Economics Questions Thread

[tigerfan11]

Someone PLEASE give me some help with the following;

When referring to Monetary Policy are the following figures and concepts correct ?
2011-12: slightly contractionary/neutral after the RBA chose to lower rates from 4.75% to 4.5%
Conflicting relationship with BP
2010-11:neutral until November 3 when the RBA finally took a contractionary stance increasing the cash rate to 4.75%
Compatible relationship with BP until November 3
2009-10: expansionary, continuing to recover from the onset of the GFC
Compatible relationship with BP

Yeah, from a quick glance it's quite fine.
Remember, when two policies conflict whilst trying to achieve the same goal, talk about it in terms of the 'policy mix'.


http://www.rba.gov.au/statistics/cash-rate.html
The numbers match

Thankyou ! can be very confusing haha

[DiMennzzaa]

Im so confused are cash rates = interest rates?

What happends when the rba increase cash rates?

[TrueTears]

Yes the cash rate is a type of interest rate, there are many many kinds of interest rates (LIBOR rate, Forward rate, FOREX rate, 90 bank bill rate etc, ASX futures rate), hence a cash rate is a interest rate but not all interest rates are cash rates. The cash rate, specifically, is the interest rate paid by banks in the overnight money market.

[batra555]

Why is it that the rba is adopting an expansionary stance and the government is adopting a Contractionary stance at a time of relatively low economic growth in australia?

[sam.utute]

Why is it that the rba is adopting an expansionary stance and the government is adopting a Contractionary stance at a time of relatively low economic growth in australia?

I wouldn't say that the government is adopting a contractionary stance. While we generally look at surpluses as being contractionary, it's not always that black and white.
E.g. the government shifts from a big surplus, to a small surplus. You could say that the government has adopted a contractionary stance in both years. However, it would be more appropriate to say that the government's stance has shifted to be less contractionary.
In the same vein, it could be argued that the current stance is merely less expansionary, not contractionary per se.

The gov't and the RBA tend to have conflicting policies quite regularly. In fact, you will always be able to find particular policies that contradict the other's stance. One of the main reasons for this is the different objectives. For example, the RBA's focus on inflation can impinge on the government's pursuit of higher growth.

[sam.utute]

A great article that explains this year's budget.
As Ross explains, the budget is definitely more contractionary (from a big deficit, to a small surplus).

http://www.smh.com.au/business/federal-budget/the-sleight-of-hand-behind-the-budget-figures-20120511-1yhld.html

[DiMennzzaa]

do you ever see things at the beginning of AOS 1 E.G. ppf, relative scarcity, oppurtunity cost on an exam?

[Hutchoo]

Yeah, I think there was a 1-2 mark question on relative scarcity on last years exam.

[sam.utute]

do you ever see things at the beginning of AOS 1 E.G. ppf, relative scarcity, oppurtunity cost on an exam?

Usually tested in the MC section.

[DiMennzzaa]

Yeah, I think there was a 1-2 mark question on relative scarcity on last years exam.

example?

[Hutchoo]

Question 4a of 2011 related to relative scarcity etc.

http://www.vcaa.vic.edu.au/Documents/exams/economics/2011economics-w.pdf

[DiMennzzaa]

what is the difference between a government initiative and a policy?


Is an initiative something the government has in mind or wants to put in place while a policy is a direct change?

[ezye21]

can somone please post here a link to the solutions to the insight 2008 economics trial exam ?

[Deleted User]

If a question asks us to discuss "the past year," is that 2011-2012 or 2012-13?

[Hutchoo]

I'm pretty sure either will suffice.