Economics HSC Marathon (1 Viewer)

[Jago]

- Economic growth and uncertainty

- Wage-Price inflationary spiral

- Income distribution, as those with lower incomes find that their incomes do not rise as quickly as prices, and lower incomes will tend to have a harder time paying off their borrowings.

- Unemployment (phillips curve) although this is not always certain

- International Competitiveness

- Exchange rate impacts, as high inflation is a major cause of depreciation of a currency over time (international confidence)



Briefly explain the 3 measurements of external stability

 

[biscuit]

1. CAD as a % of GDP - Key measure of how sustainable CAD is over time --> unsustainable if it exceeds the growth rate of an economy

Current Account Deficit / GDP x 100

2. Net Foreign Debt as a % of GDP -
Net foreign debt: the difference between borrowings by the aust public and private sectors from overseas, and the level of official reserve assets and lending fo Aust overseas

Debt servicing ratio etc

Net Foreign Debt / GDP x 100

3. Net Foreign Liabilities as a % of GDP

Net foreign liabilities: net foreign debt + net foreign equity

Net Foreign Liabilities / GDP x 100

 

[biscuit]

Describe the structural problem of low national saving

 

[qwertas]

CAD(watching the sizeod CAD)..Net foreign debts (monitoring the sustainability of the debt and equity)...$1Aud(if the Aus $ is stable

outline the extent to which recent changes to the industrial relations system hav helped achieve policies ( P & Y & labour market policies)

 

[qwertas]

the left over money not spent by government or firms or consumers is natioanl savings and can be utilised to fund the cad and liabilities .....fund subsidies or create new k or infrastructure.....without it the economy could fall into debt in the case of a inflation or IR shifts

define centralised wage fixing system

 

[Cityboy]

A centralised wage fixing system is when the government or a government body sets the minimum standards for wages and conditions in workplaces as well as fixing wage increases, through fully or partially indexing them to the inflation rate

 

[Cityboy]

what are compariative and absolute advantage?

 

[yabby]

Absolute advantage is when one nation produces more then another
Comparatice advantage is when one nation has the lower opportunty cost in producing one product (between 2 products) over another nation

Distinguise between economic growth and economic development

 

[Jago]

Economic growth the ability of a nation to satify the material wants of its people. Economic development on the otherhand is a broader concept, not only considering the increase in GDP over time but also the improvement in the welfare and standard of living of the population.

What are the consequences of a persistently high CAD, and include the Pitchford argument if you can

 

[sunjet]

Consequences of a HIGH CAD:

- Exchange rate volatility -> loss in international confidence (eg. Asian fin. crisis)
- Increased servicing costs -> debt trap scenario
- Increased foreign liabilities -> lenders reluctant to lend money (fall in credit rating)
- Constraint on economic growth -> have to ensure a sustainable rate
- Loss in trade oportunities
- Policies to reduce the CAD may result in a slowdown in growth and a rise in unemployment

However, Pitchford thesis says we shouldn't worry about the CAD as 98% of net foreign debt is from the private sector, thus lenders would of taken into consideration the risk when lending them money, and as long as the private sector make the correct calculations the economy should be fine.

Question:

1. Explain how an increase in productivity contributes to economic growth. (3 marks)

2. Explain the benefits of economic growth to business firms and the government. (4 marks)

 

[Jago]

1. increase in productivity --> more goods produced --> cheaper goods --> increased domestic spending --> thus achieving an increase in GDP and thus economic growth

or

increase in productivity --> more goods produced --> cheaper goods aka more competitive exports --> reduced CAD --> increased investor confidence --> economic growth due to more foreign investment

(is there a more obvious route?)

2. Economic growth leads to greater employment as demand for goods are strong. This is beneficial for govts as it helps their political campaigns.

Economic growth also leads to greater investor confidence, increasing inflow of capital.

Another major benefit is that higher e.g. places less pressure on the govt budget as less people are dependant on welfare (due to low unemployment)

Most obviously, an higher e.g. means an increase in real GDP, which means that there is an increasing number of goods and services available to satisfy the needs of a country's population. This means there is an improvement in material living standards.

if i've missed anything please point it out


Explain the costs of econoimc growth.

 

[sunjet]

- Depletion of the environment
- Higher CAD
- Increased demand-pull inflation

 

[Neo^^]

ic ic ic anymore

 

[kat_in_a_hat88]

Discuss policies that goverments implement towards globalisation.

 

[cimbom]

The Australian Government- implementing policies towards globalisation:
advocating free trade on bilateral, regional and multilateral level- free trade agreements, "plurilateral" ftas like ASEAN - CERTA, against agricultural protectionism in WTO Doha Round, method of only reducing protection if other trading partners do
reducing protection such as tariffs in industries such as TCF and PMV- phase out progress of tariffs being frozen from 2000- 2005 and then reduced to 5% by 2015 to allow for adaptation to demands of world economy
Further microeconomic reform and structural change towards greater deregulation, productivity and efficiency
floating the exchange rate in late 70s early 80s- deregulation of financial market allows for greater inflow of FDI, but mostly speculative portfolio investment- further affecting volatility of exchange rate
Maintaining the internal stability of low unemployment, low inflation etc. to encourage international confidence in the aust. eco, thus enabling further globalisation...
Capital and Financial Account Surpluses with CADs a reflection of globalisation and how such external instability is accepted if it means FDI etc... "Pitchford Thesis" that foreign debt is for investment within the private sector, not borrowing by government to fund day- to- day necessary spending.

 

[cimbom]

HSC 2001 Multiple Choice---

Q.11... i can't post it here. http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2001exams/pdf_doc/ecomomic_01.pdf

i think i've attached it as an image here- the upload manage attachments thing isn't working.

... or alternatively-
http://www4.boardofstudies.nsw.edu....swer=D&courseID=15110&testQuestionID=36185671

it's a balance of payments question that i got wrong.

 

[*Ya_So_CuTe*]

HSC 2001 Multiple Choice---

Q.11... i can't post it here. http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2001exams/pdf_doc/ecomomic_01.pdf

i think i've attached it as an image here- the upload manage attachments thing isn't working.

... or alternatively-
http://www4.boardofstudies.nsw.edu....swer=D&courseID=15110&testQuestionID=36185671

it's a balance of payments question that i got wrong.

The answer is -790 m ( a)

I got this wrong initially as well from a careless error. Current account is the BALANCE on goods and services+ net incomes +net current transfers, which must add to the Capital and Financial Account to give O! So you need to minus imports from exports to give you the Balance on goods and services ( BoGS) . Seems to be a common careless error!

Heres another:

Explain how microeconomic policy can bring about structual change in the Australian economy? ( 2002 Short Answer 4 marks)

 

[biscuit]

Microeconomic policy deals with supply-side economics, and attempts to improve resource allocation in Australia's use of natural, capital and human resources. Such policy is directed at the product markets, where G&S are sold, and at factor markets, where productive inputs are bought/sold.

As such, it can promote structural change in an economy, as it is directly linked with improving the productivity, flexibility and efficiency of the pattern of production.

hahah... ahh that wouldnt get 4 marks.. really gotta go over micro

Q: Outline briefly the elements of National Competition Policy

 

[Haku]

National Competition Policy 1995 implemented by the Labour govt set up the ACCC as a consumer watchdog for anti competitive conduct and mergers by firms. Also set up the uniform nation competition providing uniform national competition in all areas of firms and industry across the nation to improve productivity. Further deregulation of PTE with the agreement with the state govt deregulated gas water electricity and transportation.

thats about it i think.

Q. 2005 CSSA : "Identify TWO groups/institutions that are part of the labour market" and "Describet the role of the employment advocate"

 

[kat_in_a_hat88]

Q. 2005 CSSA : "Identify TWO groups/institutions that are part of the labour market" and "Describet the role of the employment advocate"

A1: Employment advocate which oversees the indivudual Australian workplace agreements.
AIRC: oversees the awards and collective certified agreements so they pass the "no disadvantage test"

A2: as mentioned above, so that they pass the community standards test so that any increases in wages don't affect the economy negatively

Q: Define BOP, CAD and Capital and Financial Account