Official Economics Exam Discussion

[mskwmskw]

an appreicaiting australian dollar will worsen or have a nagtive impact on the balance of goods and services, as we become less international competitive due to our exports being more expensive and imports for australians become cheaper to purchase, our postion is worse off due to the appreicating adollar

[paully08]

what was the actual wording of question 10? because it appears i got it wrong and i can't remember what the question was.

[113489]

ReVel, what you said about 'net income' for the final question is right,
the higher exchange rate means improves the balance of goods and services
but worsens net income! lucky for me, romeo salla was my eco teacher and he
talked me through it at the end of the exam because i got 'net income' the wrong
way around! other than that, good exam i think! i got all multi choice right!

How does that work?

if the dollar appreciates then when we technically are able to purchase more foreign currency in order to pay the money which is listed under net incomes. net incomes is basically the money being earnt by overseas investors, hence why it's always in a deficit. we have to therefore exchange our currency for their currency to pay them their "earnt revenue" (which is generally payment of interest, dividends and wages) through their investments in australia.

so that means as the AUD increases, it actually helps the net incomes account..this is just my guess though so nothing 100%.. hope that all made sense anyway

except the question still confused me because i always thought that it was more directly related to NFD being reduced...

[ReVeL]

Yeah, I wrote what 113489 said. Pennylane043, could you please explain how a higher exchange rate would lead to a worsening net income section? If the $A is worth more, surely we have relatively less foreign debt to pay overseas, thus IMPROVING the net incomes section..


ALSO, the question I really had no idea about was how an increase in the government surplus would impact on the achievement of either:
- Full Employment.
- External Stability.

Totally talked out of my arse. Would someone mind explaining?

Thanks.

[nick273]

can someone post question 10 in multiple choice? i said raising the school leavers age because rising the participation rate would increase unemployment in the short term, more people retiring means old people who had jobs are leaving the workforce thus increasing unemployment and the other option i cant remember but i'm pretty sure that wasn't right. hard multiple choice though even which is good

[AppleXY]

can someone post question 10 in multiple choice? i said raising the school leavers age because rising the participation rate would increase unemployment in the short term, more people retiring means old people who had jobs are leaving the workforce thus increasing unemployment and the other option i cant remember but i'm pretty sure that wasn't right. hard multiple choice though even which is good

exactly.

[nick273]

increasing the government surplus, is contractionary fiscal policy which is a leakage within the economy thus reducing G1 and G2 which are components of AD if theres less demand in the economy firms may cut supply laying off workers increasing unemployment, but i said however recently it has been seen as economically responsible by firms leading to increased business confidence and may potentially increase the demand for labour

[nick273]

Apple to u have the question? i want 15/15 anything less is an epic fail lol

[nick273]

everyone said participation rate but that would increase unemployment in the short term, and u can still have growth without increased participation rate, i.e. jobless growth so i don't see why it's right

[nick273]

and youth unemployment is the highest rate of unemployed so if people stay at school they gain real skills making it more likely for them to get jobs later especially with australia's skill shortages

[cobby]

everyone said participation rate but that would increase unemployment in the short term, and u can still have growth without increased participation rate, i.e. jobless growth so i don't see why it's right

and youth unemployment is the highest rate of unemployed so if people stay at school they gain real skills making it more likely for them to get jobs later especially with australia's skill shortages

i like ur reasoining

[nick273]

but recently the participation rate has increased from 64% to 65%, increasing resources allowing for growth, so maybe we read the question wrong and it was asking it more like how has australia been able to achieve economic growth while the unemployment rate has stayed constant, instead of how has unemployment not increased

[mskwmskw]

increasing the government surplus, is contractionary fiscal policy which is a leakage within the economy thus reducing G1 and G2 which are components of AD if theres less demand in the economy firms may cut supply laying off workers increasing unemployment, but i said however recently it has been seen as economically responsible by firms leading to increased business confidence and may potentially increase the demand for labour

could u say as a result of a growing surplus, goverments may redeuce subsides and grants to some firms/industries, therefore these firms will be wanting to cut cots in an attempt to make up lost funds due to no or redueced governemnt handouts, may lead to unemployment due to firms not being able to keep all workers because their profits are diminshing and are looking for ways to cut costs...... does that make any sense?

[nick273]

sorta but i think it's more just the overall affect on AD, i.e. a leaking in the economy

[Julian H]

Basically it is contractionary budgetary policy and like already said will decrease levels of G1 and G2. Furthermore, it has a direct dampening influence on the level of consumer confidence, which affects Consumtion expenditure (C) which makes up 60% of Aggregate Demand. Thus, unemployment will mainly drop in two ways, firstly, consumers are less willing to enter workforce as less spending in economy always creates a mood of uncertainty. Secondly as already stated, business confidence will also decrease (I) which will see the demand for our labour resources decrease as firms become less willing to invest in scarce labour, thus, in the short term goal of full employment may be undermined.