HSC Economics Question Thread

[isaacdelatorre]

HI! for "impacts of microeconomic policies on structural change in the Australian economy", would you know of any recent microeconomic policies I could talk about??

Thanks

Hey there ana,
For microeconomic policy, you wanna be talking mainly about competition, deregulation and industry policy - mainly done throughout the 90s. This is because in an essay talking about policies back then will allow you to assess the effects. This is due to the fact that micro economic reform has a relatively long time lag compared to macro economic policy; so if you were going to incorporate an example into a short answer or an essay, choose something from a little while ago so that you can tell me what the effects are.

Hope this helps sorry for the super late reply!!

The current budget's fiscal stance is contractionary. I'm confused, because the federal expenditure exceeds that of last year. Anyone care to explain this?

Hey Lumenoria,
Sorry for this really late reply to your question, if you are still interested:
remember that a budget stance is calculated based on the budget outcome of the previous year, compared to the budget outcome of this year.
A budget outcome is just Revenue - Expenses --> i.e. Taxation - expenditure
For 2016, this figure was around $39.6b deficit, in 2017, $29.4b which is a decreased deficit --> i.e. a contractionary stance

How would you answer this question? Thank you!

Describe and explain the trends in Australia’ economic growth over the past 5 years (6 marks)

Hope this clears things up!!! good luck for trials

Hey there Chloe,

Sorry for this super late reply to your really good question!!
Firstly, notice the directive verbs are describe and explain - which you must both do in this question - looking at the mark value (6) we should be looking at choosing the main changes in Australia's economic growth over the past few years since 2012.
I.e. you would choose different points in time within the last 5 years and tell me what the ecnomic growth at this point was, and what contributed to it as well as describing some characteristics.

For example, in 2009 the Global Financial Crisis saw a sharp decrease in economic growth of the US which caused an economic slowdown in the international business cycle which inevitably affected Australia as seen in the decrease of economic growth from 3.7% to 1.3% in 2008-2009. THis was due to a loss of consumer confidence which inhibited consumption and thus decreased the demand for goods and services domestically as well as internationally, seeing a decrease in exports which further decreased economic growth. Within this period, the reluctancy to consume saw an increase in unemployment and underemployment blah blah. So do something like that, dealing with the main trends of economic growth since 2012.

Hope this helps!!!

[Lexi_Jones19]

Hi can someone help me with this question? 
Evaluate the Australian government policies in addressing three economic issues to achieve the economic objectives

I already have three issues: Eco growth, unemployment and inflation but i don't know what to do after. Kinda confused. Please help! Thank You!!

[isaacdelatorre]

Hi can someone help me with this question? 
Evaluate the Australian government policies in addressing three economic issues to achieve the economic objectives

I already have three issues: Eco growth, unemployment and inflation but i don't know what to do after. Kinda confused. Please help! Thank You!!

Hey there Lexi!!

The major thing with this question is the directive verb Evaluate which essentially means to give a judgment. This judgment should be very clear in your introduction --> do you think the government's policies are effective, ineffective, mildly so - do they need improvement or change??

You would most probably split this question up into the three issues, outlining what they are and why they are important for the government to address - then go through different policies that address these issues - remember both macro (monetary/fiscal) and micro economic policies should be discussed and then an evaluation of whether or not they are achieving their goal.

So for inflation for example, you would define what it is and a brief overview of what causes it as well as the effects then tell me that it's mainly the responsibility of the RBA through monetary policy and give me a brief overview of what they have done to address it - so tell me that it was effective in curbing inflation by setting higher interest rates that discourage people to take out loans and consume/invest.

Let me know how you go with this, or if you need any more clarification/help!!

Happy studying!!

[roygbivmagic]

Hey! Could you please explain the difference between the fiscal outcome and the underlying cash outcome?

[isaacdelatorre]

Hey! Could you please explain the difference between the fiscal outcome and the underlying cash outcome?

Hey there!!

So in fiscal policy there are three ways of calculating the budget outcome: fiscal outcome, underlying cash outcome and the headline cash outcome.

fiscal outcome is used as a long term indicator of the budget. It is calculated as total revenue - total expenses - net capital investment. It is important to note that this measure excludes one off items (just like in topic 3, when calculating the underlying inflation rate, you take out the one off volatile changes). It is a long term indicator because it is calculated using the accrual method (when revenue/expenses is incurred instead of received) e.g. the government passes an act to say they will give $3 million to a disaster stricken country; but don't actually pay it until the next year, this will still be counted. Think of this one as what the government plans and aims to do with its money - hence why it is used for long term indication.

underlying cash outcome is used a short term measure of the budget. as opposed to fiscal outcome which is what the government plans to do with the money using the "accrual" method, the underlying cash outcome uses the "cash method" which basically means you calculate the outcome based on money that has been spent or received instead of planning to spend it. Thus because it is directly what the government has spent and received, it shows us the short term outcome of the budget.

Hope this helps

[mitchello]

Hey, I was wondering if you could please explain how to answer this - not sure if its actually tricky or if I'm just looking at it wrong:

A decrease in consumption expenditure of $400 million causes a fall in the level of national income.
If the current level of national income is $3000 million and the marginal propensity to save is 0.4, what is the new level of national income?

Thankss 

[Natasha.97]

Hey, I was wondering if you could please explain how to answer this - not sure if its actually tricky or if I'm just looking at it wrong:

A decrease in consumption expenditure of $400 million causes a fall in the level of national income.
If the current level of national income is $3000 million and the marginal propensity to save is 0.4, what is the new level of national income?

Thankss 

Hi! Do you have the original consumption expenditure?

[mitchello]

Hi! Do you have the original consumption expenditure?

I wish Haha that was the question word for word. I'm not sure if it really helps, but here were the options:
The new level of national income is: A) $2600 million, B) $2333 million C) $2000 million D) $1000 million

[Natasha.97]

I wish Haha that was the question word for word. I'm not sure if it really helps, but here were the options:
The new level of national income is: A) $2600 million, B) $2333 million C) $2000 million D) $1000 million

Hi!
Not sure if this is correct, but here is my working:

Hope this helps!

[sl1402]

Hey guys,

I was trying to do a HSC essay question; 'Discuss the impact of changes in the domestic and global economy on Australia's exchange rate.', and while I have the economic theory down, I have no idea what statistics or examples to use??? Any pointers to some good stats relevant would be appreciated.

[Natasha.97]

Hey guys,

I was trying to do a HSC essay question; 'Discuss the impact of changes in the domestic and global economy on Australia's exchange rate.', and while I have the economic theory down, I have no idea what statistics or examples to use??? Any pointers to some good stats relevant would be appreciated.

Hi!
Domestic economy: mining boom i.e. before/during/after
Global Economy: GFC, i.e. before/during/after
Hope this helps

[TheFreeMarketeer]

Can anyone link me or provide me with a formula sheet for economics?

Thanks so much.

[soha.rizvi1]

Hey, can someone please explain the phillips curve?

[studyharddd]

1. Explain how interest rates are determined in Australia with reference to domestic market operations, exchange settlement accounts and the cash rate.

2. Describe what action the RBA takes to tighten and loosen monetary policy.

3. Identify the impact of the following transactions on the supply of funds in the short-term money market and their impact on the cash rate.
a) The RB buys Commonwealth Government Securities from a bank.
b) The RB sells Commonwealth Government Securites to a financial Instituition.

Peace.

[Natasha.97]

1. Explain how interest rates are determined in Australia with reference to domestic market operations, exchange settlement accounts and the cash rate.

2. Describe what action the RBA takes to tighten and loosen monetary policy.

3. Identify the impact of the following transactions on the supply of funds in the short-term money market and their impact on the cash rate.
a) The RB buys Commonwealth Government Securities from a bank.
b) The RB sells Commonwealth Government Securites to a financial Institution.

Peace.

Hi!

In my opinion, these questions are pretty similar. Here's some information to assist in answering:

   - Domestic Market Operations (DMO): Actions by Reserve Bank in short-term money market to buy/sell second-hand Commonwealth Government Securities (CGS - Treasury notes + bonds) in order to influence the cash rate and the general level of interest rates
   - Exchange Settlement Accounts (ESA): Banks/some ADIs (Authorise Deposit-holding Institutions) hold a certain proportion of their funds with RBA in these accounts to settle payments w/ other banks
      ○ Must be kept in credit (no overdraw allowed for any unexpected circumstances)
      ○ Financial institutions can:
                     - Deposit surplus cash in the Short-Term Money Market (STMM) to earn interest
                       - Borrow cash from banks which have surplus funds
   - Cash Rate: The interest rate paid on overnight loans in the STMM
      ○ Determined by demand + supply for funds
      ○ Demand: Cash reserves in ESA
      ○ Supply: RBA (making payments to ESAs or vice-versa)
   - Monetary Policy: Actions by the Reserve Bank, on behalf of the government, to influence the cost and availability of money and credit in the economy

Tighten Monetary Policy i.e. Contractionary Monetary Policy

Aim: Slow down economic activity + reduce inflationary pressure
   - RBA sells CGS (receives money from ESA)
   - Decrease of borrowable funds in STMM
   - Upwards pressure on cash rate
   - Upward pressure on market interest rates (banks want to maintain profit margins)
   - Investment and Consumption decreases (more expensive to repay loans)
   - Level of economic activity decreases

Loosen Monetary Policy (MP) i.e. Expansionary Monetary Policy

Aim: Stimulate economic activity and reduce the rate of unemployment (periods of low growth)
   - RBA purchases CGS (deposits money into ESA)
   - Increase of borrowable funds in STMM
   - Downwards pressure on cash rate
   - Downward pressure on market interest rates
   - Investment and Consumption increases
   - Level of economic activity increases

Hope this helps!