2007 Economics Marathon (1 Viewer)

[Rebecca1234]

I saw this in another thread, where the people in the thread are asking each other questions to do with that subject and other people answer ....

What to do: One person asks a question ... Than someone replies and answers the question. This way we all learn together! ...

I dont know if it will work, but do u think its worth a try ??? ... Someone start ...........

 

[IceOnFire]

Re: Testing Each Other

What is the infant industry arguement and what are its weaknesses?

 

[Sparcod]

Re: Testing Each Other

Hey! I love "marathons".

I might need this stuff in uni and I've probably forgotten the content so I won't be giving the best answers.

Infant Industry Argument is an argument used by governments so that infant industries, can be protected from larger, foreign competitors, whilst trying to mature i.e. trying to achieve technical efficiency and economies of scale.

Weaknesses/problems of this include:
-higher prices and poorer quality/range of goods due to limited competition and lower incentive to lower costs and to innovate.
-economic growth is not maximised (poor allocation of resources)


I feel like an idiot here, still "studying" after the HSC but in a way, I'm helping you.


Question: What are the roles of WTO, IMF and World Bank.

 

[m0ofin]

Re: Testing Each Other

The WTO enforces the existing WTO agreement, resolves trade disputes and advances global trade negotiations that pursue the goal of free trade.

The IMF aims to maintain international financial stability. It monitors the international financial system and assists countries facing major economic crises.

The World Bank assists poorer nations with economic developments via technical advice, loans and development assistance. It aims to halve global poverty by 2015.

 

[-pari-]

Re: Testing Each Other

make one up

define CAD and "terms of trade"

 

[-pari-]

Re: Testing Each Other

Microeconomics is the study of individual economic units.
It addresses issues relating to the operation of industries on an individual scale and.....the economy's "structure"

----
gah. how was that....? amirite? :S

------

Q. Identify and define three different types of unemployment.

 

[tichondrius]

Re: Testing Each Other

The Monetary policy is implemented by the Reserve Bank through the buying or selling of Commonwealth Government Securities. If the reserve bank wishes to suppress inflation, it will decrease the supply of money by selling CGS to banks, and vice versa if it wished to encourage inflation.

Q. Explain the paradox of thrift (more of a preliminary course concept)

 

[nickthebiscuit]

If during a recession everybody decides to save money, the resultant effect would cause a decrease in aggregate demand as people decide to defer consumption. This decrease in aggregate demand will then result in a fall in economic growth.

A criticism to the paradox occurs when people decide to save their money, there is a larger pool of available funds to business to borrow from for "investment". The increased availability of funds lowers interest rates stimulating borrowings and consumption.

[nfi if this is right or wrong, read wikipedia n wrote accordingly - plz correct if wrong! LOL]

Q: Outline the effects of globalisation on financial markets.

 

[lilkiwicutie89]

If during a recession everybody decides to save money, the resultant effect would cause a decrease in aggregate demand as people decide to defer consumption. This decrease in aggregate demand will then result in a fall in economic growth.

A criticism to the paradox occurs when people decide to save their money, there is a larger pool of available funds to business to borrow from for "investment". The increased availability of funds lowers interest rates stimulating borrowings and consumption.

[nfi if this is right or wrong, read wikipedia n wrote accordingly - plz correct if wrong! LOL]

Q: Outline the effects of globalisation on financial markets.

OH the memories.... arhhh i dont know this.. * waits.. remember this... runs to Dixon * ...

have fun guys... u really do learn off this thread....

 

[davidw89]

Re: Economics Marathon - The 2006 Version

Can i ask a question

The impact of a high CAD/BOP relating to contraint on Economic growth and Macroeconomic management

 

[-pari-]

Re: Economics Marathon - The 2006 Version

sparcod's q:

globalisation has led to an increase in world trade through
- technological advances
- deregulation of financial/other markets
-break down of protection
this means an increase in efficiency and reduction of costs in terms of trade flows, which has led to and increase in world trade.

davidw89:
dont know that off the top of my head..sorry

my q:
is Aus' high CAD a big problem? give reasons for your answer.

 

[tichondrius]

Re: Economics Marathon - The 2006 Version

Is Australia's CAD a high problem?

Different theories have different opinions in relation to this question.

For example, the Pitchford thesis argues that a deficit in the current account that is chiefly accounted by the private sector is not a threat to the country in the financial market. This is because private investors take up loans because they believe it will be profitable to do so, and often in order to pay off existing loans they are likely to uptake new loans. The increasing size of Australia's current account deficit can hence perhaps be attributed to the increasing size of the private sector, as larger companies are likely to borrow larger sums of money. Once again according to the Pitchford thesis, any loan defaults that happen in the private sector are the fault of the business, and do not damage the overall integrity of the country - however this is making a large assumption, as the Asian Financial crisis occurred because of loan defaulting.

Summing up, Australia's Current Account Deficit is only a 'big problem' if the speculative financial market and investors believe it to be so. Otherwise any investment in equity in Australia and private loans taken outside of Australia will continue to grow and promote economic growth within the country.

 

[TheStickUpKid]

On the above topic about a high CAD...can someone explain why some economists say its ok to have a CAD within the range of 5 - 6% of our GDP...or is this some random fact that i've either pulled out of nowhere or misinterpreted.

 

[nickthebiscuit]

On the above topic about a high CAD...can someone explain why some economists say its ok to have a CAD within the range of 5 - 6% of our GDP...or is this some random fact that i've either pulled out of nowhere or misinterpreted.

Economists generally say it's okay to have a CAD of around 5-6% of GDP because it's not considered a problem as it's still relatively sustainable. That is the CAD isn't growing at the same rate, or faster than the rate our GDP is increasing - aka. economic growth.

A CAD greater than 7-8% of GDP results in a decrease in investor confidence possibly resulting in significant drops in investment etc. It may also possibly lead to a debt-trap scenario where it becomes an issue in repaying off the debts we owe.

 

[kb1509]

how has the protection of domestic australian industries changed over the past three decades ?

 

[hunter1]

how has the protection of domestic australian industries changed over the past three decades ?

There has been a movement towards free trade with the federal governemnt reducing tariffs, quotas and other protectionist polices. Todays Australia is fairly free of protection, except for the Australian car industry which has been lobbying the federal government for continued protection in this area.

How can the RBA intervene in the price or demand and supply of the Australian dollar??

 

[Dre at St Pats]

The RBA can influence the exchange rate in 2 ways directly or indirectly.
Directly it can enter the market as a buyer/seller of Aus. currency in what is known as dirtyin the float. For example if it wanted to cause an appreciation it would sell all its stocks of foreign currency, to purchase Aus and hence reduce supply, which drives the value of the $A up.
Indirectly it can influence the exchange rate through monetary policy. e.g if it rasised intreast rates to a level above world rates it would enocurage investment in, as it is more profitable. This would lead to a rise in demand for the $A and hence cause an appreciation.

Q: Outline recent trends in CAD

 

[kenny156]

Q: Outline recent trends in CAD

Australia has experienced persistently large current account deficits since the mid 1980's. Each year, Australia has paid out considerably more for goods and services and other income and transfer payments than it has received. The best measure of the CAD is as a proportion of GDP. The CAD averaged around 2.5% of GDP the two decades prior to the mid 1980's. Since then, the CAD has averaged 4.75% giving Australia one of the highest CAD's amongst advanced economies (as of 2005/06 is was 5.9% of GDP).

Q: Outline policies to sustain economic growth

 

[Sparcod]

This thread has been dead for the past 3 months and I can understand. It's so close to the trials and it's worth putting life back into it.

Q: Outline policies to sustain economic growth

Thankyou kenny156 for being patient for a response.

These are all from memory.

Fiscal Policy: The government can manipulate the 'G' part of the aggregate demand equation through the budget it hands down each May. If it runs a structual budget deficit, economic growth should be sustained as money is continually injected into the economy.

Monetary Policy: The RBA can influence the cash rate through the buying and selling of CGS. By manipulating the cash rates, this'll be passed onto the banks and then onto the whole economy as interest rates and in turn, the demand for funds for consumption and investment. The 'C' and 'I' part can be affected here.

Next question:
Outline the costs of sustained economic growth and explain why it needs to be controlled at times.

 

[T_M_K]

Next question:
Outline the costs of sustained economic growth and explain why it needs to be controlled at times.

LOL, Why would sustined growth need to be controlled, it doesnt, Infact sustained growth is the primary objective of the rba and the treasury.

And growth needs to be controlled, so as to, acheive sustainable rates without instability caused by cyclical booms in asset prices.

and the questions asks for costs. other than negative externalities and the impact of growth on inequality. There are very few and all of depend on circumstance.

that was a stupid question.