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RuiAce

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HSC Economics Question Thread
« on: July 21, 2016, 11:06:40 pm »
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HSC ECONOMICS Q&A THREAD

To go straight to posts from 2018, click here.

What is this thread for?
If you have general questions about the HSC Economics course or how to improve in certain areas, this is the place to ask! 👌


Who can/will answer questions?
Everyone is welcome to contribute; even if you're unsure of yourself, providing different perspectives is incredibly valuable.

Please don't be dissuaded by the fact that you haven't finished Year 12, or didn't score as highly as others, or your advice contradicts something else you've seen on this thread, or whatever; none of this disqualifies you from helping others. And if you're worried you do have some sort of misconception, put it out there and someone else can clarify and modify your understanding! 

There'll be a whole bunch of other high-scoring students with their own wealths of wisdom to share with you. So you may even get multiple answers from different people offering their insights - very cool.


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Original post.
Before you can ask a question, you'll have to make an ATAR Notes account here. Once you've done that, a little 'reply' button will come up when you're viewing threads, and you'll be able to post whatever you want! :)

Hi everyone! This is a place to post your economics questions!

The course can sometimes, frequently or always be rigorous. The HSC itself was never intended to be easy either. But someone will come to your query in due time!

Always remember that this is a community for everyone to collaborate. Never be afraid to post; you are not the only one who needs it!
« Last Edit: April 24, 2018, 12:58:57 pm by Joseph41 »

Spencerr

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Re: Economics Question Thread
« Reply #1 on: July 22, 2016, 05:42:08 pm »
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A few questions on globalisation if someone could help me with them :)


What is the impact of globalisation on the distribution of income in the Domestic Economy and In the global economy?

What is the impact of globalisation on the quality of life and economic growth in the global economy?
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conic curve

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Re: Economics Question Thread
« Reply #2 on: July 22, 2016, 09:22:18 pm »
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Can someone here please explain to me factors affecting elasticity of demand, like I read this and I still don't get it

Thanks  ;)

RuiAce

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Re: Economics Question Thread
« Reply #3 on: July 22, 2016, 09:37:25 pm »
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Can someone here please explain to me factors affecting elasticity of demand, like I read this and I still don't get it

Thanks  ;)
Having done Micro 1 at UNSW I can help you out here.

Note that the elasticity of demand is a measure of responsiveness as to a change in price. It is basically the change in quantity demand for a small change in price.

(Keep at the back of your head that according to the law of demand, consumers have a greater willingness to buy more in quantity when the prices are low.)

Analyse the scenarios logically. Consider the elastic side. (I'll leave some for you to do yourself)
Elastic demand implies that a change in price will more greatly affect a consumer's decision to purchase the product.
- If a luxury goes up in price, the consumer would really have to think about if it's worth buying anymore (everyone has different reservation prices). The demand would be elastic because depending on the scenario, even small price changes can largely affect their decision.
- If there are close substitutes, the consumer can just say oh well we can buy the other good then. Hence for a small change in price they probably won't go for the same good anymore, rather go for a similar good.
- In the long run, consumers probably have a better understanding of the market and they also have more money to be flexible with. They now know that if the price changes for something, they can go elsewhere.

Then consider the inelastic ones.
- If a necessity goes up in price, you're still going to buy it. E.g. you will probably buy water no matter what the price is. You need it.
- If there are few substitutes, then if the price goes up by a tiny amount you really can't buy anything else. The consumer's responsiveness is quite low yet again because they can't jump to something else - they will still buy the same product. It would probably have to be a much greater change in price before they go for something else.
- In the short run, consumers have to make their decisions fast. If the price change is minor, they don't have the time to think into the future and will probably buy it anyway.
« Last Edit: July 22, 2016, 09:45:03 pm by RuiAce »

birdwing341

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Re: Economics Question Thread
« Reply #4 on: July 22, 2016, 09:40:55 pm »
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I'm just thinking about the first one atm, but I remember reading somewhere there were three types of inequality that was caused by globalisation.
1. Global GDP Inequality (which isn't income inequality but kind of relates to the second one): It's basically when different countries produce more than other ones because of their natural factor endowment.
2. Domestic Inequality: the income inequality that arises when the process of globalisation affects a nation. Often the wealthy are bigger winners as they generally have a higher propensity to save. These savings can be used to invest in companies which experience growth due to globalisation. Those with less income are unable to capitalise so much on these investments, but are still able to experience increased income by skilling up in these industries
3. Income inequality between nations: Basically involves different nations having different GDP per capita kind of due to the population and the output of the country. Generally advanced economies have higher GDP per capita, because of their natural factor endowment. There are also a number of reasons for differences in economic development between nations which you can add on.

Hope that helps :)

hermansia12

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Re: Economics Question Thread
« Reply #5 on: July 22, 2016, 10:27:32 pm »
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A few questions on globalisation if someone could help me with them :)


What is the impact of globalisation on the distribution of income in the Domestic Economy and In the global economy?

What is the impact of globalisation on the quality of life and economic growth in the global economy?

For both extended responses, first start off with a definition:
Globalisation is the increasing integration between different countries economies and culture.

Then identify some key economic issues that arise due to globalisation; e.g It has led to a shift in global trade flows, trade blocs etc.

The first question: The distribution of income is directly related to the quality of life and the changing trade flows which lead to a more integrated economy. Whilst this may be beneficial for some economies (mostly those in  developed economies) It can cause exploitation of workers in order to "maximise" productivity and increase profits (decreasing quality of life). However, this can lead to income gaps  which hinder an equal distribution of income in domestic economies. The Aus gov. combats this by setting a minimum wage (which is $17.70 per hour). 
 
To answer the second question,  identify how the above-listed issues relate specifically to the quality of life (ie distribution). So the first paragraph can include an explanation of how globalisation increases trade flows  and its effects (e.g globalisation has allowed for the trading of technology and innovation which in turn leads to cheaper transport costs, lowering production costs)  This can increase the quality of life (consumers can buy more-> Econ. Growth) This can be seen with the increase in the volume of world trade by 50 times the 1950s volume.

Innovation and the effects of sharing tech are also key factors in the changed quality of life and economic growth. People doing Brazil as a case study can include the effects of Ethanol on Brazil's economy and environment (which also relates to Quality of life).

The increase in the volume of world trade can also be attributed to trading blocs and an increased focus on free trade (a decrease in protectionist policies). Then this paragraph should link to how whilst trade blocs ideally leads to increased trade (comparative advantage so Econ. growth), there are some disadvantages. Exclusivity of trading blocs and free trade agreements usually exclude developing countries (lower demand for their exports) which can stump economic growth and cause income gaps  (then a lower quality of life).   With recent news of Britain leaving EU, it is also evidence that trading blocs may not be as effective, so the effects of Globalisation on growth may be slowing down. This means governments should look towards fiscal policy for future economic growth.

Of course, this is just my interpretation of how I would answer thequestion. In economics, everything links so there are many different topics and ideas you can put in the essays. Just ensure there are stats and relevant current affairs analysis to back your points.  For me, these 2 questions are really similar so the same stats and concepts could be used but argued differently.
« Last Edit: July 22, 2016, 10:47:02 pm by hermansia12 »
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green-jake

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Re: Economics Question Thread
« Reply #6 on: July 24, 2016, 11:50:22 am »
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Three effects of a persistent CAD on external stability?

hermansia12

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Re: Economics Question Thread
« Reply #7 on: July 24, 2016, 06:54:33 pm »
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Three effects of a persistent CAD on external stability?

Hey green Jake,

External stability is the ability for Australia to service its foreign liabilities sustainably. This will affect how susceptible the economy is to external economic shocks and volatility.

Now if an economy (such as Australia) has a persistent CAD, then it means that it has less to spend on fiscal policy due to the accumulation of interest from foreign debt. (Foreign debt is a debit in the net primary income)  This can affect the quality of life in the economy (less to spend on infrastructure due to fiscal burden-> unemployment and economic growth) which can slow down long-term economic growth (affecting our external stability as it becomes even harder to pay our debts).

A long term CAD can also make the economy more volatile (economy is linked to other countries economies more closely-> Less stable) This can mean that long-term economic growth slows down, causing an increase in long- term unemployment which makes the economy less productive   

However a CAD is not all bad- Australia has had a history of low savings (with Household savings ratio at 0% in 2002). The CAD has allowed the financing of expensive infrastructure which allows for comparative advantage (Increase in productivity -> More exports). This improves our external stability by increasing the credit in the Balance of Goods and services. This was seen in the 2010 mining boom. 

Hope this helps :)
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isaacdelatorre

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Re: Economics Question Thread
« Reply #8 on: July 24, 2016, 07:21:48 pm »
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Hey,
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.

Thank you :)
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brontem

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Re: Economics Question Thread
« Reply #9 on: July 24, 2016, 08:04:12 pm »
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Hey,
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.

Thank you :)

You definitley need the economic objectives of the RBA/gov; the inflation target, unemployment target, Eco growth target
The current stances of monetary/fiscal policy (expansionary or contractionary?) the current cash rate, how much the budget is in deficit (& when it aims to be balanced)
The current rate of unemployment, inflation, economic growth (and their long term trends), the CAD and % of CAD of GDP
Australia's HDI, GNI per capita, gini coefficient and what rank this places them against the rest of the world (for HDI its also good to know what the lowest is)
Also knowing the diagrams for appreciation/depreciation of AUD, the phillips curve, lorenz curve and the tariff/quota/subsidy diagrams are useful to have  :D :D

olivercutbill

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Re: Economics Question Thread
« Reply #10 on: July 24, 2016, 08:13:10 pm »
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Are you Keynesian or a monetarist?
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hermansia12

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Re: Economics Question Thread
« Reply #11 on: July 24, 2016, 08:19:40 pm »
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Hey,
I just had a question on how to prepare for the exam.
Mainly finding statistics and trends and examples.
For my other exams I've written practice essays and just found statistics when I need them, however these were only on one topic.
For trials, I don't really have time to write an essay plan for every part of the syllabus. So what trends should I be looking at to fill out a summary sheet that can be applicable for all questions across the syllabus.

Thank you :)

Hey isaacdelatorre,

It's great to hear that you're doing practice essays and finding stats that way- That's a great way to prepare for the economics exam. In Economics you'll find that everything links. A good essay on economic growth (or any other economic issue) will inevitably tackle the other issues such as unemployment, inflation, external stability and environmental sustainability.

Therefore in your stats summary, I recommend looking over the budget and the proposed economic policies as well as key economic events such as the mining boom and GFC as well as some stats regarding the trade patterns in globalisation (e.g globalisation has increased volume of trade by 50 times the 1950s volume, APEC boosted Aus. output by 7% and created 50 000 jobs by 2010).

 The key trends that you should have memorised by now are economic growth, unemployment rates (especially with our notorious structural unemployment- manufacturing check this news article out Car manufacturing jobs at risk, cash rate, inflation and the current exchange rate (The changes in exchange rate is a powerful stat when doing external stability- amount of debt, cost of imports, confidence and speculation etc.)   

This is a lot to process and remember- my econ teacher always said economics was the physics of humanities subjects.

The best way to memorise stats I found was just doing as many questions and practice essays as possible and incorporating them as much as possible. If essays are too time-consuming, just write a thesis/topic sentence on how you would write the essay paragraph and dot point the stats that back it up.
 
 Good luck in trials!
« Last Edit: July 24, 2016, 08:23:25 pm by hermansia12 »
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Spencerr

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Re: Economics Question Thread
« Reply #12 on: July 28, 2016, 03:19:02 am »
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Hey there economics question!

Given the fact that the headline inflation rate fell down to 1%, what does this reflect about our economy? what impact will this have on the rest of the economy? and also how can fiscal policy be used to address this?
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hermansia12

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Re: Economics Question Thread
« Reply #13 on: July 28, 2016, 08:30:51 pm »
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Quote
author=diiiiiiiii link=topic=166444.msg890270#msg890270 date=1469639942]
Hey there economics question!

Given the fact that the headline inflation rate fell down to 1%, what does this reflect about our economy? what impact will this have on the rest of the economy? and also how can fiscal policy be used to address this?

Hi there diiiii

This is actually very exciting news for your course. This stat. can encompass a lot of economics theory.

Now inflation rate is currently at its lowest since 1999 (way lower than RBA’s target of 2-3% in order to stimulate stable economic growth) Unfortunately for the economy, such a low inflation rate shows that consumers are spending less -> Businesses will then lower prices in order to stimulate demand and economic activity. Our economic growth is demonstrative of this as we only have 3% growth, lower than the 3.5% required for us to maintain a stable unemployment rate.

Because of this lower demand and economic activity, RBA will usually implement monetary policy in order to stimulate demand. Lower Cash rate -> lower interest rate -> borrow more to spend (credit) -> High demand -> Higher inflation and growth. Historically, it has worked and been very effective to Australia’s stable growth, unfortunately monetary policy hasn’t been as effective recently as it has in the past (Gradual fall of the cash rate from 2.5% in 2015 to the current rate of 1.75%)

The cash rate and low inflation also relates to our Exchange rate (which is at $0.75US per Aus. Dollar). Theoretically, a fall in the exchange rate should stimulate exports (law of demand) however, Australia isn’t doing so well on the export front (cough structural unemployment -> Manufacturing only accounts for 7% of our output and slow down of the mining boom with slower growth in China). We have a greater focus on skilled labour -> School retention is high at compulsory of completing 12 years of education now and services accounts for 58% of our output.

Now with the effectiveness of monetary policy slowing down, we need to have focus more on implementing fiscal policy in order to stimulate economic activity -> Increase inflation to a healthier rate of 2-3%.

With our services sector so high, the government should have an increased focus on expanding tourism in Australia (This means no polluting the Great Barrier Reef -> Coalition promises to spend $1 Billion during election). This works with how tourism increases the amount of injections in the economy (Injection > Leakages = Econ growth). It should also increase spending on infrastructure -> increase our construction sector which accounts for 9% of our output. This will stimulate long term economic growth and allows for job creation -> Lowering unemployment (at 5.7% which is higher than the NAIRU rate of 5.5%) We can also make our services sector become more productive.

They should also focus on fiscally supporting small businesses and making them more efficient and productive. This will lead to job creation and an increase of spending in the economy. Small businesses are the backbone to long term economic growth! We are still relatively uncompetitive in the retail sector of the economy, accounting for only 5% of our output.

And these are just some of the effects that inflation has on our economy! Economics is exciting because literally everything links!

Hope this helps :) Happy analysing!

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sudodds

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Re: Economics Question Thread
« Reply #14 on: July 29, 2016, 12:10:05 am »
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heyaaa Idk if anyone has already asked this, but what are peoples opinions on including graphs within your essays? My teacher said you could but I was wondering if it is really worth the time, and whether or not you will receive the same amount of marks if you just reference the statistics/changes demonstrated?

Thanks!
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