HSC Economics Question Thread

[birdwing341]

Hi Magma

Is that information correct? I thought the 2015/16 budget deficit was closer to $37.4 b (http://www.abc.net.au/news/2015-12-15/budget-deficit-increased-as-myefo-released/7029472).

In any case, it is definitely expansionary as long as the budget is in deficit. The government right now is attempting to get us back to a surplus, hence the 'forecasts' that show declining figures over the next 5-6 years. So whilst it may seem like the deficit is declining, you must remember that G>T for a deficit budget and thus they are all expansionary.

Hope this helps!

Just to add on to what Essej has said. While the outcome of the budget is expansionary, the policies within the budget are actually contractionary (as well as the government's overall aim of fiscal consolidation). I think if you get a question on this, it's good to distinguish between the outcome and the actual content

[itsAnuu]

How to do?

[isaacdelatorre]

How to do?

Hey there,

To work this out, we firstly need to find the Marginal Propensity to Consume - in this economy, we are assuming that there is no taxation; thus Income = Savings + Consumption
Hence the MPC = change in consumption / change in income
MPC = 4/5

We know that the multiplier (k) = 1/(1-MPC)
therefore k = 5
Since change in income = k x change in AD
A change in income of 1000 = 5 x change in AD
Therefore the change in AD = $200

Sorry, had it wrong before

[birdwing341]

Hey there,

To work this out, we firstly need to find the Marginal Propensity to Consume - in this economy, we are assuming that there is no taxation; thus Income = Savings + Consumption
Hence the MPC = change in consumption / change in income
MPC = 4/5

We know that the multiplier (k) = 1/(1-MPC)
therefore k = 5/4
Since change in income = k x change in AD
A change in income of 1000 = 5/4 x change in AD
Therefore the change in AD = $800

I think your multiplier should be 5 (you accidentally calculated 1/MPC) but the method looks good

[itsAnuu]

Answer is 200

[isaacdelatorre]

I think your multiplier should be 5 (you accidentally calculated 1/MPC) but the method looks good

Wait, your right - ahahha sorry - good pick up I'll fix it now

[itsAnuu]

Ty guys. I completely forgot S = I

[AFix]

May haved asked this before, but i cant seem to find the old post but how would i find consumer consumption on a tariff diagram

Do you know the answer?  Is it C?

[Deng]

Do you know the answer?  Is it C?

Sadly i dont have the solutions to the question, i was just going through some questions i saved to do for later

[kevin217]

Do you know the answer?  Is it C?

That's what I think the answer is as well

[Deng]

That's what I think the answer is as well

Do you know the answer?  Is it C?

Can one of you please explain how it is C ?

[kevin217]

Can one of you please explain how it is C ?

When the price is at $50, the demand is 700 units. Therefore 700 x 50 = 35 000

[kevin217]

When there is a rise in the minimum wage, there will be an increase in the supply of labour. This means that the participation rate has risen right?

[hermansia12]

May haved asked this before, but i cant seem to find the old post but how would i find consumer consumption on a tariff diagram

I believe the answer is C - consumer consumption is generally calculated by demand*price so 50*700

[hermansia12]

When there is a rise in the minimum wage, there will be an increase in the supply of labour. This means that the participation rate has risen right?

Yes-more people will be inclined to work so will enter into the workforce increasing participation rate. However, the unemployment rate will increase as employers are less inclined to demand labour (law of demand).