VCE Stuff > VCE Economics
Economics Questions Thread
NomotivationF:
--- Quote from: Jmac02 on October 26, 2019, 06:02:27 pm ---Hey everyone,
I'm struggling to understand the concept and definition of net primary income and why we are in such a deficit?
My guess is because many countries running a CAS (current account surplus) invest in Australia, this results in an increase in the CAFA surplus, whilst causing income debits from said investment to pay dividends and profits to overseas owners, leading to a decrease in net primary income.
Any help would be great, thanks.
--- End quote ---
Hmmm yeah what you think is a part of it but here’s my take on it.
Also just so you know Australia has actually returned to a current account surplus is the last quarter after yeaaaars of successive deficits. The reason that we returned to surplus is mostly due to the insanely high TOT which increased credits relative to debts in the BOMT section of the current account. Apart from that, the net primary incomes has, and likely always will run a deficit. This is mainly due to the savings investment gap in Australia, meaning that Australia doesn’t have enough savings to fund its investments. This results in Australians borrowing from overseas, which initially results in credits in the CAFA. However, the interest incurred on these borrowings, as well as revenue earned from investments needs to be payed back overseas, increasing debits relative to credits in the net primary income subsection of the current account, and contributing to a current account deficit
Jmac02:
That makes a lot of sense! Thanks :)
humma23:
Hi everyone,
The study design lists knowledge on one contemporary example of government intervention unintentionally leading to a decrease in the efficiency of resource allocation. Does anyone have some good examples?
Thankyou!!
NomotivationF:
--- Quote from: humma23 on November 07, 2019, 10:00:50 am ---Hi everyone,
The study design lists knowledge on one contemporary example of government intervention unintentionally leading to a decrease in the efficiency of resource allocation. Does anyone have some good examples?
Thankyou!!
--- End quote ---
I use the minimum wage. Honestly, I doubt it'll come up again but here's mine,
The minimum wage is the minimum rate of hourly pay that a worker must be paid by their employer. The figure established by the Fair Work Commission and in 2019 the minimum wage is set at $19.43 per hour for adults. The aim of the minimum wage is to ensure that lower-skilled workers receive what is considered a ‘fair’ wage that maintains their living standards and protect them from possible exploitation by employers. The minimum wage unintentionally creates an inefficiency in resource allocation. The minimum wage is set at a level above equilibrium wage, meaning that there is a surplus of labour – the supply of labour at minimum wage is greater than the demand for labour. This leads to an over allocation of labour resources, or unemployment, in the market for labour.
Jmac02:
Can anyone help me answer this? Thanks.
Evaluate the role of the market in achieving an efficient allocation of resources.
:)
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