HSC 2015 Economics Marathon (3 Viewers)

[pomsky]

Re: 2015 HSC Economics Marathon

lol ekman can i spam you with questions in your pm?

 

[teridax]

Re: 2015 HSC Economics Marathon

that being said, i'm really tempted to rote learn the whole of BOP as it just doesn't click with me

is this a good idea?

 

[Ekman]

Re: 2015 HSC Economics Marathon

By an increase in supply do you mean in the domestic market or the international financial market?

And if more Australians are investing on a global level>> why does it increase supply? Do they inject more AUD into the system?

Can you refer me to the relevant chapter in the textbook lol. I think I'm very confused.

@ the supply of AUD question. Found a paragraph in Riley's textbook but don't understand why it works the way it does:
"The supply of the AUD is derived from the demand by Australians for foreign goods and services and the purchase of foreign assets."

Why is it derived from the demand by Australians for foreign G+S? And how does this affect the supply?

There is only one market for currency and that is the FOREX market. So to look at it as if you are an Australian investor. You want to invest into an American company. When you invest, your AUD that you have will get exchanged into American dollars, resulting in an increase in supply of AUD in the FOREX market. This goes the same for Goods and Services. When you buy a pair of Nike shoes from America, your AUD that you pay with, gets exchanged into US dollars and increases the supply of AUD in the FOREX market.

 

[Ekman]

Re: 2015 HSC Economics Marathon

that being said, i'm really tempted to rote learn the whole of BOP as it just doesn't click with me

is this a good idea?

In my opinion, BOP seems to be mainly calculations and the CAD (structural and cyclical factors of BOGS and primary income). As long as you know them I guess you should be fine.

 

[Ekman]

Re: 2015 HSC Economics Marathon

Is this mainly for MC? Because it's what I've observed from doing the CSSA trial papers.

Calculations are more for MC and the CAD seems more for the essay or 5-6 markers.

 

[Ekman]

Re: 2015 HSC Economics Marathon

Sick.

Mind if I pm you for some help on a BOP calculation? Just not sure how to approach it. :/

Go for it I guess

 

[pomsky]

Re: 2015 HSC Economics Marathon

Why is the Current Account equal to the Capital and Financial Account under a floating exchange rate?

 

[Ekman]

Re: 2015 HSC Economics Marathon

Why is the Current Account equal to the Capital and Financial Account under a floating exchange rate?

That isn't entirely true:
Supply of AUD = Demand of AUD
M + Y Debits + K outflow = X + Y credits + K inflow
M-X + Y Debits - Y Credits = K inflow - K outflow
-CA=KAFA

 

[pomsky]

Re: 2015 HSC Economics Marathon

To what extent do we need to know about Keynes/Keynesian economcis? (and what can the gaps be used to explain?)

 

[nikkiglitzy_25]

Re: 2015 HSC Economics Marathon

Explain why an increase in business investment will lead to an increase in economic activity?

 

[aanthnnyyy]

Re: 2015 HSC Economics Marathon

Explain why an increase in business investment will lead to an increase in economic activity?

Simply business investment will increase economic activity through increase aggregate demand (AD=c+i+g+(x-m)). Any increases in AD leads to an increase in economic growth and as a result increasing real GDP. With increased business investment, more businesses will be established in turn reducing the levels of unemployment. - and with more business activity, greater output is generated with improved productivity and efficiency- contributing torch monic growth.
(When it you say business investment- does that include all businesses such as FDIs or only domestic?)

 

[aanthnnyyy]

Re: 2015 HSC Economics Marathon

Q. Discuss the main advantages and disadvantages of a depreciating dollar, under a floating exchange rate system

 

[Ekman]

Re: 2015 HSC Economics Marathon

Q. Discuss the main advantages and disadvantages of a depreciating dollar, under a floating exchange rate system

Adv:
-Australia's exports become cheaper, increasing the exports and international competitivness, improving BOGS. This also improves the level of employment and economic growth (and to a certain extent, allowing the Budget to go into a surplus)
-If the $AUD is low, foreign investors will find it easier to invest. Thus investor confidence will remain high as long as it is not continually depreciating.
-A depreciation will cause a increase in $AUD value of foreign income earned on Australia's investments abroad. The value of foreign assets will be increased as well due to the "valuation effect".

Dis:
-Australian consumers have less 'purchasing power', as they can now buy less quantitiy of goods overseas as they are more expensive.
-Increases the value of interest servicing costs on foreign debt, as Australians can now buy less foreign currency with $AUD. This in turn increases the outflow of primary income, thus worsening CAD.
-The 'valuation effect' may occur, as the value of foreign debt will be increased in $AUD value.
-Inflationary pressures and imported inflation will be increased as imports become much expensive. Thus causing more pressure on the RBA.
-The TOT will also worsen as well, as import prices will increase relative to export prices.

 

[aanthnnyyy]

Re: 2015 HSC Economics Marathon

Adv:
-Australia's exports become cheaper, increasing the exports and international competitivness, improving BOGS. This also improves the level of employment and economic growth (and to a certain extent, allowing the Budget to go into a surplus)
-If the $AUD is low, foreign investors will find it easier to invest. Thus investor confidence will remain high as long as it is not continually depreciating.
-A depreciation will cause a increase in $AUD value of foreign income earned on Australia's investments abroad. The value of foreign assets will be increased as well due to the "valuation effect".

Dis:
-Australian consumers have less 'purchasing power', as they can now buy less quantitiy of goods overseas as they are more expensive.
-Increases the value of interest servicing costs on foreign debt, as Australians can now buy less foreign currency with $AUD. This in turn increases the outflow of primary income, thus worsening CAD.
-The 'valuation effect' may occur, as the value of foreign debt will be increased in $AUD value.
-Inflationary pressures and imported inflation will be increased as imports become much expensive. Thus causing more pressure on the RBA.
-The TOT will also worsen as well, as import prices will increase relative to export prices.

Nothing to improve on.... 6/6

 

[tmkarp]

Re: 2015 HSC Economics Marathon

BUMP: Analyse the strategies implemented by an economy other than Australia in response to the international business cycle. (5 marks)

 

[rrulez]

Re: 2015 HSC Economics Marathon

May someone please explain the measurement of the budget outcome in terms of fiscal outcome, underlying cash outcome as well as headline cash outcome.

 

[Ekman]

Re: 2015 HSC Economics Marathon

May someone please explain the measurement of the budget outcome in terms of fiscal outcome, underlying cash outcome as well as headline cash outcome.

Fiscal outcome: It measures all of the expenditure and revenue as they are incurred and earned. It takes into account of future payments, such as superannuation.

Underlying: It measures all the expenditure and revenues as they are actually paid or received.

Headline: It measures all the one-off sales, that usually come from privatisation/corporatisation of public companies.

Basically the easiest way to remember it is: Fiscal outcome = Underlying outcome + future payments and Headline = One-off sales (just like in inflation but instead of sales, it is volatile goods and services)

 

[RecklessRick]

Re: 2015 HSC Economics Marathon

For the next one, the reason why I support C rather than B is because a reduced retirement age will result in a burden on the government's budget, however the job vacancies will increase, resulting in an increase in the demand for labour. Of course this is arguable as cyclical unemployment will definitely decrease, but structural and long-term will not always decrease (as there may still be a mismatch of skills, and the long term unemployed are still undesirable). However the reason why I don't completely agree with B is because it will have no impact on structural unemployment, and it will have little effect on long-term unemployment because the reason why they are long-term is due to their lack of knowledge of the labour markets, and their loss of skills overtime, so just encouraging them to work will only decrease hidden unemployment, and wont have any effect on long-term or structural.

I'd disagree with C. The increased demand for labour is largely irrelevant given the smaller size of the workforce and the consequent reduction in aggregate supply, especially since the question is with regard to the NAIRU which is primarily influenced by structural factors. Additionally, older members of the workforce (60+) will tend to be more highly skilled than younger members of the work force, or those who were previously hidden unemployed but have chosen to now seek employment. I'd argue that the quality (and size) of the labour force would decrease such that aggregate supply would take a hit, and the NAIRU would be negatively effected. I'd also disagree with your logic on B given that I read "encouraging those who receive welfare to enter the workforce" as implying that this encouragement would actually be achieved through programs like retraining or the kind of assistance to workers seeking jobs that is provided at centrelink.

 

[Ekman]

Re: 2015 HSC Economics Marathon

I'd disagree with C. The increased demand for labour is largely irrelevant given the smaller size of the workforce and the consequent reduction in aggregate supply, especially since the question is with regard to the NAIRU which is primarily influenced by structural factors. Additionally, older members of the workforce (60+) will tend to be more highly skilled than younger members of the work force, or those who were previously hidden unemployed but have chosen to now seek employment. I'd argue that the quality (and size) of the labour force would decrease such that aggregate supply would take a hit, and the NAIRU would be negatively effected. I'd also disagree with your logic on B given that I read "encouraging those who receive welfare to enter the workforce" as implying that this encouragement would actually be achieved through programs like retraining or the kind of assistance to workers seeking jobs that is provided at centrelink.

I remember consulting my teacher about this question after posting my response, and he provided me another perspective to question. The reason why he agreed to C was lowering the retirement age will most definitely lower unemployment, as those who are aged between 60 to 65 that are structurally unemployed (due to the constant improvements in technology) or long-term unemployed will just retire instead of looking for jobs, meaning that NAIRU would decrease. In terms of my response, what I was trying to say was that a lowering of the retirement age will most definitely increase job vacancies in about every industry. Thus those who a structurally unemployed due to a lack of job vacancies in a particular industry will no longer be structurally unemployed. Ill give an example to illustrate what I mean. If you were a engineer, and the only jobs available were for farming, there would be a mismatch of skills, resulting in you being structurally unemployed. However if the retirement age decreased, and all the older workers in the engineering industry retire, there are job vacancies for you in the engineering industry, resulting in a decrease in structural unemployment and the NAIRU.

In terms of the word "encouraging", I feel like it directly relates to hidden unemployment, as they are unemployed people who are discouraged. Hence if you encourage the discouraged people, you decrease the hidden unemployment. However, according to my teacher, this will also have some impact on the NAIRU as well, as NAIRU also consists of hidden structural unemployed, but in terms of the question itself, C is the better answer.

 

[swagmeister]

Re: 2015 HSC Economics Marathon

BUMP: Analyse the strategies implemented by an economy other than Australia in response to the international business cycle. (5 marks)

Bump