Economics Questions Thread

[Andiio]

Hutchoo, socialism vs. anarchy?

[chrisjb]

Which of the following economic goals may be more difficult to achieve in the short run when microeconomic reforms change the structure of the Australian economy?

A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth

I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.

They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...

What do you guys think?

[chrisjb]

I have a real question that isn't just ramblings about a multiple choice question again:

What are enterprise bargaining agreements and how do they affect equity in income distribution?

[Hutchoo]

Which of the following economic goals may be more difficult to achieve in the short run when microeconomic reforms change the structure of the Australian economy?

A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth

I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.

They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...

What do you guys think?

Compak 2011?
I got this MC question wrong as well, and I chose A too
Tbh, the compak 2011 exam is pretty crap. The first MC question (imo) is wrong as well. You have to make toooooooooooooooo mannnnnnnny assumptions when answering the questions in that exam.

For your other question: (just to get you rolling)

• Enterprise (bargaining) agreements simply refer to when an individual and firm/company negotiate over work conditions and wages.
• The wages are (usually) reflected by the workers productivity.
• This affects the equity in income distribution as workers with more  bargaining power enjoy the benefit of an increased income whilst workers with less bargaining power do not reap this benefit.
   

[chrisjb]

Which of the following economic goals may be more difficult to achieve in the short run when microeconomic reforms change the structure of the Australian economy?

A. external stability
B. equity in income distribution
C. low inflation
D. sustainable economic growth

I found this one quite tricky and ended up getting it wrong. I chose A, external stability, partly perhaps because the reform I did was trade liberalisation, which would decrease external stability as imports became much cheaper and local firms scrambled to compete in the short term... But I can see now that this wouldn't necessarily be the case for all the other reforms.

They said the answer was B, and I'm assuming that it's because the reforms never set out to achieve equity in the first place. But... I can still see a very strong argument for option D in that while suppliers struggle with the new market structures they will probably reduce or slow production in the short term as they re-adjust...

What do you guys think?

Compak 2011?
I got this MC question wrong as well, and I chose A too
Tbh, the compak 2011 exam is pretty crap. The first MC question (imo) is wrong as well. You have to make toooooooooooooooo mannnnnnnny assumptions when answering the questions in that exam.

For your other question: (just to get you rolling)

• Enterprise (bargaining) agreements simply refer to when an individual and firm/company negotiate over work conditions and wages.
• The wages are (usually) reflected by the workers productivity.
• This affects the equity in income distribution as workers with more  bargaining power enjoy the benefit of an increased income whilst workers with less bargaining power do not reap this benefit.
   

Thanks for your help Hutchoo!

one more definition for my hyper extended glossary

[ANILBALA]

I was wondering whether a CAD is "financed" by capital and financial account and does this add to NFD? If it is financed why is it? I thought CAD was a flow

[Hutchoo]

I was wondering whether a CAD is "financed" by capital and financial account and does this add to NFD? If it is financed why is it? I thought CAD was a flow

Hey man, good question!

First of all, I suggest you understand the sub-accounts of the Current Account/Capital and financial accounts reallllllllly well because there's a good chance it'll be on the exam.
There is a current account deficit when the total amount of debits in the 4 sub accounts are larger than the credits.

The Balance of Payments (BoP) states that when all components of the BOP accounts are included they must sum to zero with no overall surplus or deficit. Meaning that if there is a CAD (for a country like Australia), the Capital and Financial accounts must equal the deficit by being in surplus. This is done by increasing borrowings from abroad (increasing NFD) and using the borrowed money to pay off current account deficit.

This should help you a bit:
http://en.wikipedia.org/wiki/Balance_of_payments
Should help you understand the BoP etc.


Hope this helps a bit.

[ANILBALA]

Thanks Hutchoo,
So a lower CAD means that it has to be offset by a lower surplus in the capital and financial account, which involves reduced borrowing from overseas and thus a lower CAD is likely to reduce NFD.

[chrisjb]

Another MC I'm unsure about if you guys could help me out?

The market failure from asymmetric information is unlikely to be minimised by:

a) use of independent reviews by customers
b) the formulation of a firm's code of conduct
c) legislation which entitles consumers to a refund if they purchase a faulty product
d) stringent penalties on those firms who engage in misleading and deceptive conduct.

In my mind i've narrowed it down to B or C, but I'm not sure

thanks in advance for your help!

[ANILBALA]

Chrisjb, I'm pretty sure it is B

[Hutchoo]

It is duh B.

[chrisjb]

Thanks guys! I'll go through this thread after exams and buy you all drinks at the VCENotes meet up for answering my questions... Hutchoo, Water and Sam are gonna get quite wasted judging by the help throughout the year!

[ANILBALA]

Um, tssm 2009 answers suggest a high terms of trade has a uncertain impact on external stability due to high $A and conflicting boost of net export values. does anyone know which one has a greater impact (positive or negative).

[chrisjb]

Um, tssm 2009 answers suggest a high terms of trade has a uncertain impact on external stability due to high $A and conflicting boost of net export values. does anyone know which one has a greater impact (positive or negative).

I'd say that high TOT would improve external stability. Look at our current balance of trade, it's in the black largely because of the spike in commodity prices. Because so many of our exports are commodities with inelastic demand from China and India, the AUD doesn't affect them so much. It's true that manufacuting, tourism etc. have all contracted significantly, however this effect has been less significant than the expansion in the mining industry.

Also, higher AUD can reduce inflationary pressures leading to more competitive exports (but the first two effects are more important than this one).

[Water]

I thought Higher AUD (Exclude TOT) leads to reduced international competitive as our final goods and services become more expensive?


Eg Tourism Education