Economics Questions Thread

[JCurmi]

Relative price is the cost of production of the product relative to its sale price. When relative prices rise, supply decreases and shifts to the left. This creates movement of demand on the supply curve towards the left. The equilibrium point is now higher than before in terms of price, and lower in terms of quantity supplied and demanded.  The opposite will occur when prices decrease. With this knowledge, all you have to state is how the change in prices change the behaviour of consumers and suppliers within the market.
Hope that helps.

I don't think that definition of prices is right. Relative Prices are the cost of one item compared to another. Sort of like a ratio. Relative Prices is like the thing in this course I don't understand, so I may be wrong.

Can we start making up hard questions for practice. I'll start

How can the principles of choice based on opportunity cost be related to the decisions parents with small children about whether or not to seek paid employment.

That's what I've been taught as well. Relative prices confuses me as well. I think it links to the allocation of resources through consumers purchasing the products with a lower relative price, as there is higher demand for those items. So more resources are allocated to those items with lower relative prices??

I have no idea, would love for someone to further clarify this.

[Deleted User]

When asked about the policy mix, do we only talk about monetary and budgetary policies or do we also have to talk about Aggregate Supply policies?

[redxman]

AS policies link together with budgetary policy.

e.g. Trade Liberalisation is done by the RBA. It would be part of the discretionary part of the budget.

[Hutchoo]

Pre-exam humour:
 

[JCurmi]

^ LMFAO.

Just forwarded that to my teacher.

[Deleted User]

How important is it to know all the statistics off by heart? Can we just have knowledge of the trends rather than trying to memorise all the actual figures?

[sam.utute]

I think quoting statistics helps your answer stand out from the rest of the state. I definitely used figures in most of my answers.

If you want to just mention trends, find out the peaks and troughs of the data, so you can say: "... rising to a high of 3.1%" or "with unemployment peaking at 5.8% as a result of the slower growth."

[HiddenUser]

On that note, do we need to know a variety of statistics from the last 4 years or just particular stats that help bring out our theory?

[morantz]

On that note, do we need to know a variety of statistics from the last 4 years or just particular stats that help bring out our theory?

you wouldn't want to quote stats that date back to more than 4 years ago, since those events no longer have any relationship with the current economic climate. I've been told that stating the GFC which occured 4 years ago is pushing it, since its too far back. It's worth remembering many events that occured in that 4 year duration, especially the ones that are often assessed on and the ones you speculate will be on the exam.

[Saur11]

Personally, statistics should always be paired with a policy. Quoting empty statistics is pointless, think of statistics as evidence from English. They are used to substantiate your answer and should be used to add value to your answer.

[Deleted User]

"... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?

[Deleted User]

"Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?

[morantz]

"... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?

Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013.

"Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?

Past 2 years, hence its prior to the this year's budget which is 2012-2013.

[HiddenUser]

What sort of statistics are we expected to know?

[Deleted User]

"... the government's current approach to fiscal policy..." Is this referring to the 2011/12 or 2012/13 budget?

Current approach refers to the government's plan to employ a contractionary stance in the budget thats enforced mid this year til mid next year, so 2012-2013.

"Describe one example of budgetary policy action, implemented over the past two years..." Does this include policies from the 2012/13 budget?

Past 2 years, hence its prior to the this year's budget which is 2012-2013.

Yes, but policies implemented in the 2012-13 budget have already begun to be implemented, so they do count as being "past", no?