HSC Economics Question Thread

[natasha.sharma8]

what are causes of appreciation and depreciation

[emilyygeorgexx]

what are causes of appreciation and depreciation

Hey!

So for an appreciation an increase in the demand for AUD is equivalent to a decrease in the supply of AUD. Factors that cause an increase in the demand for AUD include increased demand for Australia's exports, expected future exchange rate increases, investment flows increase, etc. Factors that cause a decrease in supply include Australia's imports increase, interest rate differential decreases, etc.

For a depreciation a decrease in the demand for AUD is equivalent to an increase in the supply of AUD. Factors that cause a decrease in the demand for AUD include demand for Australia's exports decrease, interest rate differential decreases, etc. Factors that cause an increase in the supply of AUD include Australia purchasing imports increase, interest rate differential decreases, expected future exchange rate decreases, etc.

Hope this helps

[a.leisha]

Heyy, I have an economics in-class test coming up on economic issues. It's only on unemployment, inflation and selected parts of wealth and y, and eco. growth. The test will only be multiple choice and a couple of short answers so I'm wondering if I will need to know any unemployment or inflationary trends for the test or if they are mostly used in essay questions? Thank you!!!

[emilyygeorgexx]

Heyy, I have an economics in-class test coming up on economic issues. It's only on unemployment, inflation and selected parts of wealth and y, and eco. growth. The test will only be multiple choice and a couple of short answers so I'm wondering if I will need to know any unemployment or inflationary trends for the test or if they are mostly used in essay questions? Thank you!!!

Hey!

From assessments I have done at school I’d say probably not for multiple choice and short answer. However, if you’d like to cover yourself maybe just know the direction it has been going in the last few years and it’s current stance right now.

Maybe also just know like the basic statistics like we want NAIRU unemployment to be between 5 and 6%, sustainable economic growth between 3 - 4%, CPI inflation between 2 - 3%, etc

Hope this helps

[wishmeluck]

Hey just have a question:
When writing and essay about CAD or the BOP what are the things i need to include? I know the essay should be answering the question, but what are the general things should the essay have for all questions?

[006896]

Hi!
I need help with an economics essay. I would like to have it looked over. Is this the right place to post it?
Thanks!
Hi!
Could you please explain to me the effects of a recession on an economy (and also how/if this differs from just a general contraction)? Also, how can the government intervene to stimulate the economy?
Thank you.

Mod Edit: Post merge!

[raymond.semaan]

Hi!
Could you please explain to me the effects of a recession on an economy (and also how/if this differs from just a general contraction)? Also, how can the government intervene to stimulate the economy?
Thank you.

A recession is basically the end point of a contraction, it is the lowest point it will reach before kicking back off again or at least thats how I see it. It's where all of the effects of low economic activity are at their worst, i.e Unemployment rises, drop in consumer spending, drop in consumer confidence, drop in real income etc

With regards to Government Intervention,  they intervene through a process called Open Market Operations which is the buying and selling of Commonwealth Government Securities(CGS) by the RBA in order to either remove money from the Economy or to pump money back into the Economy. The banks buy or sell these CGS using money from their Exchange Settlement Accounts, subsequently reducing or increasing the supply of money in the economy. This results in a movement in Interest Rates as less money would ^Interest Rates(supply curve shift to the left) and more money would result in lower Interest Rates(supply curve shift to the right). These changes in Interest Rates encourage or discourage borrowing of money which is a large stimulant/sedative concerning Economic Activity.

I have a Lucid Chart Diagram I believe will help you so I've posted it below

https://www.lucidchart.com/invitations/accept/b29e46d7-dab2-4d3d-8304-e696c5ebe003

[joemassoud]

Hey guys, if anyone could please help me answer the following questions that will be awesome:

1. Distinguish between the effects of a depreciation and an appreciation of the Australian dollar on exports prices, import prices and inflation (3 marks)

2. Analyse the impact of a sustained appreciation in the Australian dollar on the balance of payments and the rate of structural change in Australian industry (5 marks)

Thanks in advance!!

[raymond.semaan]

"what are the impacts on the australian economy of a sustained appreciation of the australian dollar"

What is the best way to structure a response to this question, I've created an intro but I'm having trouble deciding what to base my body paragraphs on . Should structure each paragraph based on the components of Aggregate Demand, i.e Consumers, Government, Investment, Imports and Exports, or should I structure it based on areas such as the Current Account Deficit, Inflation, Unemployment, Structural Change and Economic Growth.

[joemassoud]

Hey Guys,

By any chance, does anyone have a response to the following question:

Analyse the impact of recent changes in the global economy on Australia’s balance of payments.

If not, can someone please give me an idea of what to write or a plan

Thanks in advance!

[katgrace1]

Hey guys, if anyone could please help me answer the following questions that will be awesome:

1. Distinguish between the effects of a depreciation and an appreciation of the Australian dollar on exports prices, import prices and inflation (3 marks)

2. Analyse the impact of a sustained appreciation in the Australian dollar on the balance of payments and the rate of structural change in Australian industry (5 marks)
Thanks in advance!!

1. A depreciation is where the dollar holds less value in relation to another currency or basket of currencies (TWI) . If our dollar is cheaper to importers, it will make export prices cheaper and therefore make our exports more competitive. Import prices will rise as it will cost more to trade from the local currency to a foreign currency. Inflationary pressure will increase as the price to purchase goods and services will increase. The opposite effects will occur for an appreciation.


2. A sustained appreciation is referring to a long term view. If specifically looking at BOP you would need to distinguish the imapct on the current account as well as the capital & financial account.

In terms of the current account, a sustained appreciation will lead to exports being highly priced and will have low international competitiveness. Also domestic consumers can pay more for their dollar and will increase consumption including imports. This will worsen BOGS and therefore the CAD.  Also the net primary income will be impacted by the valuation effect. When our dollar appreciates, it will also result in debts and servicing costs reducing (assuming the debts are variable exchange rate- ceteris paribus).

The K Acc is impacted as foreign assets will be worth more overseas due to the valuation effect. This will improve the K account. Remember the K account and Current account should balance so an improvement in one will result in a decay in the other.

In terms of the rate of structural change, an appreciation will lead to a decrease in foreign investment which will hinder economic and business growth.

[katgrace1]

"what are the impacts on the australian economy of a sustained appreciation of the australian dollar"

What is the best way to structure a response to this question, I've created an intro but I'm having trouble deciding what to base my body paragraphs on . Should structure each paragraph based on the components of Aggregate Demand, i.e Consumers, Government, Investment, Imports and Exports, or should I structure it based on areas such as the Current Account Deficit, Inflation, Unemployment, Structural Change and Economic Growth.

When structuring an essay I often find it easier to write out a brief essay plan.  Write according to your personal style. Either of the options would be fine, as long as you clearly link back to the question. Ensure if doing the first way to highlight that you are showing impacts on elements of the economy, maybe in conclusion summarising the impact as a whole. If writing via second method continuously link to the impact on the economy rather than dumping information. Hope this helped.

[dispersionforces]

Hey, since everything links and relates in economics, I find it a bit difficult to make sure that I identify all relationships in a long response. Any tips or useful links to really understand relationships between economic concepts in the syllabus?

Kind regards.

[StudyBuddyKJ]

This may sound like a stupid question, but here goes.

Why does the Reserve Bank of Australia use indirect method of quotation for exchange rates, over direct method of quotation? I never really understood why the RBA will use indirect, when direct method seems so much easier.

[StephTol]

Hey!

I am wondering if someone was able to summarise the Balance of Payments because I am not really grasping the whole concept of it all.

Thanks in advance!