HSC Economics Question Thread

[Adriaclya]

Can someone help me with these? How do you work out the appreciation/depreciation from its value against another currency?

Yo! So to calculate appreciation/depreciation is given by:

current exchange rate minus initial exchange rate / initial exhange rate
 
So applying to your question,
Its (1.07 -  0.85)/0.85.
So if it gives a positive value, it has appreciated by the answer you get; vice versa for depreciation.
That should give an answer of around 26 ish percent. Ie there has been an appreciation in aust dollar against us dollar by 26 percent!
Also, from the trade weighted rate, you can also tell an appreciation in aust dollar to us dollar by the increase in TWI. 

[olivercutbill]

Something that confuses me because of notational differences and differences in videos online:

Given nominal GDP and the CPI outcome, what is the working to find the real?

Some divide the nominal GDP by the CPI, some reduce nominal GDP by eg. 25% (for a CPI of 125).

Can someone clear this up for me? Thanks

[conic curve]

Explain how non-equilibrium market situations for surfboards can be resolved through the operation of the price mechanism (4 marks)

[brontem]

Something that confuses me because of notational differences and differences in videos online:

Given nominal GDP and the CPI outcome, what is the working to find the real?

Some divide the nominal GDP by the CPI, some reduce nominal GDP by eg. 25% (for a CPI of 125).

Can someone clear this up for me? Thanks

real GDP = nominal x 100/CPI
(nominal and CPI numbers for the same year obviously) 

[Adriaclya]

Given nominal GDP and the CPI outcome, what is the working to find the real?
Can someone clear this up for me? Thanks

Just to add on to brontem  ,

Yes current real GDP = current nominal GDP x 100/current CPI .
However it can also be expressed such that
Real GDP = nominal GDP / ratio of current CPI to base year CPI (which is usually taken as 100)

As you were saying how some people subtracted 25%, that is incorrect (given a cpi of 125).

[Adriaclya]

Explain how non-equilibrium market situations for surfboards can be resolved through the operation of the price mechanism (4 marks)

Basically, its saying in a non-equilibrium market situation, where supply does not equal demand, there is either a shortage or a surplus of surfboards.
Now we know that the price mechanism is ultimately the influence of prices on the interaction between the supply and demand of items.
So in a case of
shortage of surfboards (supply <demand at a given price:
You would increase the price of the surfboard to contract demand (since more expensive) and increase supply (since price increase acts as an incentive for production)
surplus of surfboards (supply>demand):
You would decrease the price of it to expand demand and contract supply for the market to be in equilibrium.

Yep.

[Loki98]

Could someone explain this question.
which of the following methods of financing an expansionary fiscal policy will be more likely to cause higher inflation?
1. borrowing from the Reserve bank
2. issuing government securities for the sale in the domestic market
3. issuing government securities for sale to foreign investors in a foreign currency.
4. selling government assets
Answer is A
Thanks

[chuckiecheese]

Hey guys,

This is mad that the economics side of this site has grown, it is great !

Got back our trial paper today and I got 82/100, topped the exam. I know I should be stoked, but I am after a band 6 in the HSC exam, so any ideas on how to bump my way up there?

[Adriaclya]

Hey guys,

This is mad that the economics side of this site has grown, it is great !

Got back our trial paper today and I got 82/100, topped the exam. I know I should be stoked, but I am after a band 6 in the HSC exam, so any ideas on how to bump my way up there?

the main points i would give would be to :
be concise but do not compromise it for structure and information in your answers
know the connections between syllabus dotpoints
being aware of the question verb
proper jargon
time managment - really depends on what's comfortable to you. i prefer smashing my essays first and then doing mc's and short answers. but at the end, just make sure you have time to double check.
knowing the definitions of specific jargon. dude, this makes it hella easier for understanding differenct concepts
thats probs all i can offer right now (cos router acting up). But going through your paper, knowing exactly what you got wrong and where your weaknesses are, is the best place to start for maximising those marks!
so tell me, where are parts of the exam you lost most marks in and what type of questions were they?

[Essej]

Could someone explain this question.
which of the following methods of financing an expansionary fiscal policy will be more likely to cause higher inflation?
1. borrowing from the Reserve bank
2. issuing government securities for the sale in the domestic market
3. issuing government securities for sale to foreign investors in a foreign currency.
4. selling government assets
Answer is A
Thanks

Hi Loki!

So we know that there are 4 types of financing a deficit/expansionary fiscal policy (tap, tender, monetary and overseas).

Elimination isn't really necessary for this as you should be able to single out a which is a form of monetary financing. We know that borrowing from the reserve bank (which amounts to printing money, also known as quantitative easing) increases the money supply. Thus, purchasing power of consumers falls and inflation rises.

Hope this helps !

[chuckiecheese]

HELP

How to structure

Explain how both labour market policies and fiscal policies can be used to reduce income inequality and wealth inequality.

[lukejohnson]

Hey wondering if someone could please help with these short answer questions

Explain how changes in the level of domestic interest rates impact on Australia's balance of payments.
Briefly outline one macroeconomic policy that could be used by government  to improve Australia's balance of payments.

Cheers

[Spencerr]

Hey wondering if someone could please help with these short answer questions

Explain how changes in the level of domestic interest rates impact on Australia's balance of payments.
- Note that the conduct of monetary policy is geared towards inflation targeting (keeping inflation within the 2-3% band) however changing the IR can impact upon Australia's BoP
- Increases in IR can dampen economic growth and help to lower inflation. Imports are a function of domestic economic growth and so reducing growth will reduce our demand for imports, thereby improving our BoGs should our exports remain unaffected. However interest rate differentials between national economies can result in capital inflows (remember that most of the advanced economies have interest rates near 0% with the EU having negative interest rates, hence increasing IR will lead to greater capital inflow as investors find it more attractive to invest here (due to higher returns)). This results in increased surpluses on our financial account which will lead to an increased CAD as they balance out under the exchange rate mechanism.
- Decreasing IR can stimulate economic growth and can lead to an increase in imports which reduces the size of our net exports, potentially widening our net exports. This is due to the fact that subsequent structural changes in the economy have "hollowed out" many of our manufacturing sectors etc. therefore we rely heavily on overseas to import consumer goods. Decreasing IR can also lead to capital flight if other national economies have higher interest rates which can lead to reduced surpluses on the Financial account.

Briefly outline one macroeconomic policy that could be used by government  to improve Australia's balance of payments.
- One macroeconomic policy that the government can use is to achieve fiscal consolidation by achieving consecutive budget surpluses, stabilising debt and reducing the amount of interest the government has to pay on its debt. According to the twin deficits theorem S -I + T - X = X - M. (T - X) being the Public Sector Underlying Deficit (PSUD), if the government maintains fiscal discipline and reduce the PSUD, they can reduce the size of the CAD represented by (X - M). Furthermore, by running budget surpluses, the government increases the pool of national savings, closing the savings investment gap whilst also mitigating the "crowding out effect" that is the government competing with private sectors for national savings, forcing the private sector to borrow overseas which is cheaper.

Cheers

[Deng]

Hey guys, i got my trial marks back and was wondering how i can improve on "referring to the stimulus".

My teacher said that inserting figures and quotes from the stimulus isnt actually referring to it and i should use it as the basis of my essay

Thoughts on this ?

[Essej]

Hey guys, i got my trial marks back and was wondering how i can improve on "referring to the stimulus".

My teacher said that inserting figures and quotes from the stimulus isnt actually referring to it and i should use it as the basis of my essay

Thoughts on this ?

Hi Deng!

It would be difficult for me to comment unless I actually see your response, but often directly inserting quotes from the stimulus isn't actually showing an understanding of the question. To achieve the high bands, the questions require you to integrate the stimulus into your response.

Say the stimulus (often a paragraph in the HSC trials) said something along the lines of "The RBA posed that the deteriorating inflation rate in Australia, sitting at 1.3%, was a result of both domestic and international factors."

You should never directly insert the quote ie "Inflation is a result of both domestic and international factors. The RBA posed that..."
Instead, what the markers want to see is an understanding of the question and a use of words/small phrases from the stimulus sustained through your response.
This may look like "The recent decline in inflation can be attributed to domestic factors such as a trend lowering of consumer MPC, as well as slower overall global growth. Currently, due to the reduction in effectiveness of monetary policy, the inflation rate now sits outside the targeted band of 2-3% at 1.3%."

Hope this helps - happy to have a look at any of your responses if you need specific clarification (i feel i'm being too general  )