Economics Marathon (1 Viewer)

[gemrism]

Re: Economics Marathon - The 2006 Version

how do you work out the equilibrium level of income when C=100 + 0.8Y and I=40?
thanks.

You could also find out the savings equation which in this case would be
S=-100+0.2y
then since the equilibrium is when leakages =injections
let S=Investment
40=-100+1/5y
140=1/5Y
y=700
!

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

See if I can get this right.

how do you work out the equilibrium level of income when C=100 + 0.8Y and I=40?
thanks.

Y=C+I
Y=100+0.8Y+40
0.2Y=140
Y=700 (very reliable answer)

 

[2006hsc]

Re: Economics Marathon - The 2006 Version

next question: explain the difference between a centralised wage system and a decentralised wage system. (if this has been done already, please answer it again because i dont know the answer and cant find it here)

 

[gemrism]

Re: Economics Marathon - The 2006 Version

next question: explain the difference between a centralised wage system and a decentralised wage system. (if this has been done already, please answer it again because i dont know the answer and cant find it here)

A centralised wage system is one which is heavily regulated and influenced by the government.
A decentralised wage determination is one which is determined by bargaining power, productivity and market forces (supply/demand).

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

A centralise system is whereby wage increases are set by government tribunals i.e AIRC with the unions.

Decentralised system is one which wage increases are determined through enterprise bargaining eg. awa or certified and are hence influenced by demand and supply of labour.


QUESTION:Explain how political constraints affect the implementation of macroeconomic policies.

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

1.5 days and still unanswered...

How do political constraints affect implementation of macroeconomic policies??
-Firstly, the government in Australia is elected by the people and their decisions do affect their popularity and usually base their decisions on the basis of trying to hold onto seats. This is usually evident during election years eg. offering tax cuts in 2004/05
-Secondly the government has tried to survive in the long term eg. avoiding tax reform or signing the Kyoto Protocol.
-Other political constraints include lobby groups such as greenpeace.


QUESTIONS:
What is the current cash rate?
How many times has it risen this year and what are the reasons why?

 

[onebytwo]

Re: Economics Marathon - The 2006 Version

QUESTIONS:
What is the current cash rate?
How many times has it risen this year and what are the reasons why?

the current cash rate stnads at 6.0% and is forecast to increase next month. there have been two rate hikes this year coming as a result of increased CPI inflation which has been partially blamed on banana prices, but more significantly the excessive oil prices arising from instability in the mid-east. businesses have mainly absorbed the higher transport/fuel costs, however the CPI inflation does stand at about 4% and core inflation is at the top of the RBA's target band of 2-3%
EDIT: next Q (off the top of my head)
describe policy options available to the gov. in attempting to reduce negative externalities

 

[aileenli]

Re: Economics Marathon - The 2006 Version

can i add to onebytwo's question, since i really dont know this??

QUESTION: what is a negative externality? and describe policy options available to the gov. in attempting to reduce negative externalities

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

Externalities as in environmental stuff or as in economic relations with the world?

An externality is an indirect, unintended effect on the population, good or bad, when a firm produces a good or service.
Negative ones include noise, pollution,

Government policies include: fines and restrictions as well as imposing taxes and property rights to certain environmental resources.
You can add more to this.

QUESTION: What is the crowding out effect?

 

[zedzed]

Re: Economics Marathon - The 2006 Version

What is the crowding out effect:

when excessive public sector borrowing compromises the amount of funds available for private sector investment.


Q: What is the effect of a strong dollar (AUD) on the CAD?

 

[P_Dilemma]

Re: Economics Marathon - The 2006 Version

QUESTION: What is the crowding out effect?

The crowding out effect occurs when Government borrows funds from the public. This creates a shortage of funds for businesses/firms who want to borrow these funds, thus the business sector is "crowded out" of the market for funds.

Question: Why is the CAD usually measured as a % of a nation's GDP?

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

The crowding out effect occurs when Government borrows funds from the public. This creates a shortage of funds for businesses/firms who want to borrow these funds, thus the business sector is "crowded out" of the market for funds.

Question: Why is the CAD usually measured as a % of a nation's GDP?

The two of you answered the question at the exact same time. Whoa...!!!
..and you've both asked CAD questions..

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

To be fair, I'll answer both your questions since we got two answers which doubles the accuracy.

zedzed: a strong dollar, will counteract the valuation effect and since most of our foreign debt is written in foreign currency, the CAD will be less in $A terms. Also, strong $A will reduce import costs as they appear cheaper. Because of this, in the short term, the terms of trade improves as cost of imports fall relative to our exports which have increased in value due to appreciation.

Also, strong $A= high investment overseas and hence increased income payments.

dilemma: CAD is measured that way to compare stats across different countries and different times as GDP values vary.

 

[Daniel.w]

Re: Economics Marathon - The 2006 Version

Q: What is the effect of a strong dollar (AUD) on the CAD?

A strong AUD will lead to higher export income in the short term, as the same volume of exports will be sold at higher prices. Which is benificial to the CAD, but seeing as the TOT is in favour of imports this is unlikely.

conseqently, a strong AUD will more likely result in cheaper imports which will increase import spending relative to domestic goods spending and cause a deterioration in CAD.

thats probably a pretty dogey answer...

but the real question is

What is the cause of unemployment and how many types of unemployment are there?

 

[onebytwo]

Re: Economics Marathon - The 2006 Version

a strong AUD generally promotes increased imports as the purchasing power of a single unit of currency against forsign currency is increased, and at the same time exports international competitiveness is compromised, thus there is an overall blowout on the BOGS and a subsequent deterioration of the CAD

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

Whoa...people are challenging my answers!!
Daniel- how many types of unemployment? Depends on catagerisation.

Causes?
Cyclical- low agg. demand or contactionary fiscal/monetary policy
Structual change

 

[Sparcod]

Re: Economics Marathon - The 2006 Version

Next queston: Distinguish between comparitive and absolute advantage.

 

[onebytwo]

Re: Economics Marathon - The 2006 Version

the CAD is measured as a percentage of GDP mainly because it demonstrates its sustainability, a CAD less than -6% of GDP is generally considered unsustainanble, unless, by what prof. pitchford says, the import spending is on capital goods and other goods that will contribute to investment.

 

[onebytwo]

Re: Economics Marathon - The 2006 Version

Next queston: Distinguish between comparitive and absolute advantage.

an economy has a comparative advantage when they can produce a good at a lower opportunity cost than another country, however, ricardo suggested that trade is still beneficial for both countries if each spoecialises
an economy has an absolute advantage when it can produce a given quatity of goods ir services with lesser input of resources

 

[joeyjojoshabado]

Re: Economics Marathon - The 2006 Version

Comparative advantage: where a country can produce a good relatively more efficently, with a lower opportunity cost than other countries

Absolute advantage: where a country can produce the same amount of a good
- with fewer resources
- more cheaply
- more of a good with the same amount of resources


Question: What are the advantages and disadvantages of protection? (sorry if its been asked already)