HSC Economics Question Thread

[Lumenoria]

Hi!

Background Info

A quota is defined as a restriction on the amount/value of a good that may be imported.
The amount of imports is the difference between the quantity that domestic businesses can supply, and the quantity that is demanded.

So before the quota was implemented, the quantity that domestic producers supplied was 1000, whereas the quantity demanded was 5000. The amount of imports is 5000-1000 = 4000.

At the new price of $12, the quantity that domestic producers supplied is 2000, whereas the quantity demanded is 4000. The amount of imports is 4000-2000 = 2000.

At the old price, overseas producers could supply 4000, but at the new price, overseas producers can only supply 2000. Therefore, the quota is 2000 (maximum value they could supply).

Hope this makes sense!

Aw thankyou, you're incredible! That was ridiculously helpful, thanks again for such a comprehensive answer

[Natasha.97]

Aw thankyou, you're incredible! That was ridiculously helpful, thanks again for such a comprehensive answer

You're welcome, I'm glad that it helped

[nattynatman]

Hey guys does anyone know why the answer is clothing and not food?

[zofromuxo]

Hey guys does anyone know why the answer is clothing and not food?

This is because if you look at the picture.
Even though Food has a higher weighting factor then Clothing.
The Clothing has an increase of 20 compared to Food of 10 to the CPI by expenditure group.
The question is asking for which CPI expenditure group contributes the most to the inflation rate.

[nattynatman]

This is because if you look at the picture.
Even though Food has a higher weighting factor then Clothing.
The Clothing has an increase of 20 compared to Food of 10 to the CPI by expenditure group.
The question is asking for which CPI expenditure group contributes the most to the inflation rate.

based on that, doesn't that mean housing and health also contributes more than clothing?

[studyharddd]

Yo can anyone shoot me a link to some notes on external stability?

[yattmoani]

Hi! Could someone please help me with this question? Also what topic is it in?

[isaacdelatorre]

Hey guys does anyone know why the answer is clothing and not food?

Hi there,

So to figure this out, we look at the weighting of each category and the increase it had.
So for clothing, it makes up 30% of the CPI increase and since the change for that group was 10 - we times 10 by 0.3 to get the weighted increase which is 3. However when we do that same thing for food (0.2 x20) we get 4 which is a higher increase than 3 and thus it contributed higher.

Hope this helps just remember to look at both the weighting and the increase.
Good luck

Yo can anyone shoot me a link to some notes on external stability?

Hey there mate,

You should be able to find some in the notes section (click on the notes tabs above) alternatively.. in the shop section there is a set of band 6 economics notes which is sure to have external stability.

Hope this helps; feel free to ask any questions on the topic if you have any

Hi! Could someone please help me with this question? Also what topic is it in?

Hey there, so this is in topic 3 - the first sub topic which is on economic growth. Here we have to find the value of the multiplier and firstly find the MPC which is (change in Consumption)/(change in Income) --> 90/150 = 0.6.

Then using this we find the value of the multiplier which is 1/(1-MPC) --> 1/(1-0.6) = 2.5.

Then the multiplier effect is that an increase in one of the components of aggregate demand (C + I + G + X - M) will have a multiplied effect on income by the value of the multiplier --> so a $40bn increase will increase the equilibrium level of income by $100bn. Therefore the new equilbrium is $400bn (C).

Hope this helps

[studyharddd]

Yo can someone please explain these for me. Thankyou

[ellybubble]

Yo can someone please explain these for me. Thankyou

hey, so for Q 16 you should know the formula that change in Y (income) = k x change in expenditure
to work out k, k = 1/MPS (So we need to work out MPS)
MPS = change in savings/change in income = 100/500 = 1/5
Thus, k = 5

so now, 1000 = 5 x change in expenditure
therefore, change in expenditure = 1000/5 = 200 so B
(hope this is right, i am a 2017 hsc eco student)

[ellybubble]

Yo can someone please explain these for me. Thankyou

For Q 18, we need to work out the nominal GDP for year 1 = C + I + G + (X-M) = 1000

nominal GDP for year 2 = 1100
but we need to work out the real GDP for year 2 to compare this with year 1:
real GDP = nominal GDP x 100/110 = 1000

so the growth rate is 0% i think

[fish99]

Could someone help me with this type of question: Analyse the monetary policy stance adopted by the RBA during 2017. Using two monetary policy transmission mechanisms or channels, explain how this stance is likely ot have impact on the goals of strong and sustainable growth and full employment. (6 marks) I believe the monetary policy stance has remained the same throughout 2017, have I got that correct?
I am also kind of confused how to incorporate teh transmission channels into the answer.....?

[BradMate]

Could someone help me with this type of question: Analyse the monetary policy stance adopted by the RBA during 2017. Using two monetary policy transmission mechanisms or channels, explain how this stance is likely ot have impact on the goals of strong and sustainable growth and full employment. (6 marks) I believe the monetary policy stance has remained the same throughout 2017, have I got that correct?
I am also kind of confused how to incorporate teh transmission channels into the answer.....?

I would talk about how the RBA have maintained the stance of level interest rates as they are in a tough position with low inflation, unacceptable unemployment and record low wages growth, yet they can't adopt expansionary monetary policy due to the property market that needs suppressing, and huge pressures from the US with their contractionary monetary policy (alongside the high AUD for a large part of this year).

For transmission channels, I would focus on the effect of unchanged interests to 1. households (wage growth, unemployment), and 2. financial flows / overseas sector (AUD, US pressures, broadly declining international competitiveness with more recent reliance on mining exports with growing export price index throughout 2017)

[zofromuxo]

Could someone help me with this type of question: Analyse the monetary policy stance adopted by the RBA during 2017. Using two monetary policy transmission mechanisms or channels, explain how this stance is likely ot have impact on the goals of strong and sustainable growth and full employment. (6 marks) I believe the monetary policy stance has remained the same throughout 2017, have I got that correct?
I am also kind of confused how to incorporate teh transmission channels into the answer.....?

Disclaimer: I did VCE Economics so the transmission channels may differ slightly or completely.

There are 5 transmission channels/mechanism for how a change in interest rates affects economic activity.
1. Cost of credit (Savings and Investment)
2. Cash Flows
3. Availability of Money and Credit
4. Asset values/prices
5. Exchange rate

Well we that the monetary policy hasn't changed interest rates since August of 2016.
So we know that the stance hasn't changed at all during 2017.

I would talk about the cost of credit (savings and investment) channel as since the interest rate is so low. It means it costs less of consumers to borrow money. This incentivises consumers to borrow money to purchase goods and services and this then increases the demand for consumer durables and is likely to increase Consumption demand in the economy. This should then push economic growth and thus help improve achieving the goal of SSG. This then flows onto achieving Full Employment through a higher economic growth requiring more labour to produce more those consumer durables as there is a higher demand for them.

You can then talk about how for the Cash flow channel. The interest rates currently have a positive impact on users in the economy with exisiting variable rate loans. As they have less discretionary income dedicated to the repayment of the loan. This allows consumers to spend more money on goods and services which then drive up Consumption and AD in the economy. This then flows into higher rates of economic growth and how this helps achieve SSG. You can they copy and paste what I said before for Cost of Credit channel here for helping full employment.

I hope this helps. I would also include statistics to back up your answer too. although the whole reason why the cash rate hasn't risen is because of the transmission mechanism haven't worked. There is a good article I think by The Age talking about the transmission channels being broken. But I digress

BradMate's answer has shown that reality is different to theory. What I have written above is the theory that RBA hopes for but the reality is in BradMate's answer.

[fish99]

I would talk about how the RBA have maintained the stance of level interest rates as they are in a tough position with low inflation, unacceptable unemployment and record low wages growth, yet they can't adopt expansionary monetary policy due to the property market that needs suppressing, and huge pressures from the US with their contractionary monetary policy (alongside the high AUD for a large part of this year)

I hope this helps. I would also include statistics to back up your answer too.

Excellent - thanks so much for your help, makes sense now 👍😃
Sorry - just realised I posted on HSC economics - not VCE (im doing vce) 🤔