign currency, increasing demand. With overseas currency buying less aussie currency, causing AUD denominated imports to increase cost overseas relative to other goods and services, thus decreasing export demand.
Post by: millie96 on March 27, 2014, 05:06:59 pm
can somebody please explain how externalities cause market failure? thanks! (sorry for so many questions about this AOS)
Post by: p.taaa on March 28, 2014, 11:08:16 pm
negative externalities: they are usually overproduced by the free market because they are usually a result of profitable/ self-interested activities (like smoking) so public benefits exceed private benefits. Leading to overproduction and people are worse off because it negatively effects their welfare
in both scenarios people are worse off than they should be if the government interfered. So resources in this way aren't allocated in a way to best satisfy individuals.
If the government interfered, they will extend production leading to positive externalities (i.e. education which they do) and restrict/ limit production leading to negative externalities (i.e. carbon tax, ETS). correcting the market failure through reallocation of resources because now people are better off.
can be said private costs are more equal to public costs or private benefits are more equal to public benefits
Hope this helps!
Post by: Summers on March 29, 2014, 12:32:53 pm
Hope this helps!Remember there are externalities in production and externalities in consumption.
Post by: abcdqdxD on March 29, 2014, 03:49:22 pm
say positive externalities: they are usually underproduced by the free market because they are usually unprofitable, so people aren't benefitting as much as they should be (private costs outweigh the public costs)
negative externalities: they are usually overproduced by the free market because they are usually a result of profitable/ self-interested activities (like smoking) so public benefits exceed private benefits. Leading to overproduction and people are worse off because it negatively effects their welfare
in both scenarios people are worse off than they should be if the government interfered. So resources in this way aren't allocated in a way to best satisfy individuals.
If the government interfered, they will extend production leading to positive externalities (i.e. education which they do) and restrict/ limit production leading to negative externalities (i.e. carbon tax, ETS). correcting the market failure through reallocation of resources because now people are better off.
can be said private costs are more equal to public costs or private benefits are more equal to public benefits
Hope this helps!
I think public/private benefit is more uni than VCE
Post by: watagal on April 01, 2014, 07:02:28 pm
Q.) Which of the following types of market failure is not part of the justification for taxation in the Australian economy?
(A.) All forms of market failure are used to justify taxation in the Australian economy.
(B.) Negative externalities
(C.) Public Goods
(D.) Positive externalities
I went for (A) simply because we can justify taxation for public goods as without taxation society would miss out on essential goods which would not be provided in a competitive market as there is no profit to be made out of it. We can justify taxation through negative externalities as parties undertaking transactions will not take into account externalities on third parties. E.G carbon Tax. Additionally there is a close link between public goods and positive externalities e.g. education creates positive externalities for society as an educated person is more likely to be able to support themselves not engage in crime etc. Hence positive externalities can be part of the justification for the taxation system as without tax the government would not have been able to provide greatly subsidised education thus there would be less educated people.
That is why i went for (A), however the answer according to my teacher is (D).
Is there something wrong with my reasoning?
Any help is appreciated Thank you.
Post by: abcdqdxD on April 01, 2014, 07:31:16 pm
Post by: watagal on April 01, 2014, 07:37:42 pm
Post by: chasej on April 17, 2014, 12:31:34 am
Hey all,
just wondering if we need to know all factors listed that affect aggregate demand and supply?
Can an exam question specifically refer to one factor?
Is this a valid exam question - EG. Explain how Real Unit Labor Costs (RULCs) affect Aggregate Supply.
I am only, at the moment, learning three factors for AD and AS... should I learn them all? Thanks.
You don't have to know all the factors. Last year I learned 4 demand and 4 supply factors. Ensure you can define the factor, explain it's effect on all the economic goals (by the end of the area of study) and most importantly know the statistics affecting the factor from this year and three years prior (so know how the factor changed over 2010-time of the exam) [you will have to update your notes to account for statistics relevant to the exam which didnt exist prior to your SAC]. Three factors are probably enough, but I felt more secure learning four-wasn't much extra to know and ensured there would be variety if two questions on the exam assessed similar content).
You would never be asked to explain the effect of one specific factor on the exam, as the study guide simply states you need to learn factors, which are of your choosing. Exam questions have always been like "Using the information in the table, identify a factor that might have contributed to the increase in the *snip* between June 2011 and December 2012, and explain why., (VCAA economics exam 2013 q.1.a., I snipped out a little of the question so people wouldn't know exactly what the question asked for the sake of being able to complete the prac exams without pre knowing the questions that much", so in that question you could have used any factor which related to the data provided (which was very broad data which related to all the factors possible).
Learning all the factors would just be a waste of time in basic terms, you only need to know three or four (very well).
Post by: M_BONG on April 18, 2014, 03:01:07 pm
Also, when explaining economic goals would you use "business and consumer confidence" as one factor affecting inflation? Or would you separate them - ie. factor one business confidence; factor two consumer confidence.
Thanks!
Post by: chasej on April 18, 2014, 03:04:05 pm
Cheers for the great advice Chasej.
Also, when explaining economic goals would you use "business and consumer confidence" as one factor affecting inflation? Or would you separate them - ie. factor one business confidence; factor two consumer confidence.
Thanks!
No problem. They're two separate factors (which effect different items in the AD equation also) so should be discussed separately, however they are so similar I would advise against using them both in the same response.
Post by: chasej on April 19, 2014, 10:11:39 pm
Didn't get a response for my previous post.. probably because it was too rant-like :P
I will re-ask it in a calmer tone.
In questions like "Explain two factors affecting Aggregate Demand"
If I say Factor 1 is Consumer Sentiment and a second is a second is disposable income
Do I need to define Aggregate Demand, Consumer Sentiment and Disposable Income?
A second question I have is: do we need to know in detail the Genuine Progress Indicator (GPI) .. my book uses it as an example for an alternative to GDP.. Do I need to know GPI in detail?
Thanks
For the first question, yes you would have to define all three. Don't just start each response off with definitions, that would be boring. but to accurately explain the answer to questions, you certainly would have to define those three key concepts. I've said it many times, economics is primarily a conceptual understanding based subject, like you certainly wouldn't get any marks just by blurting out definitions, but you do need to do some rote learning to properly answer questions. Basically, definitions alone won't earn you marks, but definitions are required to reach the standard required to get full marks. You could probably get an A or low A+ without definitions, but to bring you to the next level, you have to concisely define the key concepts in each response.
I don't think I have my old prac SACs to provide examples anymore as I gave them to my teacher to use for this year's class but I could try and ask if I could upload some exemplars if enough want.
For the second question, yes you have to know the alternatives to GDP in detail, a couple of years ago many students got stumped on a 4-marker (iirc) simply because they skimmed over alternatives and didn't learn enough detail. There are two in the textbook but generally the only ever ask you to answer questions about one of the two in exams (they give you the choice), so you're probably safe learning one in detail (define, know what it is/how it is calculated, compare in detail to GDP) and the other superficially (just define, know what it is, explain briefly).
Relevant study guide key knowledge point:
Quote
• limitations of GDP and alternative measures of living standards, including Genuine ProgressThe word including means you have to know both.
Indicator (GPI) and Measuring Australia’s Progress (MAP);
Post by: abcdqdxD on April 19, 2014, 11:21:50 pm
Post by: chasej on April 22, 2014, 02:12:26 pm
Also, in terms of remembering key statistics how would you guys go about it?For the statistics I memorised 1 year intervals (I think I learnt what it was around June each year for the past four years). Then in responses I would say something like "over 2013-14 consumer confidence trended upwards from x% in June 2013 to y% in June 2014".
Like, would you remember level of GDP growth for the past 4 years or just remember the 4 year average? Or do you not need to remember it at all?
I am looking at memorising unemployment rate, productivity, GDP and disposable incomes for the past 4 years.. Do you guys think this is a bit of an overkill?
Thanks again.
You also don't have to know the exact figures, for example if the growth rate went from 2.1% to 3.1% you'd be safe saying it went "upwards from around 2% to just above 3%"
Post by: millie96 on April 25, 2014, 07:03:08 pm
Post by: abcdqdxD on April 25, 2014, 09:04:49 pm
why do falling stocks cause inflation or increase prices?
I don't think that's part of the study design
Post by: millie96 on April 25, 2014, 10:05:25 pm
Post by: M_BONG on April 27, 2014, 08:07:47 pm
Was just doing some CPAP and TSSM questions..
The phrases "Terms of trade", "Current Account Deficit" and "Trade Weighted Index" all seem to be assumed knowledge and pop up as definition questions. Eg. define Terms of trade..
But
The Study Design does not mention those terms and I remember Chasej said you don't need to know all the factors affecting AD and AS... so wouldn't I be correct in saying that I don't need to know all the above three terms, since they all refer to a specific AD/AS factor?
Thanks!
Post by: chasej on April 27, 2014, 11:25:48 pm
Hey guys,
Was just doing some CPAP and TSSM questions..
The phrases "Terms of trade", "Current Account Deficit" and "Trade Weighted Index" all seem to be assumed knowledge and pop up as definition questions. Eg. define Terms of trade..
But
The Study Design does not mention those terms and I remember Chasej said you don't need to know all the factors affecting AD and AS... so wouldn't I be correct in saying that I don't need to know all the above three terms, since they all refer to a specific AD/AS factor?
Thanks!
All those terms are on the study design or directly implicated with terms which are on the study design.
First key knowledge dot point under U3 AOS2 external stability section:
Quote
the nature, significance and measurement of international transactions including the balance of payments, exchange rates, terms of trade and net foreign debt;
These things can be considered AD/AS factors however they have their own dot point requiring you to know them separately to AD/AS factors.
Post by: Jono_CP on May 04, 2014, 07:22:11 pm
Thank you!
Post by: D.J.#20 on May 04, 2014, 10:09:56 pm
Post by: chasej on May 04, 2014, 10:33:15 pm
Anyone have summarised notes on EG/ FE/ DIST ??
People say mine are pretty good for learning the theory. These notes are the whole course but it isn't hard to find what you're looking for. http://www.atarnotes.com/?p=notes&a=feedback&id=1276
Good luck!
Post by: abcdqdxD on May 05, 2014, 01:54:56 am
How does everyone deal/cope with the multiple choice questions??? Sometimes I feel like it just a process of luck... Does anyone have any tips or methods of going about multiple choice questions, in relation to economic growth and employment or in general? E.g. I got 4/5 for one multiple choice test relating to microeconomics, and got the easiest one wrong. And I studied super hard for supply and demand and only got 1/5 and nearly failed the SAC. Help would be much appreciated...
Thank you!
My advice is to go through each alternative carefully and eliminate alternatives one by one until you only have one left. Can be useful to draw supply/demand graphs or upward/downward arrows to signify effects on goals.
Post by: millie96 on May 11, 2014, 04:19:14 pm
Post by: chasej on May 11, 2014, 04:42:22 pm
How do changes in the budgetary policy affect inflation?
Budgetary policy essentially effects aggregate demand by either increasing or decreasing the G1 and G2 section of the AD equation. Hence a lower surplus or increase in defecit causes demand inflation by increasing G1/G2 and likewise a higher surplus or lower defecit decreases demand inflation by decreasing G1/G2 in very general terms.
To actually understand the effect of a budget the budget items itself must be looked at to determine the effect e.g. a defecit may be smaller decreasing G1/G2 however if this is due to many tax cuts the budget may have an expansionsery effect on AD hence increasing demand inflation by allowing consumers to spend more due to higher disposable incomes.
Post by: chasej on May 13, 2014, 06:50:42 pm
Hello guys,
I was just wanting to ask a question about what teachers can ask you on SACs because I am really disappointed. My first two SACS which was AOS1 split in two I received 36/40 and 40/40. For my second SAC which I sat last week I received 18.5/30 which is worth 30% of our Unit 3, whilst the first two was only worth 40% together. The average for the SAC was around ~20 with some really high performers such as myself getting quite poor results (not as dramatically bad as mine), and with the lower end of the cohort getting up higher, but it is fair to say that I have dropped enough marks for no return from my second top sport in the cohort to around 8th or 9th after this.
Regardless, here is the question. I was wondering what they can actually test you on? Although these components of the study design may be listed elsewhere, we haven't learnt them yet in those parts so yep. We learnt the dot points in AOS2 under ''The nature and purpose of macroeconomic activity,'' ''Strong and sustainable economic growth,'' and ''Full employment.'' This is my conundrum; under two of those headings, it says something generally about knowing factors about aggregate demand and supply that influenced the rate of economic growth in Australia for the past 4 years, and something to do with the economic cycle. Can the exam or SAC specify something such as 'exchange rate' or 'interest rates' be directly asked about in the question? The textbook that I used doesn't even have those components to do with agg demand and supply, and I was almost 100% certain that you could only be asked questions such as 'Describe two factors affecting aggregate demand' or something along those lines. I had a heated argument with my teacher about this because I was told this by a 1/2 teacher, and I'm almost positive I've read it somewhere else in the VCAA policies, and she just ignored me saying you can be taught on whatever whilst I continually referenced the study design.
Could someone please provide some clarity? I've fucked up my chance of doing well in the subject because of this unless I can somehow turn it back, because I just learnt 4 of my favourite agg supply/demand factors for each that I could talk about. :(
Thanks guys in advance!
The exam can never specify factors aside from those which are mentioned as having to know in the study design in other parts of the study design (e.g. exchange rate is expressively mentioned under external stability heading). The teacher has to the right to structure the questions however the want though, so any debate with them is fruitless, you have no recourse with VCAA as an individual (VCAA only considers complaints from school principles themselves). Only thing you could do is try and explain it to someone higher up e.g. VCE co-ordinator, but I imagine they would be reluctant to get involved in subject specific affairs.
Post by: M_BONG on May 13, 2014, 08:48:42 pm
Thanks. That sucks, because from learning off the study design I'm no longer going to get a 40! It is pretty ironic that the teacher is actually the VCE co-ordinator. I'm not really sure what external stability is, so I doubt they can mention something not relative to what you've studied as an a-ok reason to put some bullshit into the SAC. The SAC was purchased from CPAP, and their SACS are basically review questions just testing your knowledge in all areas rather than professional SACS with the worst stimulus ever. I'm not too sure that teachers are actually allowed to do that though? Isn't VCAA like the education body of Victoria and teachers follow their study design ... I think I might call VCAA tomorrow and ask because I know I'm not going to get the SAC scraped or anything and I'll just have to cop it, but it would be good for future reference.Dude you are complaining waaaaaaaay too much.
VCAA actually does receive complaints from individuals. Some kid in my 3/4 last year complained about us having a new teacher every week (had like 4 teachers) and they provided us with like free seminars for our subjects which nobody went to, and the school got a slap on the wrist.
Here is the thing: VCAA does not care if your teacher doesn't mark your SACs fairly as long as his marking criterias are fairly applied (ie. to all students).
Also, schools can definitely use other company's papers as SACs. My school gives out CPAP trial exam SACs and they are very fairly worded. Teachers have discretion on how they set SACs and these SACs are audited by VCAA (randomly) and they won't listen at all to your appeals because they will dismiss it as subjective opinion.
By the way, if you don't know what external stability is, you really shouldn't be blaming your teacher man. External stability is like one of the five key goals of the government's monetary policy and it's definitely in the study design as a core knowledge of VCE economics . Maybe open up your Economics textbook? You'll see there is a major chapter on that.
Post by: M_BONG on May 13, 2014, 09:14:34 pm
I never said they couldn't use other company's SACs; I just said that CPAP SACs are usually review question oriented rather than replicating exam style questions.
The SAC was purchased from CPAP, and their SACS are basically review questions just testing your knowledge in all areas rather than professional SACS with the worst stimulus ever. I'm not too sure that teachers are actually allowed to do that though?
2.
I'm not appealing to VCAA I'm not sure where you got that idea from.
I think I might call VCAA tomorrow and ask because I know I'm not going to get the SAC scraped or anything and I'll just have to cop it, but it would be good for future reference.[/b]
VCAA actually does receive complaints from individuals. Some kid in my 3/4 last year complained about us having a new teacher every week (had like 4 teachers) and they provided us with like free seminars for our subjects which nobody went to, and the school got a slap on the wrist.
3.
I'm not really sure why you're trying to be a smart ass.
I complained about one two things, I wouldn't turn your attitude into some sesquipedalian woo new big word-like teller of tales saying 'waaaaaaaaay.'
VCE may be your life but VCAA isn't some holy grail that disregards human life. hang on, I'm the one being the smartarse here?
4.
Thanks. That sucks, because from learning off the study design I'm no longer going to get a 40! It is pretty ironic that the teacher is actually the VCE co-ordinator. I'm not really sure what external stability is, so I doubt they can mention something not relative to what we've learned
I don't know what external stability is because I haven't learnt it? Kill me now that I'm not getting ahead of my class will you. I know it's hard to believe, but my Economics textbooks have been opened - I'm so sorry I don't study ahead of my class.
So. Here you go I have answered all your questions/accusations/attacks on me using your own words.
You obviously said you wanted to complain to VCAA. You obviously said schools can't use commercial SACs. You obviously said that external stability cannot be on the SAC because you haven't learned it. You obviously accused me of being a smartarse when you're initiating the personal attacks.
Oh sorry you can't take other people's opinion if they don't suit what you want them to be. Sorry mate, you asked a question, expect a frank answer. Not something that will sound good to you.
Post by: Jono_CP on May 13, 2014, 09:38:50 pm
Post by: chasej on May 13, 2014, 11:05:51 pm
See usually I don't bother with these online arguments because they end up wasting too much of my time. My previous message was not me trying to be a smartarse, it was me trying to answer your questions. I am sorry you take things so sensitively.
2. [/b]
VCAA actually does receive complaints from individuals. Some kid in my 3/4 last year complained about us having a new teacher every week (had like 4 teachers) and they provided us with like free seminars for our subjects which nobody went to, and the school got a slap on the wrist.
3.
4.
So. Here you go I have answered all your questions/accusations/attacks on me using your own words.
You obviously said you wanted to complain to VCAA. You obviously said schools can't use commercial SACs. You obviously said that external stability cannot be on the SAC because you haven't learned it. You obviously accused me of being a smartarse when you're initiating the personal attacks.
Oh sorry you can't take other people's opinion if they don't suit what you want them to be. Sorry mate, you asked a question, expect a frank answer. Not something that will sound good to you.
In all fairness man, that was really really harsh and such an attack like the one you did on 90ATAR was really uncalled for and jumped to many conclusions, yeh I've noticed 90ATAR complaining a fair bit, but the attack on his study ethics is quite uncalled for as many schools are just starting to learn external stability and break the U3aos2 sac into two parts hence on a few topics are on each. 90ATAR may not have been required to learn external stability yet.
I agree with your other points on the setting of SACs however.
Post by: M_BONG on May 14, 2014, 07:10:26 am
In all fairness man, that was really really harsh and such an attack like the one you did on 90ATAR was really uncalled for and jumped to many conclusions, yeh I've noticed 90ATAR complaining a fair bit, but the attack on his study ethics is quite uncalled for as many schools are just starting to learn external stability and break the U3aos2 sac into two parts hence on a few topics are on each. 90ATAR may not have been required to learn external stability yet.Dude when did I ever attack his study ethics?
I agree with your other points on the setting of SACs however.
Dude you are complaining waaaaaaaay too much.
Here is the thing: VCAA does not care if your teacher doesn't mark your SACs fairly as long as his marking criterias are fairly applied (ie. to all students).
Also, schools can definitely use other company's papers as SACs. My school gives out CPAP trial exam SACs and they are very fairly worded. Teachers have discretion on how they set SACs and these SACs are audited by VCAA (randomly) and they won't listen at all to your appeals because they will dismiss it as subjective opinion.
By the way, if you don't know what external stability is, you really shouldn't be blaming your teacher man. External stability is like one of the five key goals of the government's monetary policy and it's definitely in the study design as a core knowledge of VCE economics . Maybe open up your Economics textbook? You'll see there is a major chapter on that.
Tell me when in this comment did I attack his study ethic.
He got all worked up after this comment. Fine, I admit my "you complain waaaayy to much" was a bit unncessary...
EDIT: I just realised that open my economics textbook remark couldbe taken as sarcasm; but I literally meant for him to "open up his economics textbook" ; im sorry if you take everything as an attack. I don't even know 90atar, why would I make remarks about his study ethics...You (and 90atar) are the ones jumping to conclusions.
Post by: abcdqdxD on May 14, 2014, 06:52:53 pm
Post by: M_BONG on May 17, 2014, 03:58:07 pm
I know how to define living standards, but the challenge is in defining the "non-material" part of the question.....
Thanks!
Post by: chasej on May 17, 2014, 04:11:18 pm
Hi guys, can someone please define for me what "non-material living standards" is?Non-material living standards are all aspects of a persons life affecting their well being (and the well being of society as a whole) which are not related to a persons ability to access to good or services, these are very broad and include areas from happiness and health to family stability and freedoms.
I know how to define living standards, but the challenge is in defining the "non-material" part of the question.....
Thanks!
Post by: Jono_CP on May 17, 2014, 07:30:40 pm
Non-material living standards are all aspects of a persons life affecting their well being (and the well being of society as a whole) which are not related to a persons ability to access to good or services, these are very broad and include areas from happiness and health to family stability and freedoms.
Yep, absolutely.
This could also be indicated if manufacturers are working in an environment which is polluted. E.g. there material living standards may rise but at the cost of non-material living standards.
Also, someone may have a job that they really like but hate travelling to. E.g. an excess amount of traffic, having to get up early...
Material living standards are pretty straight forward, e.g. you have a decent amount of money or you don't.
Non-material living standards are more complicated in the sense that you can both be happy and sad within the environment of a particular job.
Generally however, Gallop Organisation has indicated only 20% of people are engaged in the work they do. Costing the economy around $380 billion dollars a year.
This is how non-material and material living standards intertwine and connect within the economy.
Post by: chasej on May 17, 2014, 10:44:02 pm
Yep, absolutely.Really good use of current examples and stats (y)
This could also be indicated if manufacturers are working in an environment which is polluted. E.g. there material living standards may rise but at the cost of non-material living standards.
Also, someone may have a job that they really like but hate travelling to. E.g. an excess amount of traffic, having to get up early...
Material living standards are pretty straight forward, e.g. you have a decent amount of money or you don't.
Non-material living standards are more complicated in the sense that you can both be happy and sad within the environment of a particular job.
Generally however, Gallop Organisation has indicated only 20% of people are engaged in the work they do. Costing the economy around $380 billion dollars a year.
This is how non-material and material living standards intertwine and connect within the economy.
Going further, one of the huge limitations of GDP is that it mostly completly ignores non-material living standards and measures overall living standards through materiality only. That's why over the years alternate measures of living standards such as GPI have become more prominent, and is one of their greatest strengths in that they can provide a better measure of non-material living standards and hence overall living standards relative to GDP.
Post by: coolrezaee on May 18, 2014, 11:01:29 am
How could the goal of full employment be achieved if there is a decrease in participation rate?
My answer: The goal full employment would be achieved if the participation rates were to decrease by employers having a smaller 'pool' of labour resources to choose from thus the shortage of labour would force them to employ the only available labour in the market hence the goal of full employment is achieved.
It was worth 2 marks, would i get my 2 marks?
Thanks
Post by: M_BONG on May 22, 2014, 06:50:23 pm
I am stuck on this:
Which of the following demand factors would be the most volatile?
A) Government Expenditure
B) Private Consumption Expenditure
C) (Exports - Imports)
D) Private Investment Spending
Also; Which of the following is the best definition for economic growth?
C)An increase in the value of goods and services produced over a period of time
D) An increase in the volume of goods and services produced over a period of time.
Is it value or volume?
Thanks guys!
Post by: chasej on May 22, 2014, 06:55:36 pm
Also; Which of the following is the best definition for economic growth?
C)An increase in the value of goods and services produced over a period of time
D) An increase in the volume of goods and services produced over a period of time.
Is it value or volume?
Thanks guys!
It is volume (usually expressed as "real value" which implies adjustment for inflation to determine the real value of increased production).
[Can't remember for sure the answer to the other question so will leave it to someone else, but I am 90% sure it is exports/imports as they are subject to volatile exchange rate markets and other global factors not occuring on a domestic scale].
Post by: M_BONG on May 22, 2014, 07:07:45 pm
It is volume (usually expressed as "real value" which implies adjustment for inflation to determine the real value of increased production).Oh ok; but I thought GDP was a value indicator not a volume indicator?
[Can't remember for sure the answer to the other question so will leave it to someone else, but I am 90% sure it is exports/imports as they are subject to volatile exchange rate markets and other global factors not occuring on a domestic scale].
Volume implies the quantity not the total dollar figure of goods and services produced?
Nevertheless, the answer is indeed, D (the volume); I probably would remember from now on it's volume not value but I just need an explanation on why..
Post by: chasej on May 22, 2014, 07:12:40 pm
Oh ok; but I thought GDP was a value indicator not a volume indicator?
Volume implies the quantity not the total dollar figure of goods and services produced?
Nevertheless, the answer is indeed, D (the volume); I probably would remember from now on it's volume not value but I just need an explanation on why..
Economics growth is an increase in production of goods and services. Yeh GDP is a value indicator, that's why to determine real economic growth the chain volume measure of GDP is used which multiplies prices from x amount of time ago by the amount of goods and services being produced now which determines the increase in volume of production. Economic growth is a change in volume. GDP is value at any given point in time. Real GDP is GDP adjusted for inflation/deflation so the two values (GDP from x time ago and current GDP) are comparable over time, thus is used to measure economic growth.
Post by: abcdqdxD on May 22, 2014, 08:25:32 pm
Hey
I am stuck on this:
Which of the following demand factors would be the most volatile?
A) Government Expenditure
B) Private Consumption Expenditure
C) (Exports - Imports)
D) Private Investment Spending
Option D is correct. (I) is most volatile.
Post by: M_BONG on May 22, 2014, 08:42:09 pm
Option D is correct. (I) is most volatile.Ok that is strange.
I chose external stability (chasej's answer) initially.. but the answer for this is Private Consumption Spending...
Is the QAT paper wrong?
Post by: abcdqdxD on May 22, 2014, 09:24:55 pm
Ok that is strange.
I chose external stability (chasej's answer) initially.. but the answer for this is Private Consumption Spending...
Is the QAT paper wrong?
If you go through the down under textbook, it actually states that I is most volatile so I would say it is a mistake by QATs
Post by: M_BONG on May 24, 2014, 11:17:29 pm
"Discuss one reason why the GDP is not an accurate indicator of changes in material living standards"
I said the GDP does not effectively measure the level of income equality and wealth distribution. It only measures the volume of total goods and services produced and thus does not indicate how well off the citizens of a country are.
This is a CPAP practice SAC question; in the marking scheme, income equality was not listed as a reason why GDP is not accurate. So is it a valid reason?
Thanks.
Post by: abcdqdxD on May 24, 2014, 11:24:40 pm
Can I get help with this question
"Discuss one reason why the GDP is not an accurate indicator of changes in material living standards"
I said the GDP does not effectively measure the level of income equality and wealth distribution. It only measures the volume of total goods and services produced and thus does not indicate how well off the citizens of a country are.
This is a CPAP practice SAC question; in the marking scheme, income equality was not listed as a reason why GDP is not accurate. So is it a valid reason?
Thanks.
yep its correct
Post by: sam.utute on May 31, 2014, 11:39:38 am
http://www.theage.com.au/business/university-fees-to-be-regulated-under-pynes-reforms-20140530-399pd.html
Post by: melbin123 on May 31, 2014, 11:31:49 pm
Post by: chasej on May 31, 2014, 11:35:58 pm
Is this where I post , if I need help with a question ?
Sure is.
Post by: M_BONG on June 01, 2014, 08:58:09 pm
"Discuss the likely impact of an appreciating Australian dollar on the net income component of the Current Account" 3 marks VCAA exam question.
I wrote that:
* An appreciating $AUD will see reduced foreign investment in the country since the purchasing power of foreign currencies is eroded due to the higher $AUD. Thus, multinational investors (eg. Ford) may likely offsource their investment from Australia to countries with a comparative advantage in lower currency costs. This has the effect of reducing the net income component of our net incomes.
But according to the VCAA examiner report:
"Students often confused net income with capital and investment flows or with service flows. Better answers talked about the valuation effect of an appreciating $AUD and were able to say that an appreciation of the $AUD will reduce net foreign debt to the extent it is denominated in foreign currencies. In turn, this will reduce the interest payments recorded in net incomes, thus improving the net incomes deficit."
So is the examiner report saying that my answer (ie. higher $AUD will see less net incomes through wages, investment) is wrong? And the only acceptable way to answer this is through the alleviation of our Net Foreign Debt?
Thanks!
*Also, how is Net Foreign Debt part of Net incomes?
Post by: Jono_CP on June 01, 2014, 09:12:55 pm
In relation to supply and demand factors affecting Inflation (there are so many!) but our school has hinted that we only need to know one demand and supply factor affecting inflation over the past 4 years for this SAC. Could anyone recommend to me any factors to focus on, e.g. our teacher said not to do consumer confidence and/or business confidence as this is too straight forward.
Post by: chasej on June 01, 2014, 09:34:38 pm
I have an Economics SAC on External Stability, Inflation and Equity of Income Distribution coming up.
In relation to supply and demand factors affecting Inflation (there are so many!) but our school has hinted that we only need to know one demand and supply factor affecting inflation over the past 4 years for this SAC. Could anyone recommend to me any factors to focus on, e.g. our teacher said not to do consumer confidence and/or business confidence as this is too straight forward.
A great one for external stability and inflation is exchange rates (also a requirement under study design) and interest rates (directly affects inflation as you will learn in u4 aos1 also).
Equity you don't need to learn aggregate demand/supply factors but rather the study design states you must know "factors" so just things which have effected equity, a good one to use is inflation rates and also the GST.
Post by: chasej on June 01, 2014, 09:39:38 pm
Hey can someone help me with this question?
"Discuss the likely impact of an appreciating Australian dollar on the net income component of the Current Account" 3 marks VCAA exam question.
I wrote that:
* An appreciating $AUD will see reduced foreign investment in the country since the purchasing power of foreign currencies is eroded due to the higher $AUD. Thus, multinational investors (eg. Ford) may likely offsource their investment from Australia to countries with a comparative advantage in lower currency costs. This has the effect of reducing the net income component of our net incomes.
But according to the VCAA examiner report:
"Students often confused net income with capital and investment flows or with service flows. Better answers talked about the valuation effect of an appreciating $AUD and were able to say that an appreciation of the $AUD will reduce net foreign debt to the extent it is denominated in foreign currencies. In turn, this will reduce the interest payments recorded in net incomes, thus improving the net incomes deficit."
So is the examiner report saying that my answer (ie. higher $AUD will see less net incomes through wages, investment) is wrong? And the only acceptable way to answer this is through the alleviation of our Net Foreign Debt?
Thanks!
*Also, how is Net Foreign Debt part of Net incomes?
Net Foreign Debt affects net incomes as the associated interest payments are recorded as a net incomes outflow. Interest repayment on debt is a major component of net incomes. An appreciating AUD means interest repayments denominated in overseas currency will decrease in Australian dollars, thus reducing net incomes outflow, reducing the net incomes defecit, which decreases the CAD, meaning Australia has a greater chance of being able to meet associated payments of the CAD without debt increasing to a level which harms internal stability, that is, Australia would achieve external stability.
(You're answer was sort of relevant but what VCAA would have been looking for was the reduced interest repayments.
(Not an exam quality answer but I tried to explain it simply).
Post by: Jono_CP on June 01, 2014, 09:42:54 pm
How much of the BOP do I need to know? It is quite complicated, is it more definition and for multiple choice questions? Or should I discuss the effect that the BOP has on the CAD?
Post by: chasej on June 01, 2014, 09:46:34 pm
Hey chasej,
How much of the BOP do I need to know? It is quite complicated, is it more definition and for multiple choice questions? Or should I discuss the effect that the BOP has on the CAD?
You need to know the BOP in detail, that is, know all the accounts it consists of, what they include/record and how they all effect each other, it seems complicated and it consistently comes up as a point many students find challenging so you're not alone in finding it difficult, but the good thing is most things in the course are quite a bit easier than it from then on.
I remember finding the BOP a little difficult, I basically had to memorize a picture of a BOP flowchart with all the accounts to understand it fully.
Post by: abcdqdxD on June 01, 2014, 09:50:46 pm
Net Foreign Debt affects net incomes as the associated interest payments are recorded as a net incomes outflow. Interest repayment on debt is a major component of net incomes. An appreciating AUD means interest repayments denominated in overseas currency will decrease in Australian dollars, thus reducing net incomes outflow, reducing the net incomes defecit, which decreases the CAD, meaning Australia has a greater chance of being able to meet associated payments of the CAD without debt increasing to a level which harms internal stability, that is, Australia would achieve external stability.
(You're answer was sort of relevant but what VCAA would have been looking for was the reduced interest repayments.
(Not an exam quality answer but I tried to explain it simply).
I agree with chasej. Difficult to give marks to what Zezima wrote because I don't think it was relevant to the question.
With regards to BOP, know the CAD super well, know the financial account well and capital account is rarely examined but good to know it briefly
Post by: Jono_CP on June 01, 2014, 09:53:20 pm
Post by: Jono_CP on June 01, 2014, 11:47:23 pm
When I am dealing with 'trend type questions', obviously quite crucial judging from previous exams and our teacher has been stressing this point, how do I structure my answer?
E.g. if it is on the exchange rate and analysing it over the past 4 years do I just go: definition, state that it is 'cyclical' and select the relevant years/statistics of depreciation and appreciation?
Usually I just went definition, cyclical trend and stated the majority of the years as a way to fill up the lines. Whilst I got full marks for this, my teacher is telling me to be more selective of the years that I put down, which frustrates me as I find that I have an extra 2-3 lines to fill in the short answer.
Any advice on trend questions would be much appreciated.
Thank you!
Post by: chasej on June 01, 2014, 11:57:34 pm
Hey,
When I am dealing with 'trend type questions', obviously quite crucial judging from previous exams and our teacher has been stressing this point, how do I structure my answer?
E.g. if it is on the exchange rate and analysing it over the past 4 years do I just go: definition, state that it is 'cyclical' and select the relevant years/statistics of depreciation and appreciation?
Usually I just went definition, cyclical trend and stated the majority of the years as a way to fill up the lines. Whilst I got full marks for this, my teacher is telling me to be more selective of the years that I put down, which frustrates me as I find that I have an extra 2-3 lines to fill in the short answer.
Any advice on trend questions would be much appreciated.
Thank you!
If the paper shows you a graph and then asks you to describe the trend all you need to say is that "from x time to y time z was trending a, and from c to d y was trending b".
You don't have to explain the factor itself or how it moves, just describe the trend that it is showing you using the rough times and figures.
(Unless I misinterpreted what you were asking as it's getting pretty late :P )
Post by: Jono_CP on June 02, 2014, 12:04:56 am
E.g. it is impossible to fill up the lines of a short answer question merely by describing the trend itself without mentioning the majority of years. Our teacher tells us to be selective but not much else, which frustrates me because there are quite a few lines for just a trend question!
Post by: abcdqdxD on June 02, 2014, 08:43:11 pm
A higher currency doesn't necessarily suggest decreased investment. On the contrary, the AUD has been quite high post-GFC because it is viewed as a 'safe-haven' for investors in that the currency is stable because Australia is politically and economically sound. High interest rates in Australia relative to the rest of the world has also pushed up the value of the AUD and we have actually seen more investment inflows into Australia.
Post by: abcdqdxD on June 02, 2014, 08:46:36 pm
You interpreted my question correctly, but I am still lost with this approach.
E.g. it is impossible to fill up the lines of a short answer question merely by describing the trend itself without mentioning the majority of years. Our teacher tells us to be selective but not much else, which frustrates me because there are quite a few lines for just a trend question!
Trend questions are allocated 2 marks. One mark for identifying the nature of the trend, one mark for using stats correctly.
For example: Economic growth as measured by Real GDP has trended upwards from 3% in 2012 to 4.2% in 2013. If either of trend direction or stats aren't in your response then you will lose marks.
Post by: Jono_CP on June 02, 2014, 08:48:05 pm
Post by: millie96 on June 05, 2014, 02:07:49 pm
Post by: abcdqdxD on June 05, 2014, 02:58:50 pm
What are the consequences of zero/very low inflation?
Low levels of economic growth
Post by: Politics on June 10, 2014, 05:17:50 pm
Post by: chasej on June 10, 2014, 05:56:45 pm
Just had my AOS 2 SAC today, i think i did pretty well, i was a bit offput by one of the questions (It wasn't an unusual question, but i just wasn't prepared at all) it was something along the lines of "Name two causes that cause inequity in income distribution" (it was a hypothetical question, we didn't have to relate it to current statistics or anything) and for one of my arguments i said Inflation. I said high rates of inflation greatly affects the poor as the rich can protect themselves better and the low income earners often find their real incomes decrease more relative to high income earners and this cause greater inequity (in essence). I spoke to a couple of people after and i got mixed feelings about it? What does you guys think? Myself i'm a bit iffy and will be happy with half a mark to be honest.
You answered about a quarter of the question to be honest. Inflation is one out of two factors and you explained inflation half way. Like you said the factor and the outcome. But you really need to explain the why. Like explain richer people can invest in assets which increase in value with inflation, protecting real net worth. While poorer people lose real income (as their incomes buy less goods and services at higher prices).
A few other factors are indirect proportional taxes, workplace law changes, superannuation changes, changes in redistribution of income eg. Welfare and income tax.
Post by: Jono_CP on June 10, 2014, 05:59:30 pm
Stuffed up multiple choice 5/10 and then aced short answer 30/30 for the last SAC. Go figure...
Have I ruined my chances at gettin 20+ for Economics?
Chasej were you averaging like 90's to get the 40+?
Post by: chasej on June 10, 2014, 10:12:56 pm
Ended Unit 3 with an A, overall 85%. Which would be top 3.
Stuffed up multiple choice 5/10 and then aced short answer 30/30 for the last SAC. Go figure...
Have I ruined my chances at gettin 20+ for Economics?
Chasej were you averaging like 90's to get the 40+?
I averaged low 90's for U3, mid 90's for U4, both scaled up to 96/97 respectively. Got a low A+ on the exam which is what brought my score to low 40's.
You are definitely in good steed for a 40+ if you average 90+ after scaling on SACs. Top 3 is a good position provided the top 3 in your cohort A+ the exam, then you're set.
Post by: Hannibal on June 16, 2014, 09:25:06 pm
Thanks in advance :)
Post by: Jono_CP on June 16, 2014, 09:29:10 pm
Post by: Jono_CP on June 25, 2014, 05:18:17 pm
Post by: Jono_CP on June 25, 2014, 05:38:39 pm
Post by: chasej on June 25, 2014, 09:31:24 pm
?
I think your issue may be that you are reading the questions to fast and missing out on those little nuances which change the answer, although the 2nd question is pretty badly worded.
For the 1st question:
You're asked what decreased the underlying defecit, decreasing the defecit means government payments are exceeding receipts by a lesser amount than before. By process of elimination, the medibank option although an increase in receipts is one off and thus does not effect the underlying defecit. Interest rates have no direct effect on the budget outcome.
Those ones you should eliminate immediatly and then you're left with two. Option C increase payments, which increases the defecit. However option D increases receipts through increased taxation, reducing the defecit, hence is the correct answer.
For the 2nd question:
What the question is essentially asking (in very bad wording), is what happens to the budget outcome when economic growth is increasing and government makes no discretionary changes. A we eliminate immediatly as it talks about the discretionary section of the budget and the question specifically excludes such items. B is incorrect as the defecit will decrease in times of increased growth (as those relying on welfare such as unemployed decrease and government starts collecting more incomes taxes). C again talks about the structural outcome which is irrelevant. D is correct as the decreased defecit as a result of economic growth increasing decreases the net aggregate demand the government is contributing to the economy, hence reducing economic activity.
Advice:
For MC you need to fully read the question and break down what it is asking. For most questions you should determine the answer before you even read the available options. For example if a question asks "what happens to the cyclical component of budget in times of decreased economic growth", I can immediatly dejuce the correct answer would involve something which decreases receipts and increases payments in the budget, hence reducing a surplus or increasing a defecit. Highlighting key words in the question and subsequently available answers is a great way to make sure you fully read and understand the question.
Post by: Jono_CP on June 25, 2014, 09:45:49 pm
I think your issue may be that you are reading the questions to fast and missing out on those little nuances which change the answer, although the 2nd question is pretty badly worded.
For the 1st question:
You're asked what decreased the underlying defecit, decreasing the defecit means government payments are exceeding receipts by a lesser amount than before. By process of elimination, the medibank option although an increase in receipts is one off and thus does not effect the underlying defecit. Interest rates have no direct effect on the budget outcome.
Those ones you should eliminate immediatly and then you're left with two. Option C increase payments, which increases the defecit. However option D increases receipts through increased taxation, reducing the defecit, hence is the correct answer.
For the 2nd question:
What the question is essentially asking (in very bad wording), is what happens to the budget outcome when economic growth is increasing and government makes no discretionary changes. A we eliminate immediatly as it talks about the discretionary section of the budget and the question specifically excludes such items. B is incorrect as the defecit will decrease in times of increased growth (as those relying on welfare such as unemployed decrease and government starts collecting more incomes taxes). C again talks about the structural outcome which is irrelevant. D is correct as the decreased defecit as a result of economic growth increasing decreases the net aggregate demand the government is contributing to the economy, hence reducing economic activity.
Advice:
For MC you need to fully read the question and break down what it is asking. For most questions you should determine the answer before you even read the available options. For example if a question asks "what happens to the cyclical component of budget in times of decreased economic growth", I can immediatly dejuce the correct answer would involve something which decreases receipts and increases payments in the budget, hence reducing a surplus or increasing a defecit. Highlighting key words in the question and subsequently available answers is a great way to make sure you fully read and understand the question.
Thank you so much chasej, brilliant advice as per usual!!!! :) much appreciated.
As well as reading the question too quickly, could this also be a comprehension issue? e.g. not understanding the content really well and just rote learning? I think I need to understand these concepts in order to get the multiple choice correct.
Do you recommend that I use an open book format when practicing multiple choice questions? How do I understand the content in economics as opposed to just note-taking etc??? Keeping up with the economics news?
Your knowledge was superb, and something even though it not possible for an incompetent such as myself, I aspire towards it nonetheless.
Thanks again!
Post by: chasej on June 25, 2014, 09:59:45 pm
Thank you so much chasej, brilliant advice as per usual!!!! :) much appreciated.
As well as reading the question too quickly, could this also be a comprehension issue? e.g. not understanding the content really well and just rote learning? I think I need to understand these concepts in order to get the multiple choice correct.
Do you recommend that I use an open book format when practicing multiple choice questions? How do I understand the content in economics as opposed to just note-taking etc??? Keeping up with the economics news?
Your knowledge was superb, and something even though it not possible for an incompetent such as myself, I aspire towards it nonetheless.
Thanks again!
Thanks mate, appreciate the compliments :)
Well last year my study consisted of, pre-reading before class, then writing handwritten notes with class, typing those notes, then cross-checking those notes with the text to ensure I didn't miss anything pertinent.
Then I would study the heck out of those notes, not to memorise them, but rather read through them until I got to the point where I understoof the way the concepts were interelated. I did a fair few flow charts to do this, like you put on concept in a box and link them to another with an other and make a note of the connection that makes that arrow.
In my opinion to ensure you understand you should be doing around 125+MC and 7-8 SACs worth of short answer in the lead up to a SAC, that way there's pretty much no question you can be asked which you haven't at least seen a varient of before. Meaning that hopefully you've identified any areas you don't get and rectified your knowledge.
Rote-learning is probably what's holding you back, like short answer you can probably do alright if you know definitions and understand what's going on in the economy and can make logical links. But MC are very theory based and that's what you need to understand. Especially because MC kind of force you into thinking and applying your knowledge one way whereas short answer often provide a little flexibility to how the question is answered.
Post by: abcdqdxD on June 26, 2014, 08:05:11 pm
Post by: chasej on June 26, 2014, 08:08:43 pm
125 MC for a SAC is pretty crazy. I don't think u need to do many to be honest. If you know the content well, you should know the answers straight away. Do MC closed book and timed.
I meant as you go along studying, like 20 from each chapter in the text, then what the prac SACs give etc.
It's pretty easy to make 125 over normal study of an AOS.
I guess it's different for everyone but I found it helpful doing a lot of MC. I don't really like MC at all though tbh.
Post by: millie96 on July 01, 2014, 04:57:49 am
Post by: abcdqdxD on July 01, 2014, 02:37:49 pm
how does a contractionary budget actually slow AD, and how does expansionary increase AD? can someone please explain the process thanks
Expansionary budget: Increase 'G" -> increase AD -> increase eco growth (thereby expansionary by definition) and vice versa for contractionary
Post by: Rachelle on July 04, 2014, 12:48:40 pm
Thanks mate, appreciate the compliments :)In saying that with SA you can be more flexible, could you rote learn the content and apply it to such questions?
Well last year my study consisted of, pre-reading before class, then writing handwritten notes with class, typing those notes, then cross-checking those notes with the text to ensure I didn't miss anything pertinent.
Then I would study the heck out of those notes, not to memorise them, but rather read through them until I got to the point where I understoof the way the concepts were interelated. I did a fair few flow charts to do this, like you put on concept in a box and link them to another with an other and make a note of the connection that makes that arrow.
In my opinion to ensure you understand you should be doing around 125+MC and 7-8 SACs worth of short answer in the lead up to a SAC, that way there's pretty much no question you can be asked which you haven't at least seen a varient of before. Meaning that hopefully you've identified any areas you don't get and rectified your knowledge.
Rote-learning is probably what's holding you back, like short answer you can probably do alright if you know definitions and understand what's going on in the economy and can make logical links. But MC are very theory based and that's what you need to understand. Especially because MC kind of force you into thinking and applying your knowledge one way whereas short answer often provide a little flexibility to how the question is answered.
Also, where can we find to practice 125+ MC? I heard that the checkpoints weren't that good.
Would you recommend an economics dictionary to rote learn terms, or rather ones confined in the textbook?
Thanks :)
Post by: abcdqdxD on July 04, 2014, 10:29:14 pm
In saying that with SA you can be more flexible, could you rote learn the content and apply it to such questions?
Also, where can we find to practice 125+ MC? I heard that the checkpoints weren't that good.
Would you recommend an economics dictionary to rote learn terms, or rather ones confined in the textbook?
Thanks :)
Practice SACs from teachers and the Indigo study guide is a good start. Would recommend having fundamentals textbook if you're not using it already.
Post by: abcdqdxD on July 09, 2014, 08:57:45 am
Ok I understand what automatic and discretionary stabilisers are; but is an increase in welfare payment an automatic or discretionary stabiliser?
Ie. in periods of recessions there is likely to be an increase in people unemployed, hence more welfare payments and more spending (since low income earners spend larger proportion of incomes). But is this an example of the government *deliberately* using its discretionary stabiliser to increase economic growth or is it an automatic process?
EDIT:
also, are transfer incomes and welfare payments the same thing? would it be just repititive to use them one after the other?
Welfare payments are automatic as it varies based on the level of AD and eco growth. Can be discretionary if govt changes rate of welfare indexation/payment rates.
Can treat transfer and welfare being the same thing in the scope of the VCE course. However, they are technically not the same.
Post by: millie96 on July 09, 2014, 09:15:42 pm
Also can we use facts and information from any of the previous budgets or is it best to just talk about 2014/15
Post by: abcdqdxD on July 11, 2014, 10:57:07 am
Will we ever get asked about a specific fact about previous budgets?
Also can we use facts and information from any of the previous budgets or is it best to just talk about 2014/15
Unlikely but possible.
I would focus on the current budget, but current policies implemented previously (such as NBN) can still be used.
Post by: millie96 on July 21, 2014, 09:54:35 pm
e.g. explain the effectiveness of the budgetary policy in achieving the goal of low inflation over the past four years (usually 4-6marks)
Would you talk about strengths/weaknesses of the budgetary policy in achieving low inflation e.g. automatic/discretionary stabilisers etc, or trends over the past four years (such as how it was ineffective in 2012/13 for example)
thanks
Post by: chasej on July 21, 2014, 11:10:11 pm
how do you approach questions which ask about the effectiveness of the budgetary policy in achieving a goal in the past four years?
e.g. explain the effectiveness of the budgetary policy in achieving the goal of low inflation over the past four years (usually 4-6marks)
Would you talk about strengths/weaknesses of the budgetary policy in achieving low inflation e.g. automatic/discretionary stabilisers etc, or trends over the past four years (such as how it was ineffective in 2012/13 for example)
thanks
I would basically define the goal of low inflation. Then start talking about the last four budgets in order from oldest to newest explaining the budget outcome and some major policy examples briefly and explaining how that would effect the goal of low inflation for each budget. Then come to some conclusion as a last sentence like "Although in x budget there was likely to be an inflationary impact overall the government's aim of budget balance has been achieved and thus the goal of low inflation is likely to have a greater chance of being achieved given the government's budgetary policy over the past four years".
This question is asking for you to talk about real world practical things given the "over the last 4 years" statement, hence simply talking about strengths and weaknesses and ways the policies effect low inflation would not suffice, and would at most earn you half the available marks.
Post by: abcdqdxD on July 22, 2014, 02:21:54 pm
I would basically define the goal of low inflation. Then start talking about the last four budgets in order from oldest to newest explaining the budget outcome and some major policy examples briefly and explaining how that would effect the goal of low inflation for each budget. Then come to some conclusion as a last sentence like "Although in x budget there was likely to be an inflationary impact overall the government's aim of budget balance has been achieved and thus the goal of low inflation is likely to have a greater chance of being achieved given the government's budgetary policy over the past four years".
This question is asking for you to talk about real world practical things given the "over the last 4 years" statement, hence simply talking about strengths and weaknesses and ways the policies effect low inflation would not suffice, and would at most earn you half the available marks.
Hmm but if it was 4-6 marks talking about 4 budgets is way overkill imo. I think I would pull out AS policies from the budget (e.g. infrastructure, NBN) and talk about how this has expanded AS and placed downward pressure on inflation to achieve the goal. Agree that strengths/weaknesses isn't relevant, "evaluate" type questions have been removed from the current study design.
Post by: sam.utute on August 01, 2014, 10:04:43 pm
Hi everyone :)
I was reading one of the Economics Assesment Reports, it said:
"to gain full marks, students must indicate that the GST is a proportional (flat rate) tax but is regressive in its applications".
So, would I need to say that for something like indirect taxes as well?
"eg. indirect taxes are usually a flat rate payment passed onto buyers of g/s but it can be either regressive (eg. carbon tax) or progressive (luxury car tax)?"
I guess my question is, do I need to clarify that indirect taxes are proportional but application is progressive/regressive?
My understanding of the quote from the assessment report:
Students usually categorise taxes into three broad categories:
Progressive, regressive and proportional.
The statement clarifies that GST is an example of a proportional tax (10% on top of the cost) that operates in a regressive manner.
I don't think you can make the statement that "indirect taxes are proportional". Some are, but not all.
You have to be super careful how you label certain things, and the examiners will be taking marks off for incorrect use of terminology.
Post by: chasej on August 01, 2014, 10:09:28 pm
My understanding of the quote from the assessment report:
Students usually categorise taxes into three broad categories:
Progressive, regressive and proportional.
The statement clarifies that GST is an example of a proportional tax (10% on top of the cost) that operates in a regressive manner.
I don't think you can make the statement that "indirect taxes are proportional". Some are, but not all.
You have to be super careful how you label certain things, and the examiners will be taking marks off for incorrect use of terminology.
I actually think my teacher taught me to use the word proportional when defining indirect taxes, I can't remember exactly though. I might check my old notes to see what I defined indirect tax as.
Edit: Can't find my definition but found this:
From: http://www.investopedia.com/terms/i/indirecttax.asp
Quote
Indirect taxes can also be defined as fees that are levied equally upon taxpayers, no matter their incomehence these taxes are all proportional and have a regressive effect as they impact the incomes of lower income earners more so than higher income earners.
Post by: abcdqdxD on August 02, 2014, 01:46:01 pm
Post by: Jono_CP on August 02, 2014, 04:07:07 pm
Post by: chasej on August 02, 2014, 04:13:36 pm
Hi could I have some assistance with this question please? I am confused as it does not mention specific budget policies for the question, rather the budget outcome. "The forecasted budget outcome for 2014-15 is -$40.8 billion. Explain how the budget outcome may affect the achievement of full employment."
This question is asking you to discuss how the budget outcome effects the goal of full employment. So basically you would explain a defecit means expenditure exceeded receipts hence the government is having the effect of increasing AD through spending in G1 and G2 which causes suppliers to respond by increasing production to meet this increased demand, creating the need for more employees, reducing cyclical unemployment helping to achieve the goal of full employment.
If the question is for 4 or so marks or more you should also discuss the context of the budget in terms of the discretionary/automatic changes which effected the budget and the way this budget is compared to those of previous years, to put the changes to AD in context.
For example you may want to explain that the government is trying to reducing the defecit and achieve surplus, ultimately meaning this effect on AD would begin to be contractionery.
If the question was for even more marks you could discuss specific policies aimed at achieving full employment in the budget to show you're keeping up with current events and not just the theory of "budget outcome=this effect".
Post by: Jono_CP on August 03, 2014, 12:50:39 am
This question is asking you to discuss how the budget outcome effects the goal of full employment. So basically you would explain a defecit means expenditure exceeded receipts hence the government is having the effect of increasing AD through spending in G1 and G2 which causes suppliers to respond by increasing production to meet this increased demand, creating the need for more employees, reducing cyclical unemployment helping to achieve the goal of full employment.
If the question is for 4 or so marks or more you should also discuss the context of the budget in terms of the discretionary/automatic changes which effected the budget and the way this budget is compared to those of previous years, to put the changes to AD in context.
For example you may want to explain that the government is trying to reducing the defecit and achieve surplus, ultimately meaning this effect on AD would begin to be contractionery.
If the question was for even more marks you could discuss specific policies aimed at achieving full employment in the budget to show you're keeping up with current events and not just the theory of "budget outcome=this effect".
Thanks so much, makes perfect sense. Didn't think that a deficit originally would actually help full employment on first thought, but given the spending on G1 + G2 I can see clearly now, the rain has gone.
Two more questions I have if anyone is willing to answer (verbatim off a practice SAC):
"Explain one reason for a possible increase in the cash rate in 2014."
"Explain (via one transmission mechanism) how the utilisation of monetary policy would affect the achievement of the economic goal of low inflation." (If it helps, I have chosen to focus on the transmission mechanisms of: Cost of Credit (savings and investment) & Cash Flows).
NB: I am going to need to practice multiple choice tomorrow (well actually today since I am posting this when the clock strikes midnight), I am studying Budgetary Policy & Monetary Policy. I feel ok about the short answer but I am notoriously scared to death and do not do well with the multiple choice. I also understand that anything can happen on a given SAC or Exam day, so even my short answer capabilities don't mean anything. E.g. everyone starts at a mark of 0/50. Any general tips on the multiple choice and to a lesser extent (hypothetically speaking) short answer?
It is a 50 mark SAC, with 30 marks short answer + 20 marks multiple choice (10 x 2) and we only have about 50-55 minutes. Our teacher said we could possibly extend into recess, so maybe 1 hour to 1 hour and 5 minutes at maximum.
There will be time constraint pressure, my nerves will rise unbidden and threaten to shake my conviction and as well as my fear of multiple choice to add some more salt into my glorified wounds. Any tips on how to cope with these intense conundrums?
Thank you!
Post by: abcdqdxD on August 03, 2014, 08:55:34 am
It is a 50 mark SAC, with 30 marks short answer + 20 marks multiple choice (10 x 2) and we only have about 50-55 minutes. Our teacher said we could possibly extend into recess, so maybe 1 hour to 1 hour and 5 minutes at maximum.
There will be time constraint pressure, my nerves will rise unbidden and threaten to shake my conviction and as well as my fear of multiple choice to add some more salt into my glorified wounds. Any tips on how to cope with these intense conundrums?
Learn to deal with pressure. Write as fast as you can and always keep an eye on the clock. Figure out what order you're going to do the SAC in during reading time. Also do MC in reading time. Aim to do MC in about 5 minutes and leave yourself 50 minutes to do 30 marks of SA.
Post by: M_BONG on August 04, 2014, 05:16:50 pm
"Distinguish between fiscal balance and underlying cash balance".
Two questions:
a) Is this even on the Study Design?
b) The textbook defines fiscal balance as a strong and sustainable position where the government's medium term fiscal strategy is met, where budget surpluses occur regularly to prevent overwheming deficits that requires large debt repayments for future generations.
However, I just googled fiscal balance and it was defined as "The fiscal balance is an accrual measure that shows whether the Government has to borrow from financial markets to covers its activities."
So, the textbook definition says fiscal balance is a *positive* thing but google says it is a *neutral* indicator. Which one is more right, or would both get full marks?
Thanks! Any input appreciated
Post by: chasej on August 04, 2014, 05:40:18 pm
Was just looking at past SACs, there was this four marker on our 2010 SAC. Looks really dodgy.
"Distinguish between fiscal balance and underlying cash balance".
Two questions:
a) Is this even on the Study Design?
b) The textbook defines fiscal balance as a strong and sustainable position where the government's medium term fiscal strategy is met, where budget surpluses occur regularly to prevent overwheming deficits that requires large debt repayments for future generations.
However, I just googled fiscal balance and it was defined as "The fiscal balance is an accrual measure that shows whether the Government has to borrow from financial markets to covers its activities."
So, the textbook definition says fiscal balance is a *positive* thing but google says it is a *neutral* indicator. Which one is more right, or would both get full marks?
Thanks! Any input appreciated
Definitely on the study design.
Fiscal balance has two meanings, the one about achieving a budget balance and a certain method of determining the budget outcome.
The former is more relevant so use that one.
Post by: Jono_CP on August 04, 2014, 07:59:33 pm
Post by: M_BONG on August 04, 2014, 08:03:44 pm
Is the Terms of trade on the study design? This popped up randomly on our budgetary policy test and I was unprepared for a 'terms of trade' question which I think is unrelated to the study design. Might contact VCAA if I didn't receive full marks for thatYes, absolutely. Terms of trade is on the Study Design; it's a key factor listed.
Also, your school has discretion to set any SAC they want - even if it's not within the SD, as long as the marking criteria is consistent for everyone.
Post by: Jono_CP on August 04, 2014, 08:05:42 pm
Yes, absolutely. Terms of trade is on the Study Design; it's a key factor listed.
Also, your school has discretion to set any SAC they want - even if it's not within the SD, as long as the marking criteria is consistent for everyone.
Oh okay, thanks for the clarification. Is it really on the study design for budgetary policy? Must have missed it...
Post by: M_BONG on August 04, 2014, 08:09:18 pm
Oh okay, thanks for the clarification. Is it really on the study design for budgetary policy? Must have missed it...No they dont list it under budgetary policy; it's under Unit 3 AOS 2b (external stability) and they can ask things from other areas of study in SACs
Post by: Jono_CP on August 04, 2014, 08:26:10 pm
before, my fault :[
Post by: demand&supply on August 18, 2014, 09:41:40 am
Thanks.
Post by: chasej on August 18, 2014, 03:13:11 pm
Can someone please tell me a new environmental policy introduced in 2014 by the Liberal Party? One that I can use for the upcoming AS SAC and possibly the exams.
Thanks.
Do you have to use a 2014 policy? The carbon tax would be way easier to learn and explain than any of the new liberal policies. Plus I don't actually think the libs have passed a new major policy yet?
Post by: demand&supply on August 18, 2014, 05:32:52 pm
Post by: Jono_CP on August 18, 2014, 05:41:34 pm
Yer my teacher told me to, I know Carbon Tax is much easier to understand but because it is abolished my teacher wants one introduced by the Liberal party, such as the Emission Reduction Fund
Yeah our teacher said to avoid the carbon tax, due to the complexities involved with the Senate.
Post by: chasej on August 18, 2014, 11:37:49 pm
Yer my teacher told me to, I know Carbon Tax is much easier to understand but because it is abolished my teacher wants one introduced by the Liberal party, such as the Emission Reduction Fund
Ah alright. I don't think that many past economics students in vce would be able to help you because the vast majority of us would have done carbon tax so you're probably best of asking your teacher to help you out
Post by: Politics on August 19, 2014, 08:02:43 am
Post by: millie96 on August 20, 2014, 02:57:50 pm
they're conflicting this year as the budget is contractionary where as the monetary policy is expansionary
Post by: Politics on August 22, 2014, 04:05:58 pm
Post by: abcdqdxD on August 22, 2014, 07:47:46 pm
When the RBA buys Australian dollars, is that money taken out of the foreign exchange market circulation?
yep, rba is just another buyer in the market
Post by: Politics on August 24, 2014, 08:50:08 pm
Post by: chasej on August 24, 2014, 08:57:46 pm
Anyone have any examples of Automatic Stabilizers in the 2014-15 budget? Would something like the changes to unemployment benefits be one?
Automatic stabilizers are parts of the budget which change in reaction to the economy cycle with no government intervention. Changes to the structure of unemployment benefits wouldn't count, as that's a conscious decision by government, but more people going on those benefits due to higjer unemployment due to lower economic activity does count as it changed the budget without any direct government decision.
It's not really specific policy but the way that policy is designed to change in reaction to the economic cycle.
Post by: Jono_CP on September 01, 2014, 07:53:42 pm
Post by: Jono_CP on September 01, 2014, 07:54:40 pm
Post by: Jono_CP on September 01, 2014, 07:55:21 pm
Post by: Jono_CP on September 01, 2014, 07:56:18 pm
Post by: Jono_CP on September 01, 2014, 07:57:10 pm
Post by: Jono_CP on September 01, 2014, 07:58:15 pm
Post by: millie96 on September 07, 2014, 11:00:15 am
Post by: jia0020 on September 21, 2014, 03:20:36 pm
Are we allowed to use the carbon tax on the exam even though its abolished?
Yes We Are. The Carbon Tax or the new Emissions Trading Scheme are allowed to be used because it is a form of Environment or Aggregate Supply Policy.
Post by: Rachelle on September 21, 2014, 06:54:47 pm
Post by: Jono_CP on September 22, 2014, 10:30:52 pm
"Describe the effect of a high Australian dollar on the goal of low inflation."
The examiners report suggests that the value of the dollar does not have a direct effect on purchasing power. Although, unless I am mistaken, it contradicts itself by stating that a "highly valued Australian dollar means the cost of local businesses importing goods and capital goods will be cheaper in terms of $AUD?"
Post by: M_BONG on September 22, 2014, 10:37:19 pm
No idea about this question from the 2013 Economics Exam:Yeah but that's not a direct effect. It's only when the producers pass on the higher costs of production (cost inflation) onto the consumer that we experience inflation, so it's more so an indirect effect.
"Describe the effect of a high Australian dollar on the goal of low inflation."
The examiners report suggests that the value of the dollar does not have a direct effect on purchasing power. Although, unless I am mistaken, it contradicts itself by stating that a "highly valued Australian dollar means the cost of local businesses importing goods and capital goods will be cheaper in terms of $AUD?"
Other things you can talk about:
High AUD -> less demand from overseas on our exports (X) as they have reduced purchasing power, per unit of their currency. This reduces demand inflationary pressures, especially in an economy near productive capacity.
High AUD -> makes imports from overseas relatively cheaper for Australian producers. In the short term, this reduces cost inflation as costs of production should decrease. IN THE LONG TERM, productive capacity is expanded (as businesses invest more on capital goods and investment (I) from cheaper prices overseas), reducing demand inflation as productive capacity is expanded.
Also, remember to define or show an understanding of what the goal of low inflation is in your response to get full marks.
Post by: Jono_CP on September 22, 2014, 10:49:57 pm
Yeah but that's not a direct effect. It's only when the producers pass on the higher costs of production (cost inflation) onto the consumer that we experience inflation, so it's more so an indirect effect.
Other things you can talk about:
High AUD -> less demand from overseas on our exports (X) as they have reduced purchasing power, per unit of their currency. This reduces demand inflationary pressures, especially in an economy near productive capacity.
High AUD -> makes imports from overseas relatively cheaper for Australian producers. In the short term, this reduces cost inflation as costs of production should decrease. IN THE LONG TERM, productive capacity is expanded (as businesses invest more on capital goods and investment (I) from cheaper prices overseas), reducing demand inflation as productive capacity is expanded.
Also, remember to define or show an understanding of what the goal of low inflation is in your response to get full marks.
Makes sense! Thank you :)
Post by: Jono_CP on September 22, 2014, 10:55:05 pm
Explain one policy that has been used or might be used to promote the achievement of external stability
Thanks.
Post by: millie96 on September 23, 2014, 03:13:05 pm
Can anyone identify and possibly explain a policy in relation to this question from the 2013 Economics Exam?
Explain one policy that has been used or might be used to promote the achievement of external stability
Thanks.
You could use an aggregate supply policy and talk about how efficiency gains result in increased exports, improving external stability by reducing the size of the CAD. E.g. trade lib, immigration etc.
How are people going about studying? Are you going over content first or doing prac exams? if so how many how you done/planing to do
Post by: millie96 on September 23, 2014, 03:14:22 pm
I would say that because demand for commodities are relatively inelastic it reduces Australian profits/incomes, but the answers say that commodities are elastic?
thanks
Post by: Jono_CP on October 18, 2014, 12:17:52 am
Post by: abcdqdxD on October 19, 2014, 06:31:43 pm
Post by: Jono_CP on October 19, 2014, 08:05:26 pm
@Zeitegeist Means when the AUD falls, imports from overseas are more expensive
How so? I understand that exports can be purchased at a lower price, and are thus more attractive to purchase o/seas... Not sure about imports?
Post by: abcdqdxD on October 19, 2014, 08:08:30 pm
In 2013, it will cost you $100 AUD to buy the import. In 2014 it will cost you $111.11 AUD to buy the same import because you need more AUD to convert to the same amount of USD. Notice that imports are priced in foreign currencies, not AUD.
Post by: Jono_CP on October 21, 2014, 03:57:01 pm
Post by: LazyZombie on October 25, 2014, 11:18:18 am
What are government securities? Why does the RBA like to sell them when tighting monetary policy and why do firms find them attractive? And what does it mean when the rba buys back government securities?
We don't need to know the specifics about government securities (I don't really understand this part of the course fully either), but they include government bonds, which are basically IOU's saying that the government will pay back whoever owns the security a certain amount of cash by a certain date. Banks find them attractive investments as the RBA sells the bonds at a lower price when they tighten monetary policy, and buys them back them at a higher price when they want to loosen the cash rate, in order to manipulate liquidity in the banks ESAs.
They're an attractive investment because they're relatively safe.
This was discussed back in august, but have monetary policy and budgetary policy settings been compatible or incompatible?
I would say that they are incompatible because budgetary policy is relatively contractionary while monetary policy is expansionary, but, could you argue that the contractionary budgetary policy allows monetary policy to play the main role in stabilising AD, without significant inflationary pressures? Although the rate of inflation is well within the target range at the moment.
Post by: LazyZombie on October 25, 2014, 11:44:17 am
"Evaluate the extent to which monetary policy settings and budgetary policy have complemented each other in 2014 to promote the goal of full employment." (four marks)
Monetary policy and budgetary policy settings have been incompatible - working in opposition - as budgetary policy has been relatively contractionary as shown by policies such as the budget repair levy and the predicted fall in the budget deficit from $49.9 to $29.8 billion dollars, while monetary policy has maintained an expansionary stance, with the cash rate at 2.5%. The goal of full employment is to achieve the lowest unemployment rate, with few unused resources, without significant inflationary pressures and where cyclical unemployment is non-existent, suggested to be between 4-5% unemployment. While budgetary policy is contractionary, where fewer injections into the economy reduces aggregate demand and hence the derived demand for labour, some measures to boost employment have been put in place such as the $10000 mature-age subsidy for companies who hire workers over 50. Monetary policy, with the cash rate at a historically low 2.5%, decreasing the cost of credit and availability of cash, causing increases in consumption and investment through the transmission mechanism and hence increases in AD and the derived demand for labour.
Post by: millie96 on October 25, 2014, 01:59:36 pm
Even though the carbon tax isn't implemented anymore, can we still use it in questions where they dont specify this years actions? (e.g. what policy COULD be used?)
Thanks!
(and i'll critique your answer when I'm finished this prac paper :))
Post by: theshunpo on October 25, 2014, 02:18:44 pm
What environmental aggregate supply policy do you guys use?
Even though the carbon tax isn't implemented anymore, can we still use it in questions where they dont specify this years actions? (e.g. what policy COULD be used?)
Thanks!
(and i'll critique your answer when I'm finished this prac paper :))
I learnt both the Murray Darling Basin Plan and the Carbon Tax as environmental policies which influence aggregate supply. In the study design it says to know "how one environmental policy is designed to influence aggregate supply, long-term economic prosperity and living standards", I still went ahead and learnt more than the carbon tax because I, too, wasn't sure whether it can be still used, since it's been abolished. I would like to know what others think as well.
Post by: LazyZombie on October 25, 2014, 05:48:15 pm
on a related note, I found this today randomly http://www.businessspectator.com.au/news/2014/7/7/policy-politics/59-economists-unite-carbon-pricing-petition
some big names in that article
Post by: millie96 on October 26, 2014, 03:56:16 pm
Post by: abcdqdxD on October 26, 2014, 08:56:59 pm
In the 6 markers talking about a combination of monetary and budgetary policy in achieving a particular goal, do you have to actually define what monetary and budgetary policies are? or just the goal
yep define them
Post by: Rachelle on December 20, 2014, 10:09:34 am
Thanks
Post by: M_BONG on December 20, 2014, 08:01:22 pm
What is the difference between a cyclical CAD and a structural CAD??I assume you know what the CAD means so I will jump straight to it.
Thanks
Structural CAD occurs when the CAD is harder to fix - more long term. It occurs when Australian spends more on foreign goods and services (imports) than what it earns from exporting stuff in the long term. Australia generally spends more than it earns and hence, this is built in to the current account and is known as a structural problem. This is known as the "savings-investment gap" where we tend to spend more, jeopardising on future investment and infrastructure savings.
Cyclical CAD is CAD caused by the peaks and troughs of the economic cycle - so this can change unlike the structural CAD. Eg. When our terms of trade is favourable, our CAD tends to be reduced and when it isn't favourable, our CAD tends to increase. So cyclical = it changes; structural = built in and hard to change.
Post by: appleandbee on December 29, 2014, 06:30:12 pm
Should I even use those two policies because most students use them (like should I be different because I'm aiming for a high SS)?
Post by: Geetee on January 08, 2015, 11:45:51 pm
Post by: Gentoo on February 09, 2015, 10:46:49 pm
Just wondering, for the environmental policy component, would I be able to use Carbon Tax or CPRS for next year's exam?
Should I even use those two policies because most students use them (like should I be different because I'm aiming for a high SS)?
It shouldn't matter what policy you pick; as long as you answer the question correctly, you'll get the marks for it. You don't need to 'differentiate' yourself from the crowd by picking a less common policy.
Just wanting to know if its important to know the different types of efficiency - technical, allocative, dynamic, inter temporal, do these tend to pop up on exams at all
While I don't remember seeing an exam question that directly asked you on a particular type of efficiency, I do remember my teacher saying that it looks good if you refer to one of the specific types of efficiency while answering certain questions (examiners would be more likely to give you full marks). For example, if a question asks you how a mining/superprofits tax could benefit future living standards, you could say that it bolsters inter-temporal efficiency etc., balancing current and future consumption so that resources are conserved and future living standards can be maintained. So yeah, it's worth knowing what they all mean.
Post by: Rachelle on February 27, 2015, 11:54:07 pm
Explain why the existence of negative externalities may lead to an over allocation of resources in some industries?
Thankyou!!
Post by: Gentoo on March 01, 2015, 08:59:26 am
Post by: Rachelle on March 07, 2015, 10:01:08 am
A negative externality (a cost incurred by a 3rd party as a result of the production or consumption of a good or service) is not factored into the price of the good or service in question. This results in these goods and services effectively being 'overvalued' by the market mechanism, which means that on the whole, profit-driven firms will allocate more resources to producing such goods and services (because the price is higher), more than what 'should' occur if you took all the nasty side-effects (negative externalities) into consideration.
Thankyou. :)
Post by: Rachelle on March 07, 2015, 10:03:24 am
"All production points along the PPC are equally efficient in the respect that the economy is producing the maximum volume of goods and services possible with its available resources (that is, technical or productive efficiency is being achieved)."
I don't really understand what it is saying. I thought only one point could be the most efficient allocation of resources (allocative efficiency)and not every point on the production possibility frontier?
Post by: Gentoo on March 07, 2015, 11:26:01 am
Are you sure it wasn't just referencing a particular PPF curve? Because you could theoretically set up a curve where that statement is true (it'd be a straight line on a 45 degree angle point downwards), but it won't make sense for almost all of them. There'll generally be SOME points that add up to a greater number of goods and services total.
Post by: Rachelle on March 07, 2015, 03:45:23 pm
Er, yeah, that doesn't sound right. Only one point on the PPF is going to be the most efficient (where they've defined 'efficient' as being the maximum volume of goods and services produced with the available resources).
Are you sure it wasn't just referencing a particular PPF curve? Because you could theoretically set up a curve where that statement is true (it'd be a straight line on a 45 degree angle point downwards), but it won't make sense for almost all of them. There'll generally be SOME points that add up to a greater number of goods and services total.
Also my textbook says 'All points along the productive possibility frontier are technically efficient, regardless of what combination of goods and services are produced'.
So it must be a general definition of technical (i.e. productive) efficiency.
Can it mean that if you have one point of the curve that gives the maximum volume of goods and services, then all other points are also efficient because it has ALLOWED for only one point to add to the greatest no. of goods and services in total?
Post by: Gentoo on March 07, 2015, 04:57:59 pm
So take an example of a hypothetical economy that could only produce strawberries or fountain pens. As we know, the more they produce of one good, the less they can produce of the other good. And while there will be an optimal point somewhere along the curve where the greatest volume of the two goods combined will be achieved, the land, labour and capital resources that are being used to create these goods are being used to the same efficiency regardless of how many of each good are being produced. The workers and machines producing the fountain pens are experiencing the same technical efficiency regardless of whether they end up producing 1,000 or 5,000 fountain pens and same for the strawberries. It's just a different concept.
It all comes down to which tpye of efficiency we're talking about. Technical efficiency is very different from allocative efficiency (the main, big definition of efficiency - an allocation of resources that maximises the satisfaction of society) for example.
Post by: Rachelle on March 14, 2015, 03:54:17 pm
Okay, I think I understand the apparent problem. While one point on the PPF will give the greatest number of total goods and services, this is a SEPARATE concept to technical efficiency, which is merely how many outputs of a particular good or service you get after putting a certain number of resources into the production process.Thanks for the detailed explanation. I understand the concept better now. Thank you. :)
So take an example of a hypothetical economy that could only produce strawberries or fountain pens. As we know, the more they produce of one good, the less they can produce of the other good. And while there will be an optimal point somewhere along the curve where the greatest volume of the two goods combined will be achieved, the land, labour and capital resources that are being used to create these goods are being used to the same efficiency regardless of how many of each good are being produced. The workers and machines producing the fountain pens are experiencing the same technical efficiency regardless of whether they end up producing 1,000 or 5,000 fountain pens and same for the strawberries. It's just a different concept.
It all comes down to which tpye of efficiency we're talking about. Technical efficiency is very different from allocative efficiency (the main, big definition of efficiency - an allocation of resources that maximises the satisfaction of society) for example.
Post by: Rachelle on March 18, 2015, 06:03:42 pm
I don't know if I understand what it's saying. If the equilibrium price is increasing, doesn't it mean the price is increasing and there demand will contract. And that supply will increase instead?
Post by: Gentoo on March 18, 2015, 07:38:55 pm
A shift on the demand curve to the right (an increase in demand at any given price, which could be caused by factors like an increase in disposable income levels, etc.) would lead to shortages and the price being bidded up by consumers, which incentivises firms to allocate more resources to the production of the g/s, increasing supply until a new equilibrium Qty traded is found (higher demand and supply). This causes a movement along the supply curve to the right. So that's one way the equilibrium price can increase.
The other way is if there is a shift in the supply curve to the left (a reduction in supply at any given price, caused by factors like higher production costs etc.), which would again lead to shortages as firms are producing less, causing the price to be bidded up, resulting in a movement along the demand curve to the left and a higher equilibrium price but lower equilibrium quantity. That's the other way that results in a higher equilibrium price.
Post by: Rachelle on April 04, 2015, 06:28:46 pm
We're analysing what would have caused the equilibrium price to change in the first place due to shifts in the demand/supply curves (note how the question said 'at a given price'), not what happens after a change in price (which you're right about; a contraction in demand and supply would occur; this would be described as a movement along the demand/supply curve though).
A shift on the demand curve to the right (an increase in demand at any given price, which could be caused by factors like an increase in disposable income levels, etc.) would lead to shortages and the price being bidded up by consumers, which incentivises firms to allocate more resources to the production of the g/s, increasing supply until a new equilibrium Qty traded is found (higher demand and supply). This causes a movement along the supply curve to the right. So that's one way the equilibrium price can increase.
The other way is if there is a shift in the supply curve to the left (a reduction in supply at any given price, caused by factors like higher production costs etc.), which would again lead to shortages as firms are producing less, causing the price to be bidded up, resulting in a movement along the demand curve to the left and a higher equilibrium price but lower equilibrium quantity. That's the other way that results in a higher equilibrium price.
Oh that makes sense. Just to clarify in what circumstances do you say a shift of the whole demand line. Or an expansion along the D line. Because I know there is a difference between shifts of a whole curve and simply movements along THAT curve.
Thanks. :)
Post by: Rachelle on April 04, 2015, 06:30:38 pm
We're analysing what would have caused the equilibrium price to change in the first place due to shifts in the demand/supply curves (note how the question said 'at a given price'), not what happens after a change in price (which you're right about; a contraction in demand and supply would occur; this would be described as a movement along the demand/supply curve though).Oh sorry! You have said that. So microeconomic conditions of supply and demand cause the whole curve to shift in position. But what causes the movements along the cruve?
A shift on the demand curve to the right (an increase in demand at any given price, which could be caused by factors like an increase in disposable income levels, etc.) would lead to shortages and the price being bidded up by consumers, which incentivises firms to allocate more resources to the production of the g/s, increasing supply until a new equilibrium Qty traded is found (higher demand and supply). This causes a movement along the supply curve to the right. So that's one way the equilibrium price can increase.
The other way is if there is a shift in the supply curve to the left (a reduction in supply at any given price, caused by factors like higher production costs etc.), which would again lead to shortages as firms are producing less, causing the price to be bidded up, resulting in a movement along the demand curve to the left and a higher equilibrium price but lower equilibrium quantity. That's the other way that results in a higher equilibrium price.
Post by: thaaanyan on April 04, 2015, 07:18:26 pm
Oh sorry! You have said that. So microeconomic conditions of supply and demand cause the whole curve to shift in position. But what causes the movements along the cruve?
correct me if i'm wrong but i thought a change in price....?
Post by: Rachelle on April 04, 2015, 10:11:21 pm
#AOS1 review
Post by: Rachelle on April 04, 2015, 10:11:47 pm
correct me if i'm wrong but i thought a change in price....?I think you're right..
Post by: Gentoo on April 07, 2015, 01:08:36 pm
The 3 key economic decisions are what, how and for whom to produce?
The price system determines what to produce because firms will look to produce things that have a high relative price to obtain more profit.
The decision about how to produce is left to firms who want to maximise profit potential (I guess that falls under the umbrella of 'the price system'), who will produce goods and services in the most efficient/cost effective way in order to cut costs/maximise profits (because they have a direct incentive to - compared to, say, socialism where firms have bugger all reason to be efficient cause they'll get paid the same regardless from the government).
The decision about for whom to produce is answered by the price system because the people who have the greatest willingness to pay for goods and services are the ones who end up getting them (they're the ones who pay the price).
Post by: abcdqdxD on April 08, 2015, 07:25:14 pm
Essentially, a movement along a curve can be caused by two things:
(1) A change in price
(2) A shift in the 'other' curve
For example, for (1), if price increased from $10 to $15, there will be a contraction along the demand curve (consumers want less of something when it gets more expensive) and an expansion along the supply curve (suppliers want to sell more when selling price is higher due to profit motive).
For (2), a shift in the demand curve will cause a movement ALONG the supply curve. A shift in the supply curve will cause a movement along the demand curve.
I recommend taking some time to draw out your Supply and Demand graphs, draw out the two scenarios above and observe what is happening.
Post by: MayMacQueen on June 01, 2015, 08:51:12 pm
Also can anyone tell me how Australia did not suffer a recession post GFC? As we did 'recover' well compared to other nations. Thank you :) :)
Post by: Rachelle on July 08, 2015, 07:02:47 pm
Hello- I just wanted to ask how is Aggregate Demand (AD) overstated when G1 (Short term government spending) does NOT include transfer payments? I'm just unsure of the explanation as to why AD will be overstated.
Also can anyone tell me how Australia did not suffer a recession post GFC? As we did 'recover' well compared to other nations. Thank you :) :)
AD is overstated because the government is actually using its tax revenue to provide these welfare benefits. In other words, the govt is transferring the tax revenue it collects from from high income earners to low income earners. This is not accounted for in the G1 component and thus overstates AD. This tax revenue could have been appropriated to other areas of the economy; such as construction of infrastructure.
Australia has not experienced a recession as of post GFC mainly because the govt set out a relatively large fiscal action - which acted to stimulated AD + production flows.
Post by: Rachelle on July 08, 2015, 07:04:33 pm
I kind of get where this statement is getting from but if someone could explain in a little more detail that would be appreciated :) thanks!
Post by: cherryblossom on July 09, 2015, 02:51:49 pm
Post by: vanessa987 on November 07, 2015, 03:33:20 pm
I'm having trouble grasping these concepts.
would be much appreciated
thanks:)
Post by: vanessa987 on November 07, 2015, 03:33:50 pm
I'm having trouble grasping these concepts.
would be much appreciated
thanks:)
Post by: AndyCau on April 10, 2016, 01:42:06 pm
currently need it for this week's SAC.
thanks,, much appreciated
Post by: P.GUAN on July 04, 2016, 11:28:46 pm
What is a direct term of bonds? I am reading ways to finance a deficit and I can't get my head around for selling bonds.
Thanks guys!!
Post by: gracefaith on July 09, 2016, 10:47:52 pm
Post by: Phoebe Thomas on July 21, 2016, 07:22:54 am
Thanx!
Post by: 100.00 on September 24, 2016, 10:04:29 am
Hey! Could someone tell me if it's correct to say that the 2016-17 budget is an 'expansionary budget of a contractionary nature', as there is a predicted deficit, though smaller than the previous financial year?
Thanx!
I know its late but if you're still around :D (you've probably figured out the answer)
If im correct, you cant say that.
The current budget is predicted to be contractionary, as its going from something like a deficit of 39.9billion to 37.1 billion. Yes it is still a deficit, although it is mildly contractionary because it's trying to actively take money out of the economy from one fiscal year to the next, to restrict economic activity and aggregate demand.
You can still make reference to it still being a deficit and is stimulating the economy overall, however be careful in doing this if the question asked you just for the stance overall, as it will be uneccesary to put forth such information. The examiner doesn't want you putting forth information in an unconfident way.
Hope I helped!
Post by: Alicia23 on February 26, 2017, 03:50:58 pm
I just got 2 multiple choice questions that I don't entirely understand and it would be so great if someone could explain them to me.
1. Positive externalities may be conveyed to third parties by the production of
a) vaccines
b) chocolate
c) trees
d) nightclubs
The answer is d.
2. Higher petrol prices are most likely to result in all of the following except;
a) An increase in the demand for larger vehicles, like 4WDs
b) A higher price for LPG
c) An increased demand for public transport
d) An increased exploration effort by companies mining for oil
The answer is a)An increase in the demand for larger vehicles, like 4WDs, which i get but why would there be a higher price for LPG?
Post by: nm4065 on March 02, 2017, 10:00:57 pm
Post by: NAT0003 on March 10, 2017, 04:12:26 pm
Post by: TheCommando on April 09, 2017, 11:17:31 pm
How do you understand what the question askes you in economics without getting confused?If u dont inderstand it that means u dont understand the concept associated within that question, therefore the best thing you can do is relearn that psrticular concept, if u dont understand it from the textbook see another scource like another different text as things are explained differently which u may understand, if that doesnt help email your teacher or see your teacher at snack or lunch
Post by: TheCommando on April 09, 2017, 11:35:00 pm
Does anyone know how to answer this question: "explain why an economy must achieve productive efficiency in order to achieve allocative efficiency." (3 marks). Thanks!You wanna make sure u define Productive efficiency and allocative efficiency as theese are the key words as they are the key concepts of whst the question is really asking you about.
Than you would link productive effiency and how it related to allocative efficent, you get theese marks based on how well the marker thinks you have written it:
Sample answer:
Technical (same thing as productive) efficiency involves firms producing at the lowest possible long run costs. Allocative effiencey on the other hand represents the best combination of goods and services produced such that living standards are maximised. If a nation is being technically efficent, this means that productivity is being maximised which is shown by that nation producing along any of the point on the ppf curve. As a result this shows that the best combinatin of goods and services has occured, as by meeting the demands of consumers firms are technically efficent and therefore useses the least amount of resources to satsisfy demand of consumers which shows allocative effiency.
Feel free to fix this answer if anyone reckons its wrong
Post by: PandaWithNoName on September 25, 2017, 07:26:22 pm
You wanna make sure u define Productive efficiency and allocative efficiency as theese are the key words as they are the key concepts of whst the question is really asking you about.
Than you would link productive effiency and how it related to allocative efficent, you get theese marks based on how well the marker thinks you have written it:
Sample answer:
Technical (same thing as productive) efficiency involves firms producing at the lowest possible long run costs. Allocative effiencey on the other hand represents the best combination of goods and services produced such that living standards are maximised. If a nation is being technically efficent, this means that productivity is being maximised which is shown by that nation producing along any of the point on the ppf curve. As a result this shows that the best combinatin of goods and services has occured, as by meeting the demands of consumers firms are technically efficent and therefore useses the least amount of resources to satsisfy demand of consumers which shows allocative effiency.
Feel free to fix this answer if anyone reckons its wrong
Not sure about how well you linked technical efficiency (productive) to allocative efficiency, I would be using price signals and shortage concepts:
My Answer:
Technical efficiency refers to where productivity is at maximum and average costs of production are low and it is impossible to increase outputs without increasing quantity or quality of inputs. Allocative efficiency refers to where the right combination of goods and servers are produced for the consumers who most want and need them, hence society's wellbeing is maximised and national living standards are increased.
For example, in an event where the price rises for a product, it suggests to the producers that demand is increasing relative to supply and the market for that product might be experiencing a shortage (capacity constraints). Thus a rational producer would seek to maximise profits by using revenue to invest in better quality capital (equipment) in order to maximise productivity so more output can be produced from the same amount of inputs which as a result achieves technical efficiency. Therefore, 'scarce resources' are allocated towards a production of a good or service associated with increasing demand and allocative efficiency is achieved as any previous shortages are alleviated, prices are decreased (supply curve shift to right), material standards living standards increase as accessibility to such products are increased and society's wellbeing has collectively been satisfied.
Post by: brooke99 on October 07, 2017, 06:38:58 pm
Just wondering if anyone had any advice for how to revise for economics? is doing past exams the best thing?
I'm a lil stressed about the exam which is less than 4wks away!! :-\
any suggestions would be great!!!!
thanks! :)
Post by: zofromuxo on October 07, 2017, 07:35:51 pm
Hey..As with everything, it depends.
Just wondering if anyone had any advice for how to revise for economics? is doing past exams the best thing?
I'm a lil stressed about the exam which is less than 4wks away!! :-\
any suggestions would be great!!!!
thanks! :)
A couple of factors to consider on what to do.
1. Concepts/Material/Theory
*The basic building block
-Go through the key knowledge points for Unit 3-4 and check that you can provide what they want.
Eg: types of government expenses including government current and capital expenditure and transfer payments
:Do you understand the type of government expenses, Can you give examples (real-life is better, refer to 2nd dot pt).
2. Examples/Statistics
*A common way to get easy marks, if your missing a piece of theory inside your response, but have a well-put and relevant example it can pull you over the line.
Eg: You have a 4 mark question about why the Monetary policy's stance is keeping steady, you explain the theory behind the monetary policy, but also link in other factors that are influencing it like house prices. This shows you understand the reasoning behind the monetary's policy stance from now only a theoretical standpoint, but also in real-life. As sometimes things in reality don't match the theory and if you incorporate that, you stand out compared to the state.
:The statistics you will need are the outline in this excel sheet: here. You want to know from the last 2-years and knowing the general trend of the data and specific values of the year if possible.
:I have uploaded some articles to look at:here and here
But also read The Age's Finance section, Australian Financial Review, ABS, RBA and Compak are good places to get relevant news articles. I think anything pre-March is good as the exam is written in March of this year, from memory.
If you ace these 2 dot pts, then I would go ahead and do practice exams.
A few pointers on doing practice exams
-Draw graphs & diagrams, much like examples they can give the examiner a reason to give you a mark for the question, as you demonstrate you understand the question.
-Mark it yourself, get your friend(someone better then you or equal level) and your teacher to mark it last
:You do this because if your friend gives you a different mark, you can discuss why they scored you as they did. It serves as a learning exercise for both of you and also shows you alternative ways to answer a question.
:Then get your teacher for the final decision on the mark, if you both don't agree what it should be.
Post by: brooke99 on October 07, 2017, 08:30:13 pm
As with everything, it depends.
A couple of factors to consider on what to do.
1. Concepts/Material/Theory
*The basic building block
-Go through the key knowledge points for Unit 3-4 and check that you can provide what they want.
Eg: types of government expenses including government current and capital expenditure and transfer payments
:Do you understand the type of government expenses, Can you give examples (real-life is better, refer to 2nd dot pt).
2. Examples/Statistics
*A common way to get easy marks, if your missing a piece of theory inside your response, but have a well-put and relevant example it can pull you over the line.
Eg: You have a 4 mark question about why the Monetary policy's stance is keeping steady, you explain the theory behind the monetary policy, but also link in other factors that are influencing it like house prices. This shows you understand the reasoning behind the monetary's policy stance from now only a theoretical standpoint, but also in real-life. As sometimes things in reality don't match the theory and if you incorporate that, you stand out compared to the state.
:The statistics you will need are the outline in this excel sheet: here. You want to know from the last 2-years and knowing the general trend of the data and specific values of the year if possible.
:I have uploaded some articles to look at:here and here
But also read The Age's Finance section, Australian Financial Review, ABS, RBA and Compak are good places to get relevant news articles. I think anything pre-March is good as the exam is written in March of this year, from memory.
If you ace these 2 dot pts, then I would go ahead and do practice exams.
A few pointers on doing practice exams
-Draw graphs & diagrams, much like examples they can give the examiner a reason to give you a mark for the question, as you demonstrate you understand the question.
-Mark it yourself, get your friend(someone better then you or equal level) and your teacher to mark it last
:You do this because if your friend gives you a different mark, you can discuss why they scored you as they did. It serves as a learning exercise for both of you and also shows you alternative ways to answer a question.
:Then get your teacher for the final decision on the mark, if you both don't agree what it should be
thanks so much for that! very helpful!! :)
Post by: zofromuxo on October 07, 2017, 09:14:36 pm
thanks so much for that! very helpful!! :)I'm grateful that you found it helpful, I hope you do well on your exams and I'm impressed your are doing Geography as well :D.
As you can tell, I'm a huge geo nerd - I mean who does a degree in it, if you aren't a nerd honestly :P
I'm also jealous of the "cool" changes that made to the study design like you guys can use ArcGIS like in my degree :(.
Post by: brooke99 on October 08, 2017, 07:56:29 pm
I'm grateful that you found it helpful, I hope you do well on your exams and I'm impressed your are doing Geography as well :D.thanks! :) yep i love geography! it's probably been my easiest subject this year just cos i enjoy it!
As you can tell, I'm a huge geo nerd - I mean who does a degree in it, if you aren't a nerd honestly :P
I'm also jealous of the "cool" changes that made to the study design like you guys can use ArcGIS like in my degree :(.
Post by: abcdqdxD on October 14, 2017, 06:14:52 pm
Post by: PandaWithNoName on October 24, 2017, 07:33:58 pm
If anyone has any last minute questions before exams, ask away and I will do my best to respond!
Exam is a week away, just wanting to know how likely will there be questions on Term of Trade, the relationships between Terms of Trade and the CAD and Net Foreign Liabilities (Net Foreign Debt + Net Foreign equity).
Also is it likely there will be a question on how less competitive markets will affect on price and two types of efficiency? I saw this on a practice paper and it was extremely difficult because you have to recall knowledge on monopoly or oligopoly market structures which are not in the study design
Post by: zofromuxo on October 24, 2017, 07:50:22 pm
Exam is a week away, just wanting to know how likely will there be questions on Term of Trade, the relationships between Terms of Trade and the CAD and Net Foreign Liabilities (Net Foreign Debt + Net Foreign equity).For your first question, it will be likely that you will be asked a question on those topics. There is usually one on it, it just depends on what has happened news-wise. I suspect it may be TOT and CAD or Net Foreign Liabilities this year. But don't quote me on that.
Also is it likely there will be a question on how less competitive markets will affect on price and two types of efficiency? I saw this on a practice paper and it was extremely difficult because you have to recall knowledge on monopoly or oligopoly market structures which are not in the study design
As for your second question. If it isn't on the study design then you won't be asked it on the exam.
Anything on the study design could be on the exam . Anything not on it, isn't on the exam.
Post by: abcdqdxD on October 25, 2017, 09:07:32 am
Exam is a week away, just wanting to know how likely will there be questions on Term of Trade, the relationships between Terms of Trade and the CAD and Net Foreign Liabilities (Net Foreign Debt + Net Foreign equity).
Also is it likely there will be a question on how less competitive markets will affect on price and two types of efficiency? I saw this on a practice paper and it was extremely difficult because you have to recall knowledge on monopoly or oligopoly market structures which are not in the study design
Hi, from what I can recall the different type of efficiencies are in the course so it is probably fair game (though unlikely to come up).
I would make sure to know the different market structures as well, they have come up in MC questions in the past and are relatively quick to learn. Using these terms in your written responses where relevant will also allow you to show your knowledge.
Spending 15-20 mins on familiarising yourself with these ideas is probably enough.
Cheers
Post by: forbiddensoulxx on October 25, 2017, 05:24:53 pm
A) Productivity, costs of production, business confidence
B) Productivity, costs of production, interest rates
C) Consumer confidence, cost of inputs, climatic conditions
D) Business confidence, wage growth, company tax rates
I get why it'd not C or D, and I thought it would be A since business confidence should affect the level of goods and services suppliers are willing to supply, however the answers say its B. I don't understand why interest rates would affect aggregate supply more than business confidence.
Post by: Natasha.97 on October 25, 2017, 06:56:42 pm
Hey guys, not a Unit 3/4 question, but a 1/2 question. A question is asking factors affecting aggregate supply. Options were;
A) Productivity, costs of production, business confidence
B) Productivity, costs of production, interest rates
C) Consumer confidence, cost of inputs, climatic conditions
D) Business confidence, wage growth, company tax rates
I get why it'd not C or D, and I thought it would be A since business confidence should affect the level of goods and services suppliers are willing to supply, however the answers say its B. I don't understand why interest rates would affect aggregate supply more than business confidence.
Hi!
Interest rates affect how much a business can invest in capital equipment, such as machinery and new technology etc. If interest rates were high, businesses are not incentivised to borrow money from the bank, reducing their ability for investment (as they would have to repay more money), and vice-versa.
Hope this helps
Post by: forbiddensoulxx on October 25, 2017, 08:08:19 pm
Hi!Hey, thanks a lot for that! That makes sense, but I'm wondering wouldn't business confidence be right as well, since its the confidence a business has in their ability to provide goods and services to the market? Or is it not a factor that affects aggregate supply?
Interest rates affect how much a business can invest in capital equipment, such as machinery and new technology etc. If interest rates were high, businesses are not incentivised to borrow money from the bank, reducing their ability for investment (as they would have to repay more money), and vice-versa.
Hope this helps
Post by: zofromuxo on October 25, 2017, 08:18:49 pm
Hey, thanks a lot for that! That makes sense, but I'm wondering wouldn't business confidence be right as well, since its the confidence a business has in their ability to provide goods and services to the market? Or is it not a factor that affects aggregate supply?Business confidence plays a part certainly. The changes in interest rates have a bigger impact on affecting aggregate supply as a whole compared to business confidence.
Post by: PandaWithNoName on October 25, 2017, 10:02:14 pm
For your first question, it will be likely that you will be asked a question on those topics. There is usually one on it, it just depends on what has happened news-wise. I suspect it may be TOT and CAD or Net Foreign Liabilities this year. But don't quote me on that.
As for your second question. If it isn't on the study design then you won't be asked it on the exam.
Anything on the study design could be on the exam . Anything not on it, isn't on the exam.
Yes I am clear it won't be on the exam, but considering the question contains less competitive markets, the only way to explain it is by oligopoly market structures so on, it is hard not to refer to elements from those markets
Post by: zofromuxo on October 26, 2017, 07:52:03 am
Yes I am clear it won't be on the exam, but considering the question contains less competitive markets, the only way to explain it is by oligopoly market structures so on, it is hard not to refer to elements from those marketsThat is true, but as it isn't on the study design I'm confused on why you want to answer it.
Lets say you pick a monopoly.
Its effect on price would be that it would set prices that create "super-normal profits", but for consumers is bad new bears because some of them will have to drop out of the market as they cannot afford these higher prices.
For the efficency types, you can mention how there will be a lower productive efficiency because they are the only producer of this product, which means they have little to no pressure to improve the productivity of producing this product despite the benefits it could have for the market.
Lower allocation of resources aka allocative efficiency: this is due to the factor of usually under-allocating resources to producing their product, so they can raise prices on them for consumers, who then pay that elevated price or some consumers won't purchase the product despite needing it due to the inflated price set by the monoplist.
Post by: corza000 on October 26, 2017, 10:21:06 pm
Also what is the difference between factor, economic factor and AD factor. I've seen all of these used in questions regarding their effect on the goals. Are they all the same?
Thanks
Post by: zofromuxo on October 26, 2017, 11:17:11 pm
Any predictions on what might the topical focus in this exam? E.g. Housing bubble, ageing population, trumpIf I remember correctly the exam is written in March this year. However I would keep in the mind the key economic news this year.
Also what is the difference between factor, economic factor and AD factor. I've seen all of these used in questions regarding their effect on the goals. Are they all the same?
Thanks
So yes the housing bubble in Victoria and Sydney, Ageing population and Trump would be key events that affect the Australian economy. That being said I would still use example of this year as well like the recently released Productivity Commission report called Shifting the Deal. As assessor like when students use examples to explain concepts.
Post by: corza000 on October 28, 2017, 05:51:04 pm
Post by: fish99 on October 30, 2017, 09:11:10 pm
Identify one example of a discretionary budgetary policy announced in the 2016-17 budget and examine how this policy might influence living standards and long-term economic prosperity. 4 marks
Thanks 😃
Post by: zofromuxo on October 30, 2017, 09:22:01 pm
Could someone help me with this question?What do you need help with?
Identify one example of a discretionary budgetary policy announced in the 2016-17 budget and examine how this policy might influence living standards and long-term economic prosperity. 4 marks
Thanks 😃
Post by: fish99 on October 30, 2017, 09:32:26 pm
Post by: zofromuxo on October 30, 2017, 09:45:30 pm
Mainly the first part of the question: example of discretionary budget policy...You could use numerous policy initiatives the most common ones were the PaTH program and the Infrastructure spending (like the Melbourne to Brisbane Inland Rail program).
Post by: fish99 on October 30, 2017, 09:53:02 pm
Thanks 👍😏
Post by: mindy.mcewen on November 01, 2017, 05:34:56 pm
Like budgetary policy, government action or?
Thanks..:)
Post by: zofromuxo on November 01, 2017, 06:06:48 pm
Just wondering when/to what question would u refer to the 'Productivity Commission report called Shifting the Deal' for?Aggregate Supply policies, productivity and potentially efficiency as well.
Like budgetary policy, government action or?
Thanks..:)
Post by: Cranium002 on January 08, 2018, 06:17:02 pm
http://www.vcaa.vic.edu.au/Documents/vce/economics/Economics-resources-2017.docx
Post by: Cranium002 on March 18, 2018, 09:58:22 pm
Post by: Chelsea f.c. on May 18, 2018, 09:25:35 pm
Post by: DoctorTwo on October 31, 2018, 04:38:10 pm
Post by: Chelsea f.c. on October 31, 2018, 05:02:54 pm
Post by: joanna120728 on November 19, 2018, 04:22:32 pm
Thanks in advance :)
Post by: S200 on November 19, 2018, 04:30:19 pm
If you like eBooks you can just buy the JacPlus activation code for the Economics 3/4 textbook, and that should be an updated version...
Post by: DoctorTwo on November 19, 2018, 08:51:00 pm
Post by: oJL8A99A on November 19, 2018, 10:41:58 pm
Hi does anyone know whether it's worth getting the new edition of the 3/4 eco books for 2019? I don't want to spend so much money on new books, but if there are big differences in the new edition then I'll have to buy them new.
Thanks in advance :)
The CPAP books are pretty good but don't update on budgetary policy (because the budget comes out later in the year). So if your school uses CPAP getting past ones shouldn't be a problem.
Post by: tcvc on February 06, 2019, 08:22:36 pm
I was wondering if anyone could tell me how changes in relative prices alter 'for whom' goods and services are produced. I was only given very brief notes on it which don't make much sense.
Thanks a lot to anyone who can help.
Post by: Chelsea f.c. on February 11, 2019, 05:13:21 pm
Post by: Balfe on February 26, 2019, 07:08:23 pm
hi,The link is relatively minuscule, but I would say that the relative wages provided to different professions is what affects for whom we produce. This is because Australia is a market capitalist economy and thus goods and services end up going to whoever can afford them. So, in practice, if we have a doctor and a public servant (with a broad assumption that the doctor has a higher relative wage), the market would be said to be producing the goods and services mainly for the doctor. This is where living standards come into play in the analysis because this then means that poorer people don’t have access to the goods and services and thus their material living standards are deteriorated - as well as non-material living standards within society as a whole because this inequity in income distribution leads to rising crime rates and the development of a class system - decreasing quality of life factors for many.
I was wondering if anyone could tell me how changes in relative prices alter 'for whom' goods and services are produced. I was only given very brief notes on it which don't make much sense.
Thanks a lot to anyone who can help.
Hope this makes a bit of sense!
Post by: Loren_T on June 04, 2019, 09:42:36 pm
Does the amount of capital and financial accounts either impact the current account and vise versa, or equal the current account amount?
Post by: vox nihili on June 04, 2019, 11:50:05 pm
Can someone please explain how the current account and the capital and financial accounts are linked? ie in calculating the BOP.
Does the amount of capital and financial accounts either impact the current account and vise versa, or equal the current account amount?
What are your thoughts on this? :)
Post by: Seamus Wong on June 05, 2019, 10:44:03 am
Can someone please explain how the current account and the capital and financial accounts are linked? ie in calculating the BOP.
Does the amount of capital and financial accounts either impact the current account and vise versa, or equal the current account amount?
There exists an inverse relationship between the balance on each of the accounts. The overall debit balance on the current account is completely offset by the credit balance on the capital and financial account.
Each account impacts the other:
Our CAD results in the need to fund the deficit through financial account credits (taking out loans from abroad or issuing bonds) - adding to our NFD. But as a result, the CAD is also impacted due to the primary account debits that arise from the interest payments that we have to pay on our foreign debt. (think about a normal person taking out a loan; when you pay back that debt, you have to pay back interest on top of the principal. This is the same when countries take on foreign debt)
So it essentially is self-reinforcing, in that a rise in the CAD leads to a rise in our NFD which leads to a rise in the CAD which leads to a rise in the NFD.......
Hope this helps.
Post by: Loren_T on June 05, 2019, 06:17:59 pm
There exists an inverse relationship between the balance on each of the accounts. The overall debit balance on the current account is completely offset by the credit balance on the capital and financial account.Thanks, this does help :)
Each account impacts the other:
Our CAD results in the need to fund the deficit through financial account credits (taking out loans from abroad or issuing bonds) - adding to our NFD. But as a result, the CAD is also impacted due to the primary account debits that arise from the interest payments that we have to pay on our foreign debt. (think about a normal person taking out a loan; when you pay back that debt, you have to pay back interest on top of the principal. This is the same when countries take on foreign debt)
So it essentially is self-reinforcing, in that a rise in the CAD leads to a rise in our NFD which leads to a rise in the CAD which leads to a rise in the NFD.......
Hope this helps.
Post by: Seamus Wong on June 05, 2019, 07:43:24 pm
Thanks, this does help :)
Great!
Post by: Jmac02 on June 12, 2019, 10:00:09 pm
I'm struggling to find effective ways to study for Economics, as I primarily come from a science-based background. Although I'm averaging roughly 80's for my first two SAC's, I believe I'm putting in more than enough work to achieve scores of 85+, however, I don't really have a specific technique to study. If anyone could tell the ways they study for an Eco SAC, that would be great. Thanks :)
Post by: NomotivationF on June 13, 2019, 06:56:39 pm
Dear fellow 3/4 Economics students,
I'm struggling to find effective ways to study for Economics, as I primarily come from a science-based background. Although I'm averaging roughly 80's for my first two SAC's, I believe I'm putting in more than enough work to achieve scores of 85+, however, I don't really have a specific technique to study. If anyone could tell the ways they study for an Eco SAC, that would be great. Thanks :)
Hey Jmac, I've found in terms of Eco the key to scoring well is to actually understand the concepts that you are learning and applying them to different scenarios. I don't know if you are, but I think wrote learning answers in Eco bounds you for failure as questions can be extremely variable. Basically, understand and consolidate ur concepts and make sure you talk to the teacher about things you don't understand. If you can understand the concepts fo each of the dot point you should realistically be able to score quite well on sacs and eventually the exam.
Post by: Jmac02 on June 13, 2019, 10:07:10 pm
Hey Jmac, I've found in terms of Eco the key to scoring well is to actually understand the concepts that you are learning and applying them to different scenarios. I don't know if you are, but I think wrote learning answers in Eco bounds you for failure as questions can be extremely variable. Basically, understand and consolidate ur concepts and make sure you talk to the teacher about things you don't understand. If you can understand the concepts fo each of the dot point you should realistically be able to score quite well on sacs and eventually the exam.Thank you very much NomotivationF, I will take this advice on for my next SAC on Thursday. Wish me luck!
Post by: Jmac02 on June 16, 2019, 08:44:42 pm
As my SAC is just days away. I've got two questions about the topic. Firstly, is the reason for the balance of payments equaling out because countries like Australia who run a CAD means they're spending on foreign goods and services or buying loans to fund this. This means countries whom they buy off, run a CAS meaning they have money to spend. As Australia has spent their money to finance expansion (most likely) countries like China who have a CAS, see Australia as an appropriate place to invest in because of the high economic activity, and hence the CAFA increases. As well, why are higher interest rates perceived as a good thing (in terms of the exchange rate)? Thanks, any help is appreciated.
Post by: Seamus Wong on June 16, 2019, 11:04:20 pm
Hi everyone again,
As my SAC is just days away. I've got two questions about the topic. Firstly, is the reason for the balance of payments equaling out because countries like Australia who run a CAD means they're spending on foreign goods and services or buying loans [Not buying loans, we Take out loans or Issue Government Bonds] to fund this Yes, you are right. We spend a lot on foreign goods and pay a lot in interest payments to foreign countries on our foreign debt (which arises due to the savings-investment gap) and thus we have to seek finance from abroad to fund the CAD. This means countries whom they buy off, run a CAS meaning they have money to spend Yes, this is correct. As Australia has spent their money to finance expansion (most likely) countries like China who have a CAS, see Australia as an appropriate place to invest in because of the high economic activitycorrect, and hence the CAFA increases The CAFA doesn't increase; the CAFA SURPLUS increases . As well, why are higher interest rates perceived as a good thing (in terms of the exchange rate) They aren't necessarily a good thing. Higher interest rates could usually be argued to be unfavourable since they encourage capital inflows, causing an appreciation of the dollar and hence reducing the attractiveness of our exports and increasing the attractiveness of foreign imports, which slows the growth in economic activity domestically. However, one could argue that an appreciation of the Australian dollar potentially makes Supply-side conditions more favourable for domestic firms who source the majority of their inputs from abroad, and thus the appreciation of the AUD can help expand our productive capacity.? Thanks, any help is appreciated.
Good job, you seem like you have a relatively good understanding of how the Balance of payments works.
Keep asking questions though. The more you ask, the more prepared you'll be for the SAC.
Post by: Jmac02 on June 16, 2019, 11:41:45 pm
Good job, you seem like you have a relatively good understanding of how the Balance of payments works.
Keep asking questions though. The more you ask, the more prepared you'll be for the SAC.
Thank you so much for your help, Seamus. I will definitely do so.
Post by: Jmac02 on June 19, 2019, 10:05:40 pm
Is this an appropriate explanation for the effects of the exchange rate on Australia's CAD?
A depreciation of the AUD is likely to decrease CAD. This is because as imports are more expensive for domestic consumers and exports are relatively more attractive to investors overseas (because they can purchase more). There is likely to be greater spending on exports relative to imports, resulting in a BOGS surplus, leading to a decrease in the CAD.
However, a depreciation of the AUD is also likely to increase CAD. This is because a depreciation is likely to stimulate net primary income debits (we are selling domestic assets to overseas) because exports are relatively more attractive to purchase. This increases the net capital inflow and foreign liabilities, causing an increase in the payment of dividends, rent and profits abroad, thus increasing CAD.
Thanks.
Post by: Jmac02 on June 19, 2019, 10:18:40 pm
Thanks.
Post by: NomotivationF on June 19, 2019, 10:29:13 pm
Another quick thing, I asked a similar question before but why do higher interest rates attract investment from overseas?
Thanks.
Higher relative interest rates attract overseas investment due to the fact investors will obtain a higher rate of return if they invest in Australia, compared to other countries. Make sure to say relative interest rates otherwise the answer may not make complete sense.
Post by: NomotivationF on June 19, 2019, 10:39:14 pm
Hey everyone again,
Is this an appropriate explanation for the effects of the exchange rate on Australia's CAD?
A depreciation of the AUD is likely to decrease CAD. This is because as imports are more expensive for domestic consumers and exports are relatively more attractive to investors overseas (because they can purchase more). There is likely to be greater spending on exports relative to imports, resulting in a BOGS surplus, leading to a decrease in the CAD.
However, a depreciation of the AUD is also likely to increase CAD. This is because a depreciation is likely to stimulate net primary income debits (we are selling domestic assets to overseas) because exports are relatively more attractive to purchase. This increases the net capital inflow and foreign liabilities, causing an increase in the payment of dividends, rent and profits abroad, thus increasing CAD.
Thanks.
Hey Jmac, your answer is good, but here's how I would improve it;
A depreciation of the AUD is likely to decrease CAD. If there is a depreciation in the AUD, foreign goods and services (imports) are relatively more expensive for domestic consumers compared to Australian made goods and services; and Australian made goods and services are relatively cheaper to foreign investors (exports). As a result, there is a decrease in imports and an increase in export, increasing net exports (X-M). As there is more spending on exports relative to imports, there will be an increase in credits relative to debits in the balance on merchandise trade section of the current account, which improves the CAD.
I don't think your second statement is correct. The demand side factor is a stronger argument, however if your teacher has taught you the second statement, go for it.
Post by: Jmac02 on June 19, 2019, 11:21:23 pm
Post by: LenaChime on July 11, 2019, 12:47:10 pm
Any help is greatly appreciated :)
Post by: Seamus Wong on July 11, 2019, 09:39:00 pm
Quick Question - How does a depreciation in the AUD result in a fall in the TOT? Is it because, we are receiving less foreign currency for our exports or need to use more or our currency to buy imports?
Any help is greatly appreciated :)
We don't receive the foreign currency, we receive Australian Dollars. But yes, we do need to use more of our currency to purchase those imports - provided that we continue to actually purchase those imports at the relatively higher price level (in terms of our currency).
A depreciation of the Australian dollar means that exports are relatively cheaper in terms of foreign currency, increasing demand for our exports - thus increasing the export price index. Likewise, Australian imports become relatively more expensive in terms of our currency, reducing our demand for imports - thus reducing our import price index.
Since TOT is calculated as ((export price index)/(import price index) * 100), we should see a rise in the TOT.
... i think....
BUT
I'm pretty sure they would ask the question the other way around - i.e. how does a fall in the TOT lead to a depreciation of the AUD?. ( I say this because my notes don't say anything about the Exchange rate influencing the TOT, but rather the TOT influencing the Exchange rate )
- You would answer by saying that if the TOT is falling, it reflects export prices falling faster or rising slower than import prices, which in itself reflects a decreased level of demand for the AUD relative to supply - causing a depreciation of the AUD.
If I'm wrong please let me know cos I kinda forgot about all of it right after my sac
Post by: NomotivationF on July 12, 2019, 12:26:32 am
We don't receive the foreign currency, we receive Australian Dollars. But yes, we do need to use more of our currency to purchase those imports - provided that we continue to actually purchase those imports at the relatively higher price level (in terms of our currency).
A depreciation of the Australian dollar means that exports are relatively cheaper in terms of foreign currency, increasing demand for our exports - thus increasing the export price index. Likewise, Australian imports become relatively more expensive in terms of our currency, reducing our demand for imports - thus reducing our import price index.
Since TOT is calculated as ((export price index)/(import price index) * 100), we should see a rise in the TOT.
... i think....
BUT
I'm pretty sure they would ask the question the other way around - i.e. how does a fall in the TOT lead to a depreciation of the AUD?. ( I say this because my notes don't say anything about the Exchange rate influencing the TOT, but rather the TOT influencing the Exchange rate )
You are completely right in saying (in terms of the study design at least) a change in exchange rates does not influence the TOT, although it does have an impact on net exports.
A change in TOT is only due to changes in global prices of imports and exports,
Quote
- You would answer by saying that if the TOT is falling, it reflects export prices falling faster or rising slower than import prices, which in itself reflects a decreased level of demand for the AUD relative to supply - causing a depreciation of the AUD.
This is more along the lines of what answers should look like regarding TOT.
Post by: vox nihili on July 16, 2019, 11:29:09 am
2. Explain why it can be argued that the underlying cash balance is considered a better indication of the budget position (4)
3. From the 2019 budget, outline an example of capital expenditure and current expenditure. (2)
5. With the use of data, explain how the budget outcomes can affect net government debt. (5)
You'd get a lot more from AN (and would more likely get help with your questions) if you tried to give them a shot first and let people correct that. We're here to help, not to do your homework for you :)
Post by: Loren_T on July 24, 2019, 06:01:54 pm
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?
Post by: emilyygeorgexx on July 24, 2019, 06:32:42 pm
Hi
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?
To assess whether the budget currently holds an expansionary or contractionary stance you will have to look at the budget outcome from 2019-20 and compare it to 2018-19. You then need to see whether the budget surplus or deficit increased or decreased. That will then tell you whether it is expansionary or contractionary. You cannot determine whether it is expansionary or contractionary on mere factors such as economic growth.
Post by: NomotivationF on July 24, 2019, 07:05:30 pm
Hi
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?
Hey Jessica, becuase the 2019/2020 is a surplus, it means that it is a mildly contractionary budget due to the fact there are more leakages compared to injections into the economy. You're right in saying that the budget has tax cuts and infrastructure spending, however, due to it still being a surplus budget we need to address it as being contractionary. However, the interesting part is, that the stance of the monetary policy is expansionary, which opposes the government's contractionary stance on the budget. I think it's best to ask your teacher about this question, but purely for our current study design, a budget that is in deficit is an expansionary budget, and a budget that is in surplus is a contractionary budget.
Post by: Loren_T on July 24, 2019, 08:35:47 pm
Post by: Jmac02 on August 24, 2019, 09:34:12 am
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)
Thanks.
Post by: Seamus Wong on August 24, 2019, 12:07:03 pm
Hello everyone,
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)
Thanks.
I haven't learnt about this in class but here is what I would be thinking....
More Job vacancies means that we are operating within our productive capacity and we have room to grow production levels. In relation to outcome 2: Aggregate Supply, higher job vacancies could be indicative of firms having expanded their operations (due to, for example, higher technical efficiency and thus an increased ability to produce more) and therefore having created new jobs in the process. These new jobs are 'vacant' positions that firms wish to have filled. Indeed, all things being equal, we should see an inverse relationship between employment growth and job vacancies.
i would then assume that lower job vacancies may reflect Australia operating at it's productive limit.
This would be an interesting case since Australia would be forced to expand its aggregate supply due to increased risk of demand-inflationary pressures. Here, however, the government would be limited in their options since most Aggregate-supply side policies have long implementation lag. This is generally why it's so important to be constantly improving AS and overall productivity.
This explanation may be entirely incorrect though cos I haven't done any reading about job vacancies.
If I have said anything wrong, please let me know.
Post by: Jmac02 on August 24, 2019, 01:46:19 pm
Post by: Jmac02 on August 24, 2019, 06:34:37 pm
Can a budget deficit occur when the gov't has a contractionary stance?
Thanks.
Post by: Jmac02 on August 24, 2019, 10:39:41 pm
Post by: Seamus Wong on August 25, 2019, 10:04:37 am
Hi again,
Can a budget deficit occur when the gov't has a contractionary stance?
Thanks.
A budget deficit can indeed occur when the government has a contractionary stance.
The budget deficit just has to be lower relative to the deficit the year prior (given that there is a deficit from the year prior)
For example, Let's create this hypothetical scenario:
2017:
Government runs an expansionary budget
Total Budget Receipts = 21
Total budget outlays = 441
= Budget Deficit of $420
2018
Government runs a contractionary budget by reducing total outlays and Increasing total receipts
Total Budget Receipts = 73
Total Budget Outlays = 138
= Budget deficit of $69
You see, although 2018's budget was in the red, the deficit was smaller than 2017 (69<420).
However, IF you are only given one year's figure IN ISOLATION, you would just assume that it would be contractionary or expansionary based off of whether it's a deficit or surplus.
Post by: Seamus Wong on August 28, 2019, 12:16:57 am
Hello everyone,
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)
Thanks.
I just re-evaluated my reply to this question and I think an important thing to realise is that Job vacancies are also dependent on Aggregate demand. For example, if firms are expanding their operations due to a rise in aggregate demand, job vacancies will rise as businesses seek greater quantity of labour resources to help keep up with rising levels of sales and production.
The fact that some Aggregate-supply-side policies rely partly on Aggregate-Demand represents one of the flaws with some AS-side policy measures. For example, take welfare reform. By encouraging Australians to enter the labour force, there needs to actually be jobs available. If jobs are not available but more people are entering the labour force, the unemployment rate will rise, and more individuals would meet the work test (i.e. the test that shows that welfare recipients are searching for work), meaning that strain is placed on budget finances as more welfare payments to the unemployed are made. This can lead to the government taking on even more debt to finance the now higher level of budget spending, which can obviously bring about a host of other issues.
So yeah, I would more link Job Vacancies to Aggregate demand than aggregate supply, since they reflect short-term fluctuations in the demand for labour.
Post by: Jmac02 on September 08, 2019, 09:37:34 am
Post by: NomotivationF on September 08, 2019, 10:56:49 am
Hey everyone, how many budget initiatives should we remember for each area of AS policy (ie. 1 for spending on infrastructure, 1 for R&D, etc.) and can you have the same initiative for two areas of AS Policy? Thanks.
Hey Jmac, I would suggest knowing atleast 1 initiative for each area of AS policy. In recent exams VCAA has been asking questions about specific policies, instead of letting you pick one. Here's some of the initiatives I remember for each policy;
Immigration - 108,682 skilled migrants that pass a 'points test,' based on their ability to contribute to the Australian economy are let into the country. This policy mostly targets rural areas of Australia that are in shortage of skilled workers. (increase availability of resources).
Tax - You can use the accelerated depreciation allowance where assets under $30,000 can be written off as a tax liability for businesses, or (this is the one I use) you can use the elimination of the 37% and the 32.5% tax bracket and the creation and expansion of a 30% tax bracket for income earners of $37,000 - $200,000. This tax bracket change aims to eliminate the effect of 'bracket creep,' and encourages workers to take on more responsibilities (increase efficiency).
Welfare - Jobs for family package, government is investing $30 billion into the quality and quantity of childcare, as well as offering mothers up to an 80% subsidy (on a sliding scale) for putting their children in childcare. This incentives mothers to re-enter the workforce as they .... (increases availability of resources).
Budgetary initiatives
Infrastructure - Government has pledged to invest $100 billion in infrastructure over the next 10 years, initiatives including but not limited to the construction of $2 billion Melbourne - Geelong rail and the $5 billion Melbourne - Melbourne airport rail link. This increases mobilisation of resources .... (increases efficiency)
Training and Education - Youth jobs PaTH program. Young individuals at risk of long term welfare dependence are Prepared (trained), Trailed (interned) and Hired (mostly through wage subsidies provided to firms). (Increased availability of resources).
Research and Development - Businesses engaging in R+D are allowed to inflate their expenses on R+D by 143.5% in order to reduce the amount of company tax they pay on their profits. Incentives R+D, if successful ...... (increases efficiency).
Subsidies - (Not too sure about this one I don't usually use it, recheck with your teacher.) Export development grants are provided to firms engaging in overseas expansion/advertising, providing these businesses with up to a 50% subsidy on their costs for overseas expansion, provided they spend atleast $15,000. This allows ....... (reducing costs of production).
Post by: Jmac02 on September 08, 2019, 01:38:13 pm
Post by: Jmac02 on September 14, 2019, 07:56:29 am
Post by: NomotivationF on September 15, 2019, 03:17:50 pm
How do welfare reforms face a challenge because of a possible trade-off between the promotion of efficiency and the protection of equity in income distribution? Thanks. :)
Hmm I'm not sure if this question is from a practice exam or sac, but the concept of equity isn't part of the economics study design. In terms of answering the question (while disregarding the equity part) I'd say the government can divert their resources towards research and development/training and education instead of welfare, or something around that nature.
Post by: Jmac02 on September 15, 2019, 05:06:22 pm
Hmm I'm not sure if this question is from a practice exam or sac, but the concept of equity isn't part of the economics study design. In terms of answering the question (while disregarding the equity part) I'd say the government can divert their resources towards research and development/training and education instead of welfare, or something around that nature.
That's what I was thinking, will have to check up with my teacher about it. Thanks for the help, anyway. :)
Post by: Jmac02 on September 15, 2019, 05:09:43 pm
Thanks again. :)
Post by: NomotivationF on September 15, 2019, 09:25:19 pm
Also, can anyone please answer this. 'Explain how the provision of subsidies as a form of protection has been discredited. In your answer, refer to both the short and long term.
Thanks again. :)
This question is kinda tied in with Unit 3 aos 3. Overall, protection of the economy is usually considered bad in the long run. This is because
even though protection can have short-term benefits for some groups, it tends to result in negative outcomes for the economy in the longer term.
-This is because higher levels of protection reduce competition for local import competing producers and result in less pressure to minimise costs and prices
-There is also less incentive to improve efficiency and performance and tariffs also work to act as a tax on other Australian industries
-Over time, foreign producers tend to become relatively more efficient as they are exposed to greater competitive pressures; they can then reduce prices and gain a foothold in the Australian market, and Australian firms will then ask for an increase in tariffs to ‘protect Australian jobs’
-This process becomes destructive as inefficiency of local producers becomes entrenched, raising the cost structure of the Australian economy and increasing the likelihood that foreign governments will retaliate and protect their local producers from those Australian exporters that have a comparative advantage (eg mining).
However, subsidies are still offered in some forms such as the export development grants as I mentioned a few replies ago.
Post by: Jmac02 on September 15, 2019, 10:01:36 pm
Post by: Hetvi on September 16, 2019, 07:27:15 pm
Could you update me with some latest statistics I can’t seem to find them. Also does anyone by chance have some economic resources. That would be nice thank you so much :)
Post by: tcvc on October 09, 2019, 08:52:58 pm
I've been doing some practise exams which have supposedly been modified from the old study design and I keep finding questions which talk about achieving the goal of "external stability". It's not to complicated, but I haven't done anything on it all year. Does anyone know if it is part of the study design or not?
Any help would be awesome, cheersf
Post by: NomotivationF on October 10, 2019, 08:12:10 pm
Hi,
I've been doing some practise exams which have supposedly been modified from the old study design and I keep finding questions which talk about achieving the goal of "external stability". It's not to complicated, but I haven't done anything on it all year. Does anyone know if it is part of the study design or not?
Any help would be awesome, cheersf
External stability is no longer part of the study design. However, the term basically means an improvement in the CAD.
Post by: Jmac02 on October 11, 2019, 07:05:05 pm
Can anyone please help me with this?
"Provide one possible explanation for the full employment rate of unemployment falling below 5%?"
My guess is it has to do with increasing the productivity and efficiency of the labour force.
Thanks :)
Post by: NomotivationF on October 11, 2019, 09:16:36 pm
Hey all,
Can anyone please help me with this?
"Provide one possible explanation for the full employment rate of unemployment falling below 5%?"
My guess is it has to do with increasing the productivity and efficiency of the labour force.
Thanks :)
Ahh you can use a looooot of stuff here to be honest, but it really depends on how many marks the question is worth, as it may hint to whether it wants you to talk about AD factors that have led to the unemployment rate falling below 5%, or the casualisation of the workforce.
Here is what I would say if it was asking for both.
In recent economic times, the RBA has lowered the cash rate from 1.50% to 0.75%, with the most recent rate cut being in October 2019. This cash rate cut aims to lower the interest rate and increase aggregate demand through one of the five transmission mechanisms. In terms of the cash flow transmission mechanism, lowering the cash rate would mean consumers/businesses with existing variable loans would experience an increase in their discretionary income, due to having to pay lower rates of interest on their loans. If businesses or consumers choose to spend this newfound income, there may be an increase in private consumption expenditure (c) and/or investment expenditure (I), and thus an increase in AD. As firms increase their production to meet the increasing consumer demand, they will create a greater derived demand for labour, which may have contributed to the increase in employment and the lowering of the unemployment rate. However, although the unemployment rate has been steadily decreasing, the underemployment (members of the labour force that are currently employed but would like to work more hours) rate has been increasing. This may be due to the increasing casualisation of the workforce which involves an increasing amount of part-time and causal workers being hired to full time workers. Although this does still result in a reduction in the unemployment rate, the underemployment rate has been increasing.
Post by: Loren_T on October 11, 2019, 09:18:08 pm
Hey all,hi- im just having a go at answering a question for once here ;D
Can anyone please help me with this?
"Provide one possible explanation for the full employment rate of unemployment falling below 5%?"
My guess is it has to do with increasing the productivity and efficiency of the labour force.
Thanks :)
the goal of full employment is to have an unemployment rate of 5% of the labour force...
I guess if the rate of individuals who are unemployed becomes lower than 5%, that indicates that the demand for labour has increased. This could be caused by an aggregate demand side policy (or budgetary policy), such as high government spending on training and education. This policy would boost the productivity of the labour force, thus expanding the production possibility frontier. In response, firms will make job vacancies which can be more easily entered into by individuals who are able and willing to work, as high spending on training and education enhances the skill set of the labour force.
Post by: Jmac02 on October 11, 2019, 09:21:20 pm
Post by: Loren_T on October 11, 2019, 09:41:24 pm
you could choose any favourable AD side factor from the budgetary or monetary policy and explain how it would lead to increased employment and participation rate, therefore stimulating a boom in the economy, where unemployment is low and inflation and GDP rises.
Post by: Jmac02 on October 26, 2019, 06:02:27 pm
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.
Post by: NomotivationF on October 26, 2019, 08:08:43 pm
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
Post by: Jmac02 on October 26, 2019, 09:00:07 pm
Post by: humma23 on November 07, 2019, 10:00:50 am
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!!
Post by: NomotivationF on November 07, 2019, 07:16:52 pm
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.
Post by: Jmac02 on November 10, 2019, 08:40:55 pm
Evaluate the role of the market in achieving an efficient allocation of resources.
:)
Post by: quokka1217 on November 10, 2019, 09:18:48 pm
Thanks in advance :))
Post by: IThinkIFailed on November 11, 2019, 01:07:46 pm
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??Nope, only for that question
Thanks in advance :))
Post by: Jmac02 on November 14, 2019, 06:07:23 pm
Post by: pahm on March 09, 2020, 07:32:34 pm
- 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!!
Post by: Balfe on March 09, 2020, 08:09:10 pm
"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!
Post by: pahm on March 09, 2020, 10:56:45 pm
Hey! Firstly, you should define both terms (2 marks) and then provide your explanation (1 mark).ah I see where I went wrong - thank you so much! ;D
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!
Post by: Stormbreaker-X on March 10, 2020, 11:28:32 am
Post by: pahm on March 12, 2020, 04:07:04 pm
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?
Post by: ashercap on March 14, 2020, 05:30:16 pm
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 :))
Post by: Stormbreaker-X on March 14, 2020, 10:19:27 pm
Hey Guys,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.
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 :))
Post by: pahm on March 17, 2020, 01:25:15 pm
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 :))
My teacher said the stuff to include are 1, definitions of any key concepts mentioned in the question and 2, examples if needed (for questions with 2+ marks)
Post by: j8son on August 11, 2020, 01:00:43 pm
1. Fully explain the effect of a increase in consumer confidence on the standard of living in the Australian
economy.
2. Fully explain the effect of a decrease in interest rates on the standard of living in the Aust economy.
3. Fully explain an increase in demand for our iron ore by China, on Australia’s goal of eco growth.
4. Fully explain the effect of an increase in labour wages on AS.
5. If the AUD depreciated, fully explain the effect on AS & our productive capacity.
6. Fully explain the effect on AD & the goal of economic growth, if the AUD appreciated.
Post by: justaloser on August 11, 2020, 01:29:58 pm
Hi i am currently in year 10 and i just moved into economics and i am really behind ive done some questions but i dont understand these 1s. Thank you for reading.
1. Fully explain the effect of a increase in consumer confidence on the standard of living in the Australian
economy.
2. Fully explain the effect of a decrease in interest rates on the standard of living in the Aust economy.
3. Fully explain an increase in demand for our iron ore by China, on Australia’s goal of eco growth.
4. Fully explain the effect of an increase in labour wages on AS.
5. If the AUD depreciated, fully explain the effect on AS & our productive capacity.
6. Fully explain the effect on AD & the goal of economic growth, if the AUD appreciated.
So I'm getting that you're currently doing AD, is this Unit 2?
Think about AD like a math equation - C+I+G+X-M*. If you increase the quantity of C, then AD increases right. If you decrease the quantity of X, AD decreases. This equation is super important in Economics so you should both understand it and memorise it
*AD = Consumption + Capital Investment + Government Expenditure + Exports - Imports .
So for questions 1, 2, 3, 6:
Basically you need to revise your components of AD* so that if you see a question relating to AD, you can think, "which component of AD does this relate to?" and/or "which factor affecting AD is relevant". In question 3 the relevant factor is overseas demand and the component is exports. The second part of the questions eg. "impact on eco. growth" or "impact" really just relate to AD. So you should revise how changes in AD affect standards of living, goal of econ. growth etc. So going back to question 3, since there's more demand for exports, then exports increase and AD increases. Since increased AD increases economic growth, then would we be closer to reaching our economic growth goal? (considering target range is 3-3.5% and we're below that).
Hopefully that helps, you can DM me for a better explanation.
Post by: j8son on August 12, 2020, 09:53:15 am
1) If the AUD depreciated, fully explain the effect on AS and our productive capacity.
(aggregate supply)
Thank you for reading
Post by: dskel on August 26, 2020, 12:39:20 am
any1 know how to do this question?
1) If the AUD depreciated, fully explain the effect on AS and our productive capacity.
(aggregate supply)
Thank you for reading
A depreciation of the AUD is likely to have a negative effect on aggregate supply. A depreciation means Australians are required to exchange more Australian dollars for the same amount of foreign currency, as the value of foreign currency rises relative to the Australian dollar. Therefore, the cost of foreign goods and services will, ceterius paribus, increase. Firms who need to import inputs (intermediate goods) such as refined natural resources, for example, will have to pay a higher price which increases cost of production. Furthermore, the importation of capital such as factory machinery will also become more expensive, further increasing the cost of production. An increase in cost of production reduces per unit profits which reduces for profit-maximising firms the incentive to produce, decreasing aggregate supply.
Productive capacity is the maximum possible sustainable output of an economy. Higher AUD in decreasing the availability of suppliers to obtain capital will reduce the potential output of an economy as labour will be less productive with relatively less capital (tools and machines). Therefore, decreasing the efficiency of firms and reducing the economy's productive capacity.
Post by: Samueliscool223 on February 11, 2021, 11:15:41 pm
Post by: carpediemcras on February 13, 2021, 11:37:51 am
would a point outside the ppf represent a lack of intertemporal efficiency, similar to how a point on the ppf curve represents technical efficiency?
Not exactly - Any point outside the PPC represents a level of output that is currently unattainable for the economy (ie. they do not have the resources, technology, etc. required to increase productive output at their current point in time). A point outside the PPC therefore can't be considered to represent a lack of intertemporal efficiency, as the economy can't produce more without further technology advancements, increased productivity, etc.
Generally speaking, the PPC won't be used to comment on intertemporal efficiency, but I would say that points along the PPC are not necessarily intertemporally efficient, as the maximal output may not be sustainable. A point below the PPC might be more intertemporally efficient than one along the PPC.
Hope that helps :D
Post by: Samueliscool223 on February 17, 2021, 10:11:20 am
Not exactly - Any point outside the PPC represents a level of output that is currently unattainable for the economy (ie. they do not have the resources, technology, etc. required to increase productive output at their current point in time). A point outside the PPC therefore can't be considered to represent a lack of intertemporal efficiency, as the economy can't produce more without further technology advancements, increased productivity, etc.ok that makes sense, thanks
Generally speaking, the PPC won't be used to comment on intertemporal efficiency, but I would say that points along the PPC are not necessarily intertemporally efficient, as the maximal output may not be sustainable. A point below the PPC might be more intertemporally efficient than one along the PPC.
Hope that helps :D
Post by: jjessiie. on April 15, 2021, 02:45:11 pm
Post by: Samueliscool223 on June 21, 2021, 09:24:47 pm
Australia’s international competitiveness (e.g. Australian exports become relatively more expensive compared to competing products in the USA) and result in both fewer exports and a reduced demand for Australian dollars." OK!!!! MAKES SENSE!!!! BUT WAIT, THE DUMMY WHO WROTE THIS CONTRADICTS HIMSELF AND VCAA, WITH SIMULAR QUESTIONS GIVING DIFFERENT LINES OF LOGIC (ANSWER TO MC QUESTION 14 IN THE EXAM BY VCAA WHOSE LOGIC CPAP AGREES WITH)::::: "If there were an increase in inflation rates in the United States (US) it is likely that there would be an increase in US interest rates to bear down on the inflationary pressure. By raising US interest rates, it is likely to also mean that investors from around the world would be attracted to the higher interest rate returns on offer in the US. Therefore, there might be capital outflow from Australia, thus leading to a depreciation of the Australian dollar." wtf?? heh?? this is completely different reasoning, AND NOW IM JUST CONFUSED. THANKS CPAP, MORE LIKE """CRAP""", THIS CONFUSION IS COSTING ME SAC MARKS.
IN ADDITION,,,,, THE VCAA QUESTION IS E X T R E M E L Y FLAWED..... LIKE IT SAYS INFLATION, BUT IT DOESNT SPECIFY THAT ITS DEMAND INFLATION!! IT COULD BE COST INFLATIONARY PRESSURES THAT RESULT IN BUDGETARY ACTION TO INCREASE INFRASTRUCTURE PROJECTS N SHIT WHICH WOULD PROBABLY HAVE A DIFFERENT EFFECT ON THE EXCHANGE RATE. THIS IS JUST ONE QUESTION AMOMG THE INFATHOMABLE NUMBER OF UTTERLY FLAWED EXAM QUESTIONS. HENCE, I BELIEVE THE ECONOMICS COURSE IS GARBAGE AND BROKEN. -5/10, WOULD NOT RECOMMEND DOING SUBJECT.
THANK U FOR LISTENING TO MY TED TALK.
Post by: rkjthguakj on June 22, 2021, 01:16:11 pm
I keep finding contradictions in the CPAP study guide/jacaranda text book and its pissing me off. AND I DONT SEE A SINGLE PERSON TALKING ABOUT THIS STUFF. LET ME GIVE U AN EXAMPLE, the this stupid question asked by CPAP: "Explain how a decrease in the USA inflation rate compared to rates of inflation in Australia would influence the exchange rate" and the answer is, "higher relative rates of inflation in Australia will reduce
Australia’s international competitiveness (e.g. Australian exports become relatively more expensive compared to competing products in the USA) and result in both fewer exports and a reduced demand for Australian dollars." OK!!!! MAKES SENSE!!!! BUT WAIT, THE DUMMY WHO WROTE THIS CONTRADICTS HIMSELF AND VCAA, WITH SIMULAR QUESTIONS GIVING DIFFERENT LINES OF LOGIC (ANSWER TO MC QUESTION 14 IN THE EXAM BY VCAA WHOSE LOGIC CPAP AGREES WITH)::::: "If there were an increase in inflation rates in the United States (US) it is likely that there would be an increase in US interest rates to bear down on the inflationary pressure. By raising US interest rates, it is likely to also mean that investors from around the world would be attracted to the higher interest rate returns on offer in the US. Therefore, there might be capital outflow from Australia, thus leading to a depreciation of the Australian dollar." wtf?? heh?? this is completely different reasoning, AND NOW IM JUST CONFUSED. THANKS CPAP, MORE LIKE """CRAP""", THIS CONFUSION IS COSTING ME SAC MARKS.
IN ADDITION,,,,, THE VCAA QUESTION IS E X T R E M E L Y FLAWED..... LIKE IT SAYS INFLATION, BUT IT DOESNT SPECIFY THAT ITS DEMAND INFLATION!! IT COULD BE COST INFLATIONARY PRESSURES THAT RESULT IN BUDGETARY ACTION TO INCREASE INFRASTRUCTURE PROJECTS N SHIT WHICH WOULD PROBABLY HAVE A DIFFERENT EFFECT ON THE EXCHANGE RATE. THIS IS JUST ONE QUESTION AMOMG THE INFATHOMABLE NUMBER OF UTTERLY FLAWED EXAM QUESTIONS. HENCE, I BELIEVE THE ECONOMICS COURSE IS GARBAGE AND BROKEN. -5/10, WOULD NOT RECOMMEND DOING SUBJECT.
THANK U FOR LISTENING TO MY TED TALK.
One of the writers for the CPAP textbook worked at my school and even he admits that the textbook is riddled with errors. I personally didn't like the CPAP textbook and preferred the Jacaranda textbook. A lot of CPAP content tends to ramble and is irrelevant to SAC and exam questions.
Post by: pahm on June 22, 2021, 03:39:02 pm