Economics Questions Thread

[Summers]

Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.

[M_BONG]

Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.

Having done three Commerce subjects (Acc, Legal, Eco) for some period in VCE, I definitely find Economics conceptually the hardest.

So perhaps you find it easy because your school SACs aren't difficult? Don't get complacent though, the VCAA exams looks really long and difficult so yeah you can't afford to do no work..

[chasej]

Does economics get alot harder as it progresses? I'm doing literally no work and I'm finding it so easy.

AOS1 is conceptually the hardest in my opinion, and historically the worst answered. If you nail AOS1 and can answer the exam style questions VCAA has thrown on the exam from that AOS, you're doing pretty well for AOS1.

The rest of the AOS's in my experience, were easier conceptually, however to do well in the other 3 AOS's you need need need need need to know current examples of economic events and policies and need to go beyond what the textbook provides, you really should learn the 2014-15 budget in extreme detail, in terms of the key policies and their effects, when the budget is released. This year is probably going to be a pretty difficult year to learn the budget also as I'm expecting the liberal gov. to really shake things up, this year would be the first year the new study design is applied to a liberal budget, so should be interesting to see how people go on the exam with them.

[Summers]

Our teacher says that our SACS are up to VCAA standard and is a VCAA assessor as well and always speaks to the main assessor person about what to put in the SACS to test our knowledge for preparation for exams. I wasn't aware of it but my teacher took quite a few VCAA exam style questions from recent exams from the AOS and slightly modified them for us, but basically took them from the exams and put them in our SAC.

Some things in economics absolutely stumped me - the most basic things, like how to draw a graph. But beyond that, for the first two SACS I just read the textbook pages once throughout on the morning of the SAC so I had an understanding, and through that understanding had the ability to tell a story. It surely isn't good for long term memory but it just seemed ridiculously easily. If AOS1 is the hardest conceptually I'm going to have a ball in this subject.

In saying that, I'm in quite a strong cohort and it is noticeable who actually tries and who doesn't as the results are at quite opposite ends with each other. I was told that you were unable to do well without practice questions but I'm finding as long as you have the knowledge you don't really have to apply it.

I literally know nothing about economic events and the word 'policy' makes me cringe. Hopefully I can get it under my belt though.

[Guess what I'm doing at 3:33AM in the morning when I have a SAC in a few hours Wonders of cramming]

[millie96]

Would you say that an increase in value for the $AUD decreases aggregate demand as exports (X) are decreased and imports (M) are increased?

following the equation AD = C+I+G1+G2+[X-M]

[chasej]

Would you say that an increase in value for the $AUD decreases aggregate demand as exports (X) are decreased and imports (M) are increased?

following the equation AD = C+I+G1+G2+[X-M]

Yes. But remember you have to disucss the reasons as to why demand for imports would increase and demand overseas for Aussie exports would decrease.

That is one Australia dollar purchases more overseas currency, hence decreasing the price of imports denominated in foreign currency, increasing demand. With overseas currency buying less aussie currency, causing AUD denominated imports to increase cost overseas relative to other goods and services, thus decreasing export demand.

[millie96]

thank you!
can somebody please explain how externalities cause market failure? thanks! (sorry for so many questions about this AOS)

[p.taaa]

say positive externalities: they are usually underproduced by the free market because they are usually unprofitable, so people aren't benefitting as much as they should be (private costs outweigh the public costs)
negative externalities: they are usually overproduced by the free market because they are usually a result of profitable/ self-interested activities (like smoking) so public benefits exceed private benefits. Leading to overproduction and people are worse off because it negatively effects their welfare
in both scenarios people are worse off than they should be if the government interfered. So resources in this way aren't allocated in a way to best satisfy individuals.
If the government interfered, they will extend production leading to positive externalities (i.e. education which they do) and restrict/ limit production leading to negative externalities (i.e. carbon tax, ETS). correcting the market failure through reallocation of resources because now people are better off.
can be said private costs are more equal to public costs or private benefits are more equal to public benefits
Hope this helps!

[Summers]

Hope this helps!

Remember there are externalities in production and externalities in consumption.

[abcdqdxD]

say positive externalities: they are usually underproduced by the free market because they are usually unprofitable, so people aren't benefitting as much as they should be (private costs outweigh the public costs)
negative externalities: they are usually overproduced by the free market because they are usually a result of profitable/ self-interested activities (like smoking) so public benefits exceed private benefits. Leading to overproduction and people are worse off because it negatively effects their welfare
in both scenarios people are worse off than they should be if the government interfered. So resources in this way aren't allocated in a way to best satisfy individuals.
If the government interfered, they will extend production leading to positive externalities (i.e. education which they do) and restrict/ limit production leading to negative externalities (i.e. carbon tax, ETS). correcting the market failure through reallocation of resources because now people are better off.
can be said private costs are more equal to public costs or private benefits are more equal to public benefits
Hope this helps!

I think public/private benefit is more uni than VCE

[watagal]

Hey guys I recently had a sac and got a question wrong, and  I am slightly confused about the answer.

Q.) Which of the following types of market failure is not part of the justification for taxation in the Australian economy?

(A.) All forms of market failure are used to justify taxation in the Australian economy.
(B.) Negative externalities
(C.) Public Goods
(D.) Positive externalities

I went for (A) simply because we can justify taxation for public goods as without taxation society would miss out on essential goods which would not be provided in a competitive market as there is no profit to be made out of it. We can justify taxation through negative externalities as parties undertaking transactions will not take into account externalities on third parties. E.G carbon Tax. Additionally there is a close link between public goods and positive externalities e.g. education creates positive externalities for society as an educated person is more likely to be able to support themselves not engage in crime etc. Hence positive externalities can be part of the justification for  the taxation system as without tax the government would not have been able to provide greatly subsidised education thus there would be less educated people.

That is why i went for (A), however the answer according to my teacher is (D).

Is there something wrong with my reasoning?

Any help is appreciated Thank you.
 

[abcdqdxD]

Positive externalities are overcome by subsidies not taxes

[watagal]

Oh ok I see what your saying, I thought the question was talking about taxing in general as in we can justify taxation as the money gained from say income tax can then go towards subsidising the positive externalities. But yeah thanks for the help.

[chasej]

Hey all,

just wondering if we need to know all factors listed that affect aggregate demand and supply?

Can an exam question specifically refer to one factor?

Is this a valid exam question - EG. Explain how Real Unit Labor Costs (RULCs) affect Aggregate Supply.

I am only, at the moment, learning three factors for AD and AS... should I learn them all? Thanks.

You don't have to know all the factors. Last year I learned 4 demand and 4 supply factors. Ensure you can define the factor, explain it's effect on all the economic goals (by the end of the area of study) and most importantly know the statistics affecting the factor from this year and three years prior (so know how the factor changed over 2010-time of the exam) [you will have to update your notes to account for statistics relevant to the exam which didnt exist prior to your SAC]. Three factors are probably enough, but I felt more secure learning four-wasn't much extra to know and ensured there would be variety if two questions on the exam assessed similar content).

You would never be asked to explain the effect of one specific factor on the exam, as the study guide simply states you need to learn factors, which are of your choosing. Exam questions have always been like "Using the information in the table, identify a factor that might have contributed to the increase in the *snip* between June 2011 and December 2012, and explain why., (VCAA economics exam 2013 q.1.a., I snipped out a little of the question so people wouldn't know exactly what the question asked for the sake of being able to complete the prac exams without pre knowing the questions that much", so in that question you could have used any factor which related to the data provided (which was very broad data which related to all the factors possible).

Learning all the factors would just be a waste of time in basic terms, you only need to know three or four (very well).

[M_BONG]

Cheers for the great advice Chasej.

Also, when explaining economic goals would you use "business and consumer confidence" as one factor affecting inflation? Or would you separate them - ie. factor one business confidence; factor two consumer confidence.

Thanks!