Economics Questions Thread

[chasej]

I'm pretty confident in short answer questions for my upcoming SAC...but Multiple choice questions, I always stuff them up - I barely get half of them right. I have no idea how to fix this!

What's your current technique for answering MC? That's probably a good place to start.

[Politics]

I'm pretty confident in short answer questions for my upcoming SAC...but Multiple choice questions, I always stuff them up - I barely get half of them right. I have no idea how to fix this!

Yeah i'm the same, through all my books i always seemed to stuff up basic, simple multiple choice questions, i think i am just going to make sure i double and triple check them to make sure i did them right, little marks like them can really make a difference.

[chasej]

Yeah i'm the same, through all my books i always seemed to stuff up basic, simple multiple choice questions, i think i am just going to make sure i double and triple check them to make sure i did them right, little marks like them can really make a difference.

Case in point: I probably would have got ~45 last year if I didn't make silly mistakes in MC in both SACs and the exam.

[TazzyGirl]

Well I usually eliminate the options that definitely aren't the answer...but there's usually 1 that's almost right...so it confuses me!

[Summers]

MC is easy in my opinion. Love it. Makes me finish economics with so much time.

EDIT: MY technique is that I will do the multiple choice in reading time in my head and make the answers in my head. Then I'll go straight to short-answer and redo multiple choice after writing about all this stuff. Usually works well.

[chasej]

Well I usually eliminate the options that definitely aren't the answer...but there's usually 1 that's almost right...so it confuses me!

Sometimes it can be useful to draw little diagrams or symbols next to the answers which are a bit unclear so you can get a better idea of the theory and figure out which answer is "best". Remember in cases where two possible answers appear to be partly correct you must always pick the "best" answer for the question. This is usually the effect that occurs as a direct result of whatever the question is about (sometimes another answer may be an effect of a scenario the question is posing however it is a indirect long term effect meaning the direct immediate effect is the best answer to the question).

It's critically important to learn the skill of being able to work the answers out for at least three quarters of the MC questions during reading time in my opinion however. But with practice you'll get their. If you have an iPhone you can buy an app called "economics tutor" which has hundreds of questions related to the study design and it gives you feedback/explanation of the correct answers. I found it a pretty good way to revise just when I was hanging around and wasn't bothered doing anything else other than playing with my phone.

[TazzyGirl]

Wow thanks guys I'll definitely keep this in mind for my SAC tomorrow

[alchemy]

Hi guys,
I have some questions for Unit 1/2.
What are some of the small and big problems stock markets can cause?
How are the laws of supply and demand similar/different in the stock market?
And also, what makes the idea of perfect competition not so realistic, although it forms the basis of economic theory?

I've tried researching these, but the internet is full of information that is way beyond what I know or what I'll need to know. Any help will be appreciated (+1 to all!)

[millie96]

hi everyone, i got this question in a practice sac and need help (5 marks)

I understand that iron ore is considered inelastic to countries such as Japan and China, and therefore demand would remain constant despite the increase in price. i also understand that increasing price, balanced with inelastic demand, would increase profits to australia.

However in the answers it states that AD is increased due to a rise in export income?? What does this mean and why does AD increase?

[chasej]

hi everyone, i got this question in a practice sac and need help (5 marks)

I understand that iron ore is considered inelastic to countries such as Japan and China, and therefore demand would remain constant despite the increase in price. i also understand that increasing price, balanced with inelastic demand, would increase profits to australia.

However in the answers it states that AD is increased due to a rise in export income?? What does this mean and why does AD increase?

AD stands for aggregate demand. Was the question from an AOS1 sac or AOS2 sac? If it was an AOS1 sac, it's a bad question as AD is not part of the key knowledge for that AOS. If it was from a AOS2 SAC it's still a bit of a funny question as degree of elasticity/inelasticity isn't explicitly included in macroeconomics key knowledge in AOS2.

Aggregate demand is a macroeconomic concept and can be defined as "the total amount consumers, business and/or government are willing and able to spend on goods and services in an economy, during an given period of time".

The formula for aggregate demand is in the below spoiler:

Spoiler

AD=consumption expenditure (final goods and services purchased by consumers + Investment expenditure (essentially businesses purchasing capital)+G1 (government spending on final goods and services)+G2 (government spending on capital/investment items)+net exports (which is the total amount of exports from the economy less the total amount of imports into the economy.

In short AD=C+I+G1+G2+(X-M)

Thus following the AD formula we can see that when export values increase, net export would increase, thus increasing aggregate demand.

Going further the inelasticity of the market for many of Australia's exports means that net exports is likely to increase during times of rising export prices, as demand would not fall, thus export values being quanity*price of exports would rise. Thus aggregate demand is likely to rise during times of inelastic export price rises.

[millie96]

AOS2 sac!

Thanks so much! So I guess you think of it as a chronological thing - instead of AD increasing due to increased prices, you could say that increased prices increases exports, which increases AD?

[chasej]

AOS2 sac!

Thanks so much! So I guess you think of it as a chronological thing - instead of AD increasing due to increased prices, you could say that increased prices increases exports, which increases AD?

The chain of events is, increased prices, increaes total export values, hence increase net exports this an increase in AD.

So yeh, to get full marks in a SAC/exam you really should be breaking down and explaining all the steps, as if you miss a step you aren't really demonstrating a knowledge in the way the theory is interrelating, which essentially is what economic assessments boil down to. You need to fully explain how a cause created the effect.

[abcdqdxD]

The demand inelasticity of iron ore is also a valid point - so you're both correct. Generally better to stick with changes in the volume and price of exports when discussing export values (X) though.

[Summers]

Iron ore doesn't have inelastic demand. China's economic growth whilst still much better than most is in decline, and thus has been buying less iron ore than it has in the past from us. I'd say that inelastic demand would only be for goods/services for individual consumers, not for international firms or businesses.

[chasej]

Iron ore doesn't have inelastic demand. China's economic growth whilst still much better than most is in decline, and thus has been buying less iron ore than it has in the past from us. I'd say that inelastic demand would only be for goods/services for individual consumers, not for international firms or businesses.

All inelastic demand means is less reponsive to price changes, percentage wise then the price change itself. Just becuase demand decreases doesn't mean demand can't be inelastic.

The iron ore market is still fairly inelastic in terms of there being a need for iron ore regardless of price as iron ore is such a widely used material in many forms of production, thus demand is likely to be less responsive to changes in price as opposed to other markets.

Also Chinese economic growth, despite what many media reports have been saying, has remained relatively stable for the last few years and is likely to remain stable for at least the next year or two as per the chart in the below spoiler

Spoiler