Section II - Short Answer (1 Viewer)

[Evertonian]

I said inflation leads to an increase in price of exports and domestic assets, therefore it causes demand for AUD in short term, leading to an appreciation in short term. This increases purchasing power of domestic consumers.
Am i right?

I dont think so because inflation will make exports more expensive and as a result demand for Australia's exports would decrease hence a depreciation.

Wouldnt inflation be beneficial for the terms of trade?

 

[vpa2891]

I dont think so because inflation will make exports more expensive and as a result demand for Australia's exports would decrease hence a depreciation.

Wouldnt inflation be beneficial for the terms of trade?

I said it's in short term. For disadvantage, i said it causes depreciation in long term

 

[Justin123456789]

I said it's in short term. For disadvantage, i said it causes depreciation in long term

i believe this can be correct. cause it will appreciate the dollar in the SHORT TERM, due to speculators thinking rba will raise interest rates.

 

[tku336]

I put that inflation can lead to higher rates of growth in the short term, because it discourages savings as they have less real earnings and greater volatility. Hence with less savings comes a greater MPC and the potential for higher spending and higher short term growth.

Then went into how it damages long term growth in the negative aspect by undermining confidence and investment ...

 

[Nikkay75]

I put that inflation can lead to higher rates of growth in the short term, because it discourages savings as they have less real earnings and greater volatility. Hence with less savings comes a greater MPC and the potential for higher spending and higher short term growth.

Then went into how it damages long term growth in the negative aspect by undermining confidence and investment ...

I approached it similarly and my economic teacher thought that would get the marks.

 

[Chapppo]

There are heaps of correct answers. For an advantage I wrote that it erodes the debt for individuals as it is worth less in real terms. For a disadvantage I wrote that inflation causes lower International Competitiveness and just outlined some effects of this

 

[bell531]

I cant even remember writing a positive aspect of inflation, must've glazed over whilst writing it.

 

[eddiebra]

There is only one correct answer.

Inflation does not stimulate the economy, it does not attract foreign investment etc.

Unless the accept BS for answers then I guess you'll probably lose marks for that part if you stipulated in your response that it improves economic activity, appreciated or deprecations etc..because it does not.

The only benefit of inflation is what I mentioned before, the economy must have some sort of inflation. If you wrote anything along those lines, you should receive marks.

 

[madsam]

You talk about deflation as though its the only thing that makes inflation good.
What about hyperinflation? Just look at Zimbabwe for that

Also, good inflation reflects a growing and stable economy, encouraging investment both domestically and internationally

 

[postcardsfrom]

I put the advantage as consumers usually bring spending decisions forward as they're worried about their savings being eroded. So, in the short term it would increase aggregate demand. Negative was about like volatility...

 

[cp3]

Hmmm, i had that inflation was advantageous becuase it would stop people from spending, not the advantage of inflation rising but rather, when there was already high inflation, it would stop consumers from spending, since prices are too high, thus causing them to save instead allowing national savings to increase and CAD to decrease.

 

[shantu1992]

Hmmm, i had that inflation was advantageous becuase it would stop people from spending, not the advantage of inflation rising but rather, when there was already high inflation, it would stop consumers from spending, since prices are too high, thus causing them to save instead allowing national savings to increase and CAD to decrease.

yeah i had a total mindblank and wrote the exact same thing for that part..haha

 

[Justin123456789]

how would that subsidy diagram look in the q24 section.?

 

[azn_satans]

Me to for both things haha.

i put the bad thing is that obviously general prices go up and PP of money is decreased which tends to create more savings and less Consumption so it could cause unemployment (something like that i dont care haha)

and the advantages i looked at last night or this morning and totally forgot..i made something up and by the end i remebered what it was and wrote it in, hopefully the marker reads past the lines and into my itty bitty writing down the bottom hahaha.

BUT I THINK, no wait! i do remember, it was total crap

I said that with inflation there is usually (lol made it up) economic growth so people spend more and investors seek the high interest rates in australia... soemthing like that haha

for disadvantasges of inflation i wrote abt reduced PPP and for benefits of inflation i was stumped, first thing that came to my mind was phillips curve so i wrote about that, how in relation to inflation usually comes high employment rates.. i hope im right.. it was like 4 mark question or was it 5 mark

 

[AnandDNA]

how would that subsidy diagram look in the q24 section.?

decrease in supply i.e AS shifts to left

 

[Kakashi Hatake]

did you guys draw another supply curve to the left? cos it was like find the new equilibrium point so i drew another curve to the left and increased prices and decreased quantity.
do you think thats ok?

 

[ajay12]

I said that inflation means that there is economic activity and something something something.......

 

[suckierocks]

not dat hard... i feel i work well ^^

 

[lynton]

did you guys draw another supply curve to the left? cos it was like find the new equilibrium point so i drew another curve to the left and increased prices and decreased quantity.
do you think thats ok?

Yer thats what i did. Except i drew the graph in pencil?? Hope they can see it cos i thought you were meant to draw graphs in pencil.?

For inflation i said the disadvantages were decreased competition as there is an increase in the cost of production lifting prices. For advantages i said there were limited benefits. I said they maintain inflation around 2-3% then economic growth and stuff would be maintained. I also said the wages would increase through collective bargaining or some shit which is soo wrong

I was soo happy when they put environment management in. I was cheering- nailed that bit i hope lol

 

[anthonysak]

eh dudes
what did u guys put for the first inflation question in short answer
i got food
which was what evryone at my school got

i go to baulko btw