ATAR Notes: Forum
VCE Stuff => VCE Business Studies => VCE Subjects + Help => VCE Economics => Topic started by: marbs on October 01, 2008, 11:30:15 am
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What do you think Section B will mainly concern?
Oil Prices
Credit Crisis
Skilled Labour Shortage
My teacher said they write the exam early in the year so that would exclude world economic conditions, which will likely be on it next year.
I think it will be something about Oil and its effect on supply
Also is everyone find this the longest subject to study for? Do people find it as interesting as I do?
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IMO, I don't know how they could formulate a question about the global credit crunch. If they did, it wouldn't tie directly to the incident as higher level economics of finance isn't taught at VCE level ( :( ) .
My opinion:
- Monetary Policy
- Efficient allocation of resources
- BAF, Building Australia Fund within Budgetary Policy.
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Also is everyone find this the longest subject to study for? Do people find it as interesting as I do?
I think it will be the subject I need to dedicate the most time to to get a good mark in. I've revised most of chapter 3 but I need to get into more detail. There are all these little things that I don't exactly know. It shits me :(
But definitely interesting! Most interesting subject I do.
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Yeah, I really like eco and knowing how things in the world actually work.
In terms of the exam, it is made early in the year hence is unlikely to have any questions on new economic circumstances, however you're of course still allowed to refer to whats happening at the current time.
In section B, I've been thinking it could relate to:
- Exchange rate(except its been used so much on Eco exams they might give it a rest).
- Skills shortage.
- Petrol/Oil prices.
- Interest rates.
So sort've the same as marbs.
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Has anyone got "Australian Economic Statistics- Trends, Objectives and Policies- Warringal Publications"?
I've got it but haven't read through it all yet but it's pretty good. It goes through all the trends and stuff. There is also another accompanying book but my friend has that one as we bought both of them and share them.
It might be good to use for exam prep.
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Has anyone got "Australian Economic Statistics- Trends, Objectives and Policies- Warringal Publications"?
Nope - haven't got it but I might look into it thanks.
On another note, how is everyone actually studying for eco? I've found it probably the hardest to prepare for out of all my subjects, just because of the textbook knowledge + knowledge of the economy is alot to cover.
I think I will type up a booklet or something for each section from my revision notes, and then also for current knowledge.
What about everyone else?
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I'm doing my notes which helps refresh my memory about everything. Then I will do questions/exam questions to see the smaller things that I don't know, definitions and stuff. Our class really needs to focus on the current economic situations... we are all shitting ourselves about it.
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Yeah, I got that book costa. It's actually right next to me! Pretty shweet book :)
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What's the other one called? If you have the other one too.
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Has anyone got "Australian Economic Statistics- Trends, Objectives and Policies- Warringal Publications"?
I've got it but haven't read through it all yet but it's pretty good. It goes through all the trends and stuff. There is also another accompanying book but my friend has that one as we bought both of them and share them.
It might be good to use for exam prep.
Hey Costa, was that the books that ms bingham ordered for us??
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Yep.
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Ughhh... can someone help me please with Interest rates.
If theres a question on the exam regarding trends of interest rates I'm gonna shit my pants..
Ok. So in light of the current financial crisis economists have been talking of the next cut being a whole 1/2 a percent, reducing the target cash rate to 6.5%.
However, according to the RBA website, the last released CPI index in June had the inflation rate at 4.5%, way outside the target range of 2-3% per annum. So if anything, shouldn't the RBA increase interest rates? What I don't understand, is that the RBA's main indicator of the level of interest rates is the rate of inflation, so why is everyone talking of interest rate cuts?
I'm sure I've overlooked something major, hence explaining why I don't understand. If someone could help that would be great.
Thanks.
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Hint: The lag effect. I'll say no more
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Look at the way the markets are reacting at the moment, there is no way inflation will continue rising. Confidence is low as the markets are unstable.
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Look at the budgeted inflation figure. It is within the target range. With the current economic conditions coupled with the lag effect of 12-18 months (varies depending on the source you get this from), you are looking at a scenario where inflation could be very low if spending wasn't promoted or even a recession if things got really bad.
Looking at historical data is not enough to try and justify changes in the cash rate. Inflation may have been 4.5% but things have changed drastically in the last 12 months.
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Inflation is mainly (but not solely) rising because of supply constraints which MP is powerless to combat with (only MERs). It makes complete sense to decrease interest rates in order to give consumers a break as consumer confidence (in retail) is pretty bleak.
and as costa said, the time lag effect means that the actual effects of cash rate increases may not actually hit the demand-side immediately, rather in 3 - 6 months or so (variable).
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Ahh ok.
Thanks alot Costa, marbs and Apple.
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Yep.
Well i got those books :) did you purchase them from bingham?
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yeh. me and anagha went halve-ies so shes got the other one.
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yeh. me and anagha went halve-ies so shes got the other one.
ohh ok thats cool :)
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me and my mate went through this neap 2008 practice exam, and there was this multiple choice we'd never seen. It went something like;
It the government made a limit on the highest possible value of houses this would cause
a) More demand, thus causing a shortage
b) less demand causing a surplus
c) The equilibrium price would move down
d) ...?
I said A, but my mate said C
Has anyone seen something like this, and would did they get.
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Also Really easy question that I couldn't think of.
If interest increased what effect would this have on price stability
I said interest rates would lead to lower confidence, thus decreasing consumption spending, lower agg demand, slowing eco activity, and thus slow growth. Which will slow down inflation, and thus aids price stability by keeping prices in the target range of 2-3%.
I then said interest rates would slow investment.. (continued with similar answer) :idiot2:
What I am missing?
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I dunno, but couldn't it also increase production costs of firms that have borrowed money?
This could cause firms to raise prices to protect profits, hence adding to cost inflation, and jeapordising price stability. However, this is probably minimal compared to slower demand and would most likely be insignificant.
Meh.
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me and my mate went through this neap 2008 practice exam, and there was this multiple choice we'd never seen. It went something like;
It the government made a limit on the highest possible value of houses this would cause
a) More demand, thus causing a shortage
b) less demand causing a surplus
c) The equilibrium price would move down
d) ...?
I said A, but my mate said C
Has anyone seen something like this, and would did they get.
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Um... do you know the answer? Do you know what d) is?
If d) was
the equilibrium price would move up, id choose that. hahah
problee wrong
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lol nah I don't remember what it was, it wasn't that, and I'm pretty sure it wasn't right.
@revel - thanks thats another effect
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There is no reason why the equilibrium price would move down and def no surplus of houses.
its a or d
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thought so... thanks for that