# Section 1: Multiple Choice (1 Viewer)

#### kouklitsa

##### Member
always_smile said:
My economics teacher said the 9 was d. but then again she could be wrong. i put d and so dod the rest of my class.
yeh... i agree.... i would have thought d... but that was a weird question.. thats the 1 that i was tossing up between a and d for!

#### kouklitsa

##### Member
babee_blu_eyez said:
the hardest section overall imo
my teacher used to be an eco marker.. i think maybe an SM actually... and she thinks that the multiple choice is gonna be the discriminant... as in... makes the diff between a 100 and a 95 kind of thing.. and will really spread people out

#### Rafy

##### Retired
Hmm weird, i found it probally the easist section in the entire paper

#### Rafy

##### Retired
minushuman said:
No, it's not, question 2 is A.

I am in concurance. Real incomes especially are a good indicator of development.
I put A

Btw Karen, you might want to merge this with the pinned M/C thread.

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#### markoosh

##### New Member
minushuman said:
19. C (well, it's actually B, but not for year 12 economics)
Just enquiring as to your reasoning for Q19 (believing B is correct)

The NAIRU is the level of unemployment when cyclical unemployment is zero. It is comprised of structural and frictional factors.

How would a down turn in the business cycle have any bearing on the NAIRU which is by definition independent of cyclical factors.

#### Silver Persian

##### Banned
omg I'm so happy...i got at least 18/20....probably 19 if 2a is right...and maybe 20 if its 9d(although it looks like it isnt )

This is my first multiple choice exam ever where I haven.t made retarded higher interest rates increase economic activity type mistake.

Yay.

#### DRAGONZ

##### You've Got A Friend
markoosh said:
Just enquiring as to your reasoning for Q19 (believing B is correct)

The NAIRU is the level of unemployment when cyclical unemployment is zero. It is comprised of structural and frictional factors.

How would a down turn in the business cycle have any bearing on the NAIRU which is by definition independent of cyclical factors.
The correct answer for what we know is definitely C.

However, if he says that in university you learn it's B, then the only possible reasoning I could come up with is that an economic downturn leads to not only cyclical unemployment, but ALSO structural unemployment.

This is because an economic downturn will force resource allocation to become more efficient, and the least inefficient industries will be forced to cull their labour force, which is essentially micro reform and thus structural unemployment.

As a result of this, there are now less jobs on offer than before the downturn in the economy.

Hence, the natural rate of unemployment (or the NAIRU) has increased, because FULL employment now occurs at a lower percentage.

At least, that's how I could possibly see it working.

Nevertheless, answer for 19 is C.

#### markoosh

##### New Member
DRAGONZ said:
The correct answer for what we know is definitely C.

However, if he says that in university you learn it's B, then the only possible reasoning I could come up with is that an economic downturn leads to not only cyclical unemployment, but ALSO structural unemployment.

This is because an economic downturn will force resource allocation to become more efficient, and the least inefficient industries will be forced to cull their labour force, which is essentially micro reform and thus structural unemployment.

As a result of this, there are now less jobs on offer than before the downturn in the economy.

Hence, the natural rate of unemployment (or the NAIRU) has increased, because FULL employment now occurs at a lower percentage.

At least, that's how I could possibly see it working.

Nevertheless, answer for 19 is C.
Althought it doesn't really matter, I don't agree with your reasoning Dragonz.
In the interests of economic debate I will put forward my thoughts.

Structural unemployment is as its name suggests unemployment caused by changes in the patterns of production, meaning the skills required by employers don't match those of employees. Structural change is a long term process. During a downswing firms will not undergo structural change for two reasons.
Firstly they know it is a temporary phase and thus woudld prefer to cut production by laying off workers (cyclical unemployment) rather than undergoing significant structural reform. Secondly during a downswing business profits decrease as firms sell less output. Therefore they will not have the funding to pay for reforms and why would they wish to increase productivity when they can already supply for the market that exists?

Rather structural reform would occur during an upswing when the business can no longer meet demand. I can't see any evidence of the answer being B.

#### ando_88

##### New Member
The answer to 9 has to be D

The safety net wage rises only apply to people who are still covered by industrial awards and who have not negotiated their own agreements. As soon as an emloyee engages in enterprise bargaining to negotiate an enterprise agreement, wage determination lies in the agreement and the safety net no longer applies.

Therefore D is not only the most correct answer but it is the only correct answer.

#### ifsonotso_100

##### Meh
that's wrong, safety net always applies, cannot be worse off than the award, so your reasoning is wrong. d is wrong- look at australia is gini coefficient making income distribution really equal i think not. A is the most correct answer because enterprise agreements can actually be safety net(Award) as they have to be at least as good because there is a "no disadvantage test". well i am glad with the mc- got at least 19

#### ando_88

##### New Member
The no disadvantage test is different to the safety net. The safety net wage case is held annually where people who are not covered by an agreement can recieve a wage increase. It aims to provide some equity to income distribution so that the low-skilled, low income earners with weak bargaining power who will not be able to negotiate their own wage rises can still recieve higher pay.

As for Australia's gini coefficient...have you check recent stats? it was 0.311 in 2002 and has since moved DOWN to 0.302. But you can't use the gini coefficient to determine whether the safety net is improving income distrubution because there are numerous factors affecting it.

#### ando_88

##### New Member
sorry to post again but this is from the official government website http://www.wagenet.gov.au

What is the Safety Net Increase?
The safety net increase occurs as a result of an annual application by trade unions for an increase to the minimum rates payable under certain federal awards. The unions, employer associations and the government argue their cases for and against any increase before the full bench of the AIRC which must make a determination on the information placed before them. The final decision of the AIRC is then applied to each award and Industry Sector on an individual basis.

Do I have to pay the new rates?
If you are bound to a federal award or in Victoria, an Industry Sector and your award or Industry Sector has been varied to reflect the safety net increase, you are required to pay at least the minimum rates prescribed. If you pay your employees above minimum payments the safety net increase can be absorbed into those amounts. If your employees are covered by a Certified Agreement or Australian Workplace Agreement you would not normally be affected by the safety net increases. To find out more about making a Certified Agreement or an Australian Workplace Agreement click here.

#### ifsonotso_100

##### Meh
well what u posted confirms this idea that a is the correct answer- you wouldn't normally be affected but u still can be, as the ceritifed agreement and awa's will always be as good as the safety net(award), though normally better they don't have to be and can be as good as the minimum award. i can see why d can be correct but in the context of the question- a is the most correct answer, i was looking between d and a but a is more correct.

#### ando_88

##### New Member
read the first line after the question "what is the safety net increase?"

it says

The safety net increase occurs as a result of an annual application by trade unions for an increase to the minimum rates payable under certain federal awards.

#### Pixydust*

##### Member
dammit i got 'the rate of natural unemployment worsens with each economic downturn'...i distinctly recalled learning about something called hysterisis (is that how you spell it?) but obviously the answer is the natural unemployment rate occurs when cyclical u/e = 0 which also makes alot more sense....hmmm