HSC Economics Question Thread

[Deng]

For macroeconomic policies and more specifically fiscal, would it be more relevant for me to talk about fiscal policy during mining boom etc since i think from 14(?) onwards most fiscal policy has been rarely implemted due to political constraints i.e Hockey's zombies measures

Thanks

[kevin217]

For macroeconomic policies and more specifically fiscal, would it be more relevant for me to talk about fiscal policy during mining boom etc since i think from 14(?) onwards most fiscal policy has been rarely implemted due to political constraints i.e Hockey's zombies measures

Thanks

No, I don't think focusing strictly on macro/fiscal policy a decade ago is a good idea. If anything, if the question asks you to evaluate the effectiveness of recent macro polices, you'll be set in criticising the crap out of the recent budgets. So i definitely think you should include current conditions of the economy in your extended response.

[Deng]

No, I don't think focusing strictly on macro/fiscal policy a decade ago is a good idea. If anything, if the question asks you to evaluate the effectiveness of recent macro polices, you'll be set in criticising the crap out of the recent budgets. So i definitely think you should include current conditions of the economy in your extended response.

The only issue is they havent exactly been implemented or to my knowledge have been, which means you cant exactly evaluate them because you would be hypothesising the effects which may or may not be occurring.

[isaacdelatorre]

For macroeconomic policies and more specifically fiscal, would it be more relevant for me to talk about fiscal policy during mining boom etc since i think from 14(?) onwards most fiscal policy has been rarely implemted due to political constraints i.e Hockey's zombies measures

Thanks

Hey Deng,

I'm not too sure what you mean; but from my understanding, fiscal policy is the government's use of taxation and expenditure, commonly through the budget. Since the budget is an annual thing, I'm not sure what you mean, by "been rarely implemented." E.g. This year's fiscal stance is mildly contractionary, and there have been major proposals to decrease funding in areas such as healthcare. As well as plans to increase expenditure and implement programs like Youth PaTH. So you could definitely talk about things that have happened now and even a few years ago.

[kevin217]

The only issue is they havent exactly been implemented or to my knowledge have been, which means you cant exactly evaluate them because you would be hypothesising the effects which may or may not be occurring.

I see what you mean there. But I guess maybe some things markers will look at is your hypothesising. If you can analyse aspects of the budget and their affect on the economy, I'm pretty sure even though you are hypothesising, you are expressing your economic knowledge. Of course, your essay should include items a few years back and if you want even during the mining boom.

[Deng]

What i mean is that they are planned, but they arent necessarily put into place yet for example if they fail to pass through senate and its increasingly harder now since they only have 1 seat majority. Best example is Joe Hockey's budget and most of his reforms such as family tax benefits and other welfare stuff have failed to pass the senate, which we can speculate the impacts on distrubtion of income but it would become speculative. Also, economic theory doesnt always hold true ( cant remember exactly but my teacher once showed us an example where economic theory didnt occur in real life application hence me being hesitant on writing about things that may not happen )

[hermansia12]

What i mean is that they are planned, but they arent necessarily put into place yet for example if they fail to pass through senate and its increasingly harder now since they only have 1 seat majority. Best example is Joe Hockey's budget and most of his reforms such as family tax benefits and other welfare stuff have failed to pass the senate, which we can speculate the impacts on distrubtion of income but it would become speculative. Also, economic theory doesnt always hold true ( cant remember exactly but my teacher once showed us an example where economic theory didnt occur in real life application hence me being hesitant on writing about things that may not happen )

In this regard you can talk about why they would want to implement it. Like link back to economic concepts and why such a policy was proposed as well as its potential impacts. You can also use it to discuss positives and negatives depending on the essay. However don't have all the policies be in the pending range as economics is all about trends and analysing the impacts of policies. That way you have examples ready for any curve ball bostes throws at you.

[Giraffes are tall]

Heeey,

This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?

Thanks in advance!

[Deng]

Heeey,

This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?

Thanks in advance!

Fiscal policy itself is a form of macroeconomic policy and the other arm of maco being monetary policy. Not sure bout the tax thing, but the budget itself is a form of fiscal therefore its macro still. Automatic stabilisers are imbedded into the budget automatically acting as counter cyclical measures so gov doesnt deliberately implement them , the two are tax receipts and welfare payments. Period of high growth means more people are paying tax which helps government increase revenue and period of low economic growth means government has to pay more transfer payments which both help stabalise the economy to an extent. I believe it falls under fiscal policy --> budget outcomes

[nimasha.w]

heyy! can i please have some help with this, and tariff diagrams in general

[hermansia12]

Heeey,

This is regarding fiscal policies and government spending. When the government changes its annual fiscal budget, is this regarded as a macroeconomic policy? When these revenue and expenditure gets altered throughout the year, affecting only specific areas (eg. taxation), would it now be considered a form of micro economic reform. Also, what category does automatic stabilisers fall under?

Thanks in advance!

Hi Tall giraffe! Welcome to the atarnotes forum

A good rule of thumb my teacher taught me was that macro usually affects all of Australia but micro affects the labor market

Taxes are generally macro because they do with fiscal policy and are the government's main source of financing the budget. Automatic stabilisers like Deng said is generally taxes and welfare payments; both are aspects of fiscal policy (gov. decides what taxes and welfare payments, depending on their stance of the budget) therefore are macro.

Hope this helps

[RuiAce]

heyy! can i please have some help with this, and tariff diagrams in general

For Q19:

Of course, from a societal point of view, the total surplus is maximised when there is no tariff. But being realistic we need the tariff there so that the producers get some surplus.



Note that the tariff of $15 on top of the world price essentially forces the production up to the intersection of the demand and supply curves. At a tariff of $15, there is zero tax revenue generated from its implementation. This is because the tariff now makes it pointless for the country to participate in international trade; instead it may as well produce all the goods by itself. The government has basically forced the price up so high to the point that they only need to rely on domestic production, because recall that the intersection of the supply and demand curves is the point of market equilibrium in a closed economy.

Which generates a massive deadweight loss from a societal perspective (given that trade is still an option), however is probably the best that a producer can ever get.

By reducing the tariff back to $10, the balance is shifted back in favour of the consumers by a bit. The supply graph analysis now looks like this. (Note that a bit of consumer surplus was increased.)



The blue area is the tariff revenue as we first note that the price per unit is $20, so we work across from there. What's between the supply and demand curves will give us the number of units imported from the world. It would appear that we import (60-40) million, i.e. 20 million units from the world.

Of course, we must not forget that the world price was initially $10, but we added a tariff of $10.

So our answer is 20 million * $10 = $200 million.

(Note: I did this from university economics. Might be a bit advanced.)

[hermansia12]

heyy! can i please have some help with this, and tariff diagrams in general

First off a tarriff is a price imposed by the government on imports in order to restrict the amount of imports in an economy and a quota is a limit on the amount of imports

In question 19:
If the tariff is reduced to $10, it is $10 more than the world price (i.e $20 on market price) then the economy is in disequilibrium as there is an overdemand of 20 million. Therefore the tariff revenue= amount overdemand* tariff  = 20 million *10 = $200 million therefore the answer is B

In question 20:
If the tariff is $5 then the market price is at $15; That means an overdemand of 40 million. So to have the same effect, if we limit 40 million, (effectively move from $25 (equilibrium) amount of 50 to 30 in supply and 50 to 70 in demand) then the market price would be $15 i.e $5 tariff so the answer is C

Hope this helps

[hermansia12]

(Note: I did this from university economics. Might be a bit advanced.)

RuiAce that's perfect! Thank you i was a bit stuck on how to get the graphs like those in there. Great Insight!

[Deng]

on the note of tariffs, how would i do this one, its different from the usual ones