Economics Questions Thread

[TrueTears]

Can someone explain the idea of "Dynamic efficiency".

I know the definition is "the ability to innovate and adapt the allocation of resources based on the current economic environment" but I don't really understand the idea all that well.

A common example of dynamic efficiency is using the latest technology, what are some other examples?

Thanks

There are many definitions of dynamic efficiency, depends on what kind of assumptions you make. Consider the most simplistic framework.

Assume we have some input vector to produce some output vector and consider the set . Then our framework is simply an optimization procedure whereby we minimise some scalar (or vector...) such that and and for .

Dynamic efficiency is achieved iff:

We have some and such that subject to the constraints and (often called the unity constraint). Note clearly, .

A word of caution is that these maximisation problems can be very non-linear at high dimensions and usually some sort of approximation or numerical techniques need to be applied.

[abcdqdxD]

Increase in maternity leave payments will;

A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong

any ideas?

[chasej]

Increase in maternity leave payments will;

A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong

any ideas?

A) people would if anything leave the workforce as they have greater ability to stay out home on these payments.
B) possible as people may have more children as it is more financially viable with the increased payments.
C) this seems the most likely to me as due to people leaving the labour force there would be less labour resources available.

It's either b or c. A bit of an ambiguous question though. What does to book or wherever it's from say the answer is?

[abcdqdxD]

A) people would if anything leave the workforce as they have greater ability to stay out home on these payments.
B) possible as people may have more children as it is more financially viable with the increased payments.
C) this seems the most likely to me as due to people leaving the labour force there would be less labour resources available.

It's either b or c. A bit of an ambiguous question though. What does to book or wherever it's from say the answer is?

SAC question ugh

[p.taaa]

I'd say its more B than C, potential mothers have more incentive to have a baby now
but thats my personal opinion

[Wu]

Increase in maternity leave payments will;

A increase participation rate
B increase birth rate
C decrease current levels of aggregate supply
D something completely wrong

any ideas?

a) mothers will most likely leave the labour force to take advantage of it ↓participation rate
b) females may decide to have children as they believe that they will retain some income through the policy introduced
c) "current levels". It takes nine months to have a baby so it's not exactly true if they were meaning the current immediate time.

I'd probably go with b but preferably, none of the above, haha. I really dislike ambiguous questions like these.
---
I've got my own question that I'd like to ask. When a question asks about aggregate supply side policies, are we supposed to refer to: immigration/environment/MRPs OR infrastructure/manipulation of taxes/education and up-skilling or, perhaps any? I've currently been writing about actual AS policies that have been in the budget ($24b infrastructure 2013/14, $2b reconstruction efforts after Cyclone Oswald in Queensland, $1b 'A plan for Australian jobs') but I want to be certain for my sac tomorrow.

[chasej]

I've got my own question that I'd like to ask. When a question asks about aggregate supply side policies, are we supposed to refer to: immigration/environment/MRPs OR infrastructure/manipulation of taxes/education and up-skilling or, perhaps any? I've currently been writing about actual AS policies that have been in the budget ($24b infrastructure 2013/14, $2b reconstruction efforts after Cyclone Oswald in Queensland, $1b 'A plan for Australian jobs') but I want to be certain for my sac tomorrow.

You'd probably be better of asking your teacher if you still can. But when a question asks about AS policies in general I imagine it would be OK to draw examples form all the different types of AS policies studied. Obviously when specific questions are asked though you need to talk about only what's relevant. Talking about current policies are best as you probably know.

Good luck for your SAC.

[Wu]

You'd probably be better of asking your teacher if you still can. But when a question asks about AS policies in general I imagine it would be OK to draw examples form all the different types of AS policies studied. Obviously when specific questions are asked though you need to talk about only what's relevant. Talking about current policies are best as you probably know.

Good luck for your SAC.

My teacher isn't very tech-savvy so he wouldn't reply to me in time anyway, haha. I'll stalk him tomorrow morning before the SAC if possible then.
Thanks for your reply. My friend said that going with what is implemented in the budgets is a good idea. If a question really calls for an AS side policy, I think that I should only discuss environmental/immigration/trade lib if it has actually been in the budget so the carbon tax (2012/13) but other than that, I've memorised policies for infrastructure.

Thank you once again.   

[sam.utute]

In the exam, they're always quite explicit about which AS policy they want you to talk about, so you won't have that issue.

[chasej]

How does an appreciation of the Australian dollar affect the allocation of resources?

(First question in eco I've really ever had absolutely no clue on, allocation of resources has been taught as a more microeconomic thing but this question links it in with the external stability part of the course :/ )

I get how more imports into Australia, and less exports out of Australia would occur with an appreciation of the AUD but I can't see how it would affect the domestic allocation of resources other than resources becoming under utilised as net exports and therefore AD fall. But underutilisation isn't really allocation of resources as if resources aren't being used than they aren't allocated any where really :/

*confusion*

[abcdqdxD]

How does an appreciation of the Australian dollar affect the allocation of resources?

(First question in eco I've really ever had absolutely no clue on, allocation of resources has been taught as a more microeconomic thing but this question links it in with the external stability part of the course :/ )

I get how more imports into Australia, and less exports out of Australia would occur with an appreciation of the AUD but I can't see how it would affect the domestic allocation of resources other than resources becoming under utilised as net exports and therefore AD fall. But underutilisation isn't really allocation of resources as if resources aren't being used than they aren't allocated any where really :/

*confusion*

Where did you get this question from?

[chasej]

Where did you get this question from?

VCTA 2011 prac exam. question 2.b.ii. also noticed it in a few other prac exams around.

[abcdqdxD]

I think it's just referring to reallocation of resources away from the export sector to other areas i.e. the domestic industry or even speculative assets

[sam.utute]

I think it's just referring to reallocation of resources away from the export sector to other areas i.e. the domestic industry or even speculative assets

Yep, correct. If demand in the export sector falls, export-orientated businesses will become less profitable, and will look to reallocate resources into sectors with better prospects.

[Sebby]

The carbon tax would be an appropriate environmental policy to use for this year's exam right?