Yay economics :D3/4 of the way through unit 3. Started making notes/preparing for the first SAC D:
where is everyone up to?
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.
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.
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?
I'm way backin AoS 1, done about the first 4 dotpoints but making fairly swift progress.
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?
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
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
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.
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?
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?
C) Price of all goods and services will be negotiated by the forces of demand and supply.
This is incorrect because ______.
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.
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?
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.
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.
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.
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.
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?
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?
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.
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.
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)?
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
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!
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'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...
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.
@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:
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)
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!"
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
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.
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 :(
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.
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.
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
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)
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.
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
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?
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.).
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:
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?
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.
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?
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.
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!
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.
I thought Higher AUD (Exclude TOT) leads to reduced international competitive as our final goods and services become more expensive?
Eg Tourism Education
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!
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!
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?
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
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)."
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?
http://www.rba.gov.au/
Cash rate is now at 4.5%!
This means that the policy mix is conflicting, YO.
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.
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)?
ARGHHHHH. We need Sam to help us xD.Yeah, I haven't seen Sam around these parts for a while!
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.
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?
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?
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
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
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.
do you ever see things at the beginning of AOS 1 E.G. ppf, relative scarcity, oppurtunity cost on an exam?
Yeah, I think there was a 1-2 mark question on relative scarcity on last years exam.
I've done 4 so far and halfway thorugh my 5th. I'm aiming for 6 altogether from now til the exam.Good job!
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.
:)
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.
:)
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.
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
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?
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.
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.
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.
"... 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.
"... 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.
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.
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.
anyone know a demand and supply factor effecting external stability in last 12 months?
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. :-\
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 :)
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.
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?
HsWhat is the book which has a paperback green cover for 3/4?
Just curious - whats the difference between the cash rate and the interest rate?
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?
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.
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?
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)
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
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.
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.
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.
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.
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.
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?
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.
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.
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).
could someone please explain the effect of an appreciation of the exchange rate on income and employment?
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.
@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'.
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?
Basically it means that consumers can choose what goods and services they get
thanks for clearing that up guys! could someone explain the 'chain' method?
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
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.
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)
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.
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.
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
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%".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.
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
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?
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?
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.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.
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?
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
The carbon tax would be an appropriate environmental policy to use for this year's exam right?
Is it possible for the exam to force you to use the ETS instead of the carbon tax?
• how one environmental policy is designed to influence aggregate supply, long-term economic prosperity and living standards;
The carbon tax would be an appropriate environmental policy to use for this year's exam right?
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.
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.
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.
I would probably go with GPI because its much easier to explain. Personal preference really..
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.
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.
Wouldn't an increase in production costs have the same effect as the company tax rise? Making them all AD factors in that case.
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.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!
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
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.
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?
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?
Iirc they're doing 3/4 next year without 1/2. Pretty sure they're 2014 grad.Yeap, 2014 Grad.
Yeap, 2014 Grad.
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
Hey sorry, pressed modify instead of quote :(
Is it possible to get the post back?
"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?
"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.
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?
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..
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.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 :)
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
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..
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.
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?
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.
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,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.
"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.
"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.
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!
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.
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.
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!
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?
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?
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.
Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.
Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.
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]
Hope this helps!Remember there are externalities in production and externalities in consumption.
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!
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.
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!
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
• 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);
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.
why do falling stocks cause inflation or increase prices?
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!
the nature, significance and measurement of international transactions including the balance of payments, exchange rates, terms of trade and net foreign debt;
Anyone have summarised notes on EG/ FE/ DIST ??
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!
How do changes in the budgetary policy affect inflation?
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!
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.
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?
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.
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?
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.
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.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.
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!
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.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.
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).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].
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..
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.Ok that is strange.
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?
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.
Is this where I post , if I need help with a question ?
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.
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?
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?
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).
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!
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!
What are the consequences of zero/very low inflation?
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.
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 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!
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.
how does a contractionary budget actually slow AD, and how does expansionary increase AD? can someone please explain the process thanks
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.
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 :)
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?
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
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.
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.
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.
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".
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?
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
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.
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...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
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.
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
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
When the RBA buys Australian dollars, is that money taken out of the foreign exchange market circulation?
Anyone have any examples of Automatic Stabilizers in the 2014-15 budget? Would something like the changes to unemployment benefits be one?
Are we allowed to use the carbon tax on the exam even though its abolished?
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?"
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.
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.
@Zeitegeist Means when the AUD falls, imports from overseas are more expensive
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?
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 :))
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
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
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)?
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
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.
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.
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.
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.
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.
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....?I think you're right..
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 :) :)
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!
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
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.
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
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! :)
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!! :)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.
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 :(.
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).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
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
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!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
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.
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 marketsThat is true, but as it isn't on the study design I'm confused on why you want to answer it.
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
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 😃
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).
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..:)
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 :)
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.
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?
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.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.
Thanks, this does help :)
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.Thank you very much NomotivationF, I will take this advice on for my next SAC on Thursday. Wish me luck!
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.
Another quick thing, I asked a similar question before but why do higher interest rates attract investment from overseas?
Thanks.
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.
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.
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)
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?
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?
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.
Hi again,
Can a budget deficit occur when the gov't has a contractionary stance?
Thanks.
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.
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.
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.
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. :)
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
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 :)
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 :)
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.
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!!
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 :))
"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).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!
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.
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 :))
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 :))
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.
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
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.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
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.