HSC Economics Question Thread

[emilyygeorgexx]

Hey!!!
ummm.... bit stuck in my assignment but just have the following questions....
Year 1 - Revenue 825 - Expenditure 700
Year 2 - Revenue 900 - Expenditure 800
Calculate the budget outcome for Year 1
What is the budget stance for Year 2?

And last question.... Explain how the RBA, through Domestic Market Operations, would decrease interest rates in the economy...

Any help would be muchly appreciated as it is due tomorrow!!! and fighting a cold (= not thinking clearly)......

Thanks Heaps!!!!!!!

Hey!

So firstly in year 1, government revenue is greater than government expenditure (T > G) so therefore the budget outcome it’s fiscal surplus.

For year 2, the budget is still in surplus as government revenue is still greater than government expenditure. However, the budget in Year 1 was a surplus of $125 million and in Year 2 the budget was in surplus of $100 million. The budget surplus got smaller so therefore the budget stance is expansionary.

To decrease interest rates the RBA buys back Commonwealth Government Securities which therefore increases the money supply in the Exchange Settlement Accounts. As there is now a greater supply of funds this puts downwards pressure on interest rates and decreases them. You can see this by drawing the supply curve and shifting it to the right!

Hope this helps

[headsup]

For year 2, the budget is still in surplus as government revenue is still greater than government expenditure. However, the budget in Year 1 was a surplus of $125 million and in Year 2 the budget was in surplus of $100 million. The budget surplus got smaller so therefore the budget stance is expansionary.

Thanks heaps!!!!!!!
Just a quick question. On the table with the numbers it says Expenditure ($a).... what does that mean?

Thanks again..

[emilyygeorgexx]

Thanks heaps!!!!!!!
Just a quick question. On the table with the numbers it says Expenditure ($a).... what does that mean?

Thanks again..

Expenditure is how much money the government spends each year on things such as infrastructure projects, unemployment benefits, etc

[headsup]

Expenditure is how much money the government spends each year on things such as infrastructure projects, unemployment benefits, etc

Thanks... but wondering why is says in is in $a??? See image.

[emilyygeorgexx]

Thanks... but wondering why is says in is in $a??? See image.

Probably just a typo!

[headsup]

Probably just a typo!

Thanks! Man you are a wizz.... All the best with your HSC!!!!

[headsup]

Sorry!!! Me again.....

Just two more questions! If someone could help be MUCHLY appreciated...

1) Explain how fiscal policy might be applied to improve a country’s external stability.  (5 marks)
2) Discuss the effectiveness of fiscal policy at increasing the level of economic growth during a recession? (5 marks)

Thanks again!!!!

[wlam]

Hi,

So I'm doing the Financial markets topic of the prelim year and am struggling to memorise the features of the terms e.g. ASIC, APRA, RBA, credit unions, investment banks etc., as there is a lot of theory. I find the other topics so far more logical rather than memory-based e.g. supply and demand.

How do i tackle this?
Thanks

[JTrudeau]

Sorry!!! Me again.....

Just two more questions! If someone could help be MUCHLY appreciated...

1) Explain how fiscal policy might be applied to improve a country’s external stability.  (5 marks)
2) Discuss the effectiveness of fiscal policy at increasing the level of economic growth during a recession? (5 marks)

Thanks again!!!!

1. So for this question you can think about external stability as measured by the CAD, foreign debt, terms of trade, exchange rate, and/or international competitiveness. How does FP affect all of these measures?

An expansionary stance on the budget would inc economic growth, potentially worsening the CAD and putting us in greater foreign debt (to fund investment), but it may also improve our terms of trade (if demand for our exports grow) and cause an AUD depreciation (which means we're more internationally competitive. And vice versa for a contractionary stance.

You could also mention how low budget deficits/surpluses are seen as a greater sign of external stability by investors, which is why we're currently trying to bring the budget into surplus.

2. Ooh, now this question gets into a discussion of the strengths and weaknesses of FP. So economic growth can be measured by AD = C + I + G + X - M, meaning the government can directly impact the level of AD by changing G. And one of the big features of FP is that it has a short impact time lag-- so it'll get ya out of the recession fast.

The downside? We only change the budget once a year. So if the recession happens a month after the budget is released, we're kinda stuck with our current expenditure/taxation for another 11 months (in theory at least, in practice we have a Mid Year Economic and Fiscal Outlook around December to make revisions).

But hey, we've also got automatic stabilisers, which adjust the level of expenditure and taxation according to economic conditions. So while these stabilisers alone aren't very helpful in fixing a recession, they'll help slow the impact.

Hope this helps!

Hi,

So I'm doing the Financial markets topic of the prelim year and am struggling to memorise the features of the terms e.g. ASIC, APRA, RBA, credit unions, investment banks etc., as there is a lot of theory. I find the other topics so far more logical rather than memory-based e.g. supply and demand.

How do i tackle this?
Thanks

Hey wlam! Welcome to ATARNotes!

And yeah, Economics definitely has its sections where it's pure memorisation. For these sections, I rely heavily on things like flashcards and read-writing (name in progress, but basically reading a page of your notes and then trying to write down as much of it as you can-- rinse, repeat, until you get all the information). If you can remember what the abbreviations stand for, you can sometimes figure out what they do from the name.

Good luck in your studying!

[wlam]

1. So for this question you can think about external stability as measured by the CAD, foreign debt, terms of trade, exchange rate, and/or international competitiveness. How does FP affect all of these measures?

An expansionary stance on the budget would inc economic growth, potentially worsening the CAD and putting us in greater foreign debt (to fund investment), but it may also improve our terms of trade (if demand for our exports grow) and cause an AUD depreciation (which means we're more internationally competitive. And vice versa for a contractionary stance.

You could also mention how low budget deficits/surpluses are seen as a greater sign of external stability by investors, which is why we're currently trying to bring the budget into surplus.

2. Ooh, now this question gets into a discussion of the strengths and weaknesses of FP. So economic growth can be measured by AD = C + I + G + X - M, meaning the government can directly impact the level of AD by changing G. And one of the big features of FP is that it has a short impact time lag-- so it'll get ya out of the recession fast.

The downside? We only change the budget once a year. So if the recession happens a month after the budget is released, we're kinda stuck with our current expenditure/taxation for another 11 months (in theory at least, in practice we have a Mid Year Economic and Fiscal Outlook around December to make revisions).

But hey, we've also got automatic stabilisers, which adjust the level of expenditure and taxation according to economic conditions. So while these stabilisers alone aren't very helpful in fixing a recession, they'll help slow the impact.

Hope this helps!

Hey wlam! Welcome to ATARNotes!

And yeah, Economics definitely has its sections where it's pure memorisation. For these sections, I rely heavily on things like flashcards and read-writing (name in progress, but basically reading a page of your notes and then trying to write down as much of it as you can-- rinse, repeat, until you get all the information). If you can remember what the abbreviations stand for, you can sometimes figure out what they do from the name.

Good luck in your studying!

thanks!!

[a.leisha]

Heyy guys! Coming up to trials I'm trying to get a grasp on my notes and memorising content. As the subject is so content rich I was wondering if anyone had any tips on how to layout notes and how to summarise the info so its easier to memorise and not so overwhelming/content overload. Thank you!!! 

[BiggieT]

Heyy guys! Coming up to trials I'm trying to get a grasp on my notes and memorising content. As the subject is so content rich I was wondering if anyone had any tips on how to layout notes and how to summarise the info so its easier to memorise and not so overwhelming/content overload. Thank you!!! 

The biggest tip I have is to structure your notes exactly as per the syllabus. This is especially handy when it comes to the short answer section of the paper. While Multiple Choice and Stimulus Response focus primarily on your ability to apply the content to a variety of real (and fake) situations, the short answer and essay require an intrinsic knowledge of the syllabus dot points and what each one entails.

The ATAR Notes book is a really good start, and then from there it's all about how much content you can remember and don't need to write down. For me, I have a really good photographic memory so keeping my notes shorter helps me retain more of the info. But if you prefer to read notes over and over, then perhaps longer notes will work better for you.

As is the case in pretty much every subject, and as clichèd as it sounds, what works best is a personal preference and there is truly no correct answer.

Good luck for the trials.

[Brun]

Heyy guys! Coming up to trials I'm trying to get a grasp on my notes and memorising content. As the subject is so content rich I was wondering if anyone had any tips on how to layout notes and how to summarise the info so its easier to memorise and not so overwhelming/content overload. Thank you!!! 

One way is to try to use acronyms to summarise the main points of the syllabus. Sometimes you do have all the knowledge inside your head but forget one aspect of the course because of the huge amount of content. Acronyms can help with that, e.g. for topic 3 (economic issues):

Growth
Unemployment
Inflation
Distribution of Income
Environment

That's all the economic issues, except external stability. So you might make your acronym GUIDE E (I know, not the best, but makes it a lot easier to remember).

[headsup]

Hello 

On our trial notice one of the points say 'National Income data in a table, question on foreign investment'... Just trying to understand exactly what it is trying to say???

Thanks!!

[natasha.sharma8]

what key things i should talk about in this essay question
Explain how movermnet in the australian dollar can affect the perfomace of the australian dollar