HSC Economics Question Thread

[steviemay2000]

Then with this hsc question "Australia provides foreign aid to build schools in a developing country. how is this recorded" why was the answer still in the capital account when it is a specific thing?

[Caleb Campion]

Hello first post here! what statistics should be memorised for the upcoming essays in the economics exam? Any key topics/statistics or trends?

If you haven't already memorised statistics or trends --> There isn't a whole lot you can do right now.
The best help I could suggest this close to the exam is memorising the peak highs and lows, as well as the current statistics for each of the following:
- CAD
- Exchange Rate
-Unemployment
- Inflation
- Interest Rates
- Growth
- Distribution of Income (GINI Coefficient)
- historical terms of trade movements (ie, increased significantly through the 2000s due to the mining investment boom, and has declined steadily since 2012 due to falling Chinese demand)

At the least know the current statistic for each of these, and have a general idea of how each of these elements changed/moved during the Global Financial Crisis (2008-9)

[Caleb Campion]

Hi! Just came across a past HSC question (2015 Q15):

Which of the following could lead to a deterioration in the structural component of Australia's current account deficit?
a) An increase in net foreign liabilities
b) A decrease in portfolio investment by foreign firms
c) A decrease in export volumes due to a weakening global economy
d) An increase in imports resulting from an improvement in the terms of trade

I'm not too sure how to answer this question. What does it mean by 'deterioration in the structural component of Australia's CAD'? Thank you!

When they use the term deterioration, they are suggesting the CAD is 'worsened', in that, which one of the four options is a structural factor that would increase Australia's Current Account Deficit.

We know that one of the structural components of Australia's CAD is our high level of foreign debt, and liabilities. So if this were to increase, obviously our repayments and servicing costs will increase, seen as debits in the NPY, and will worsen the CAD --> Therefore our answer is Option A.

For closure, we know this answer is also correct through elimination: Option B is a cyclical factor due to the changing sentiment of investors etc, Option C suggests changes due to a weakening global economy, which obviously cyclical, and so too in Option D, the terms of trade, which is also cyclical due to changes in demand for particular commodities etc.

Hope that helps/ isn't too complicated.

[61288]

Then with this hsc question "Australia provides foreign aid to build schools in a developing country. how is this recorded" why was the answer still in the capital account when it is a specific thing?

The main reason why it is the capital account is because it factors in "conditional aid". Because the government is providing money specifically for building schools, this is a form of conditional aid, hence it is recorded on the capital account. Hope this helps!

[emilyygeorgexx]

Hi! Just came across a past HSC question (2015 Q15):

Which of the following could lead to a deterioration in the structural component of Australia's current account deficit?
a) An increase in net foreign liabilities
b) A decrease in portfolio investment by foreign firms
c) A decrease in export volumes due to a weakening global economy
d) An increase in imports resulting from an improvement in the terms of trade

I'm not too sure how to answer this question. What does it mean by 'deterioration in the structural component of Australia's CAD'? Thank you!

Okay so structural component of the CAD can be both the narrow export base (BOGS) or savings and investment gap (NPY).

This questions is more leaning (imo) to the savings investment gap. So as Australia is a net capital importer, we don't have enough to service our own liabilities as the domestic pool of savings is very low due to the crowding out effect. As a result of this low level of savings, Australian's look overseas to borrow the money necessary to service their liabilities. However, when borrowing the money from overseas this incurs debt servicing costs such as interest which must be paid, and are recorded as a debit in the NPY. These 2 factors account for contributing to the CAD and the level of foreign debt.

So as you know NFL = NFD + NFE, so any increase in the net foreign debt will worsen the overall NFL. Therefore the answer is A.

EDIT: Didn't see someone already answered it!

[gershadev]

Hi,
I'm confused in the:
1) difference between exchange settlement accounts and commonwealth government securities?
2)what does liquidity have to do with RBA buying and selling of CGS?
3)would an Australian buying real estate from overseas be recorded as a debits on the current account or capital and financial account?? (Is the real estate a 'good' or a 'financial asset') (found on another thread )

Thanks

[bigro27]

Hey I was wondering how many pages are expected for a 19-20/20 essay in economics? I usually write around a full booklet (7-8 pages) but in the case there is an essay on something like environment then I think I'd be looking at like 5 pages. Anyone know roughly what the HSC markers expect to hit those really up tier responses assuming the content itself is strong, detailed and data-supported?

[FutureLawStudent]

Hey I was wondering how many pages are expected for a 19-20/20 essay in economics? I usually write around a full booklet (7-8 pages) but in the case there is an essay on something like environment then I think I'd be looking at like 5 pages. Anyone know roughly what the HSC markers expect to hit those really up tier responses assuming the content itself is strong, detailed and data-supported?
/quote]
This is obviously very late, but if you want my 19.5/20 2018 HSC Economics essay I can upload it.

[006896]

Hi,
With tariff diagrams, I understand that the gov revenue is the rectangle formed from world price to the new price with the tariff added. However, when the tariff is so high, that it is equal to the equilibrium price, does that mean the gov receives no tariff revenue? Or how do you calculate revenue in that instance? I have attached a question that asks for this knowledge.
Thanks

[006896]

Hi,
So with subsidy diagrams, are the foreign importers not considered at all? Eg. in tariff diagrams, the importer revenue can be calculated. Is this unable to be calculated in subsidy diagrams?

Also, why, when domestic suppliers get subsidies, do they decrease their supply? Wouldn't it be more beneficial to keep their supply at the same level, as they would get a greater overall revenue?

I've attached a diagram, which I'm not sure if it is helpful.
Thanks

[henrychapman]

Hi,
So with subsidy diagrams, are the foreign importers not considered at all? Eg. in tariff diagrams, the importer revenue can be calculated. Is this unable to be calculated in subsidy diagrams?

Also, why, when domestic suppliers get subsidies, do they decrease their supply? Wouldn't it be more beneficial to keep their supply at the same level, as they would get a greater overall revenue?

I've attached a diagram, which I'm not sure if it is helpful.
Thanks

Hey there,
These are really good questions and certainly protection as a whole is one of the harder concepts to grasp in the course.
To answer the first question, foreign importers are not considered in the subsidy diagram and only shows the domestic market for when an industry is operating in accordance with the market forces of supply and demand, and then the changes in supply and demand once the subsidy has been implemented. The only calculation to be done in a subsidy diagram is the size of subsidy, which is the vertical height on the diagram.
And your second question, theoretically, if firms are given a subsidy, this then lowers their costs of production which therefore lowers the market price- meaning that they are unable to make enough profit. So it is true, all other things being equal, that they will decrease their supply. However, overseas competitors will also decrease their supply as the domestic producers are more competitive in the market due to cheaper prices, therefore increasing domestic supply relative to overseas supply. In a way, subsidies almost "block" overseas competition as subsidies make it cheaper for goods to be produced and therefore cheaper to purchase as reflected through their market price.
I know this may sound a bit confusing but hope this helps !

[emilyyyyyyy]

hi!

I need help with an assessment! So the question is Evaluate the economic growth and the economic development of the Brazilian economy in the last decade in regard to its integration into the global economy.
My teacher suggested we break the assessment up into sections: intro, global impact (e.g. quality of life, unemployment, trade, eco policies, etc), impacts of globalisation (e.g. market deregulation, protectionism, joining trade blocs or unions, TNCs, etc), conclusion.

I'm confused as to how I should go about answering the question, and how I should structure it?
Thanks heaps

[emilyygeorgexx]

hi!

I need help with an assessment! So the question is Evaluate the economic growth and the economic development of the Brazilian economy in the last decade in regard to its integration into the global economy.
My teacher suggested we break the assessment up into sections: intro, global impact (e.g. quality of life, unemployment, trade, eco policies, etc), impacts of globalisation (e.g. market deregulation, protectionism, joining trade blocs or unions, TNCs, etc), conclusion.

I'm confused as to how I should go about answering the question, and how I should structure it?
Thanks heaps

Hey!

I'll try and help answering this question because I did China as my case study but the structure should be relatively the same. So when i wrote an essay for a similar question like this the best thing I found was breaking it up into strategies that promoted economic growth and strategies that promoted economic development. Obviously this whole topic is about the 'Global Economy' so you would want to explain/analyse about how the strategies Brazil implemented have contributed to the growth of the global economy. You could do this by looking at changes in GWP and even Brazil's GDP, different trade patterns, FDI inflows and outflows, etc. After going into all this theory you would then use your statistics to explain the effects these strategies have had on globalisation, like you have mentioned above. Going into the specific economic policies and its effects will be a bit tricky if you haven't done the topic 'Economic Issues' and 'Economic Policies and Management' (obviously assumed you haven't) but the basics should be easy to integrate.

Hope this helps!

[meerae]

Hi!

I am freaking out about my economics exam next week. How would you answer this; "Using examples, discuss the main macroeconomic and microeconomic effects of protection on a national economy like Australia"
I discussed general advantages/disadvantages of protection and assorted them intro macro and micro but its worth 5 marks and the info I have doesn't seem sufficient.

Thanks!
meerae

[emilyygeorgexx]

Hi!

I am freaking out about my economics exam next week. How would you answer this; "Using examples, discuss the main macroeconomic and microeconomic effects of protection on a national economy like Australia"
I discussed general advantages/disadvantages of protection and assorted them intro macro and micro but its worth 5 marks and the info I have doesn't seem sufficient.

Thanks!
meerae

Hey!

So basically when looking at the question you need to break it up into macro and micro. Macro essentially is looking at the whole of the Australian economy whereas, micro targets individual sectors of the economy such as employment, competition, agricultural assistance.

Some macro things I can think of off the top of my head:
* Decreases Australia's ability to trade with the rest of the world which causes a decrease in their GDP and ultimately decreases GWP
* Decreases Australia's access to a multitude of goods and service, in which they become scarce. As there is now a limited selection of goods and services, this drives the price up and contributes to an increase in cost-push inflation in the Australian economy

Some micro things I can think of off the top of my head:
* In the short term a decrease in protection causes an increase in structural unemployment for export competing businesses within the economy as their trade has now become restricted. However, in the long term this decrease in protection causes a decrease in unemployment due to increase labour productivity and technical efficiency occurring within the economy. These resources are reallocated to more efficient industries in the economy so they are able to operate at their full productive capacity.
* A decrease in protection increases the choice of goods and services available to customers. This therefore, increases competition within the economy and causes a decrease in price. Due to this decrease in price this stimulates demand within the economy, causing increased spending which overall contributes to increase in Australia's GDP and levels of economic growth.

There is definitely 100000 things that I have missed but I hope these few help