Economics Marathon 2014 anyone??? (3 Viewers)

[enigma_1]

1. Confidence in the share/real estate market can lead to asset price inflation. Peeps can then sell their assets they might have before this speculative boom at inflated prices and therefore more money in their pocket.
2. The only other benefit that I've found is that it prevents deflation for happening.

Must admit I did cheat by looking at my notes/textbooks because I haven't gotten up to the issues in terms of revision yet (really should get a move on, I know)


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Wait sorry but just to clarify if you sell assets at inflated prices, does that result in increased profits? I don't get the more money in your pocket thing. Riley doesn't explain it properly.

 

[Colemans]

Wait sorry but just to clarify if you sell assets at inflated prices, does that result in increased profits? I don't get the more money in your pocket thing. Riley doesn't explain it properly.

Not entirely sure on that too but lets say you sell your house just before a housing bubble bursts, you essentially win. Kind of like gambling. Though you would probably only profit if inflation was contained within that market I guess.

 

[Maxwell]

Explain TWO positive effects of inflation. (2 marks)

i) Prevention of deflation: in times of deflation, prices fall, and therefore, consumers and businesses are less likely to purchase assets. As a result, a negative multiplier effect is induced on the economy, reducing economic growth.
ii) Wages: arguably, it is easier to freeze wages instead of cutting them; hence, firms are able to freeze unproductive worker's wages and index productive worker's wages to inflation, fostering increased productivity and long-run increases in aggregate supply.



That question was actually hard lol

 

[Maxwell]

My turn to ask a question:


Explain the role trade and investment have played in promoting globalisation in an economy OTHER than Australia. (5)

 

[enigma_1]

bump

 

[enigma_1]

Hey guys how do you do this question? The answer is B. Thanks

Btw Maxwell if no one replies, I will respond to your question later today ))

 

[Intrinsic]

View attachment 31008

Hey guys how do you do this question? The answer is B. Thanks

Btw Maxwell if no one replies, I will respond to your question later today ))

I think there is an error (by 1 decimal). B should be $48.3b ... anyways you add everything except for the capital account and secondary income. The financial account is associated with investment, derivatives and reserve assets

 

[wgy182]

View attachment 31008

Hey guys how do you do this question? The answer is B. Thanks

Btw Maxwell if no one replies, I will respond to your question later today ))

It is pretty simple, just add up all the components of the financial account (direct investment,portfolio investment, financial derivatives, reserve assets and toher investment). Once you add them up it should be 48.3 billion and the closest is B, probs a mistake in the answer for B.

 

[Colemans]

I remember looking at the question for 10 minutes =.="

"BUT IT DOESN'T ADD UP!"

 

[GOsie]

Explain TWO positive effects of inflation. (2 marks)

1: Inflation decreases the potential for deflation (prices lowering), which acts as a constraint for economic growth.

2: Inflation often leads to increased wages, which may push individuals into a higher tax bracket, resulting in more government revenue by the process of fiscal drag/bracket creep

Any feedback would be appreciated

 

[enigma_1]

1: Inflation decreases the potential for deflation (prices lowering), which acts as a constraint for economic growth.

2: Inflation often leads to increased wages due to the wage-price inflation spiral where wage earner seek a nominal increase in their wages to maintain their real wages, and --> they gain that wage increase which in effect causes cost push inflation (due to increase in cost of wages FOP). Furthermore this wage increase may push individuals into a higher tax bracket, resulting in more government revenue by the process of fiscal drag/bracket creep.

Any feedback would be appreciated

It's good, I'm not sure why I made it a 2 mark question lol was meant to be 4 marks, but if it was then:

First point - Say that deflation is when prices are lowered and this results in less expenditure and investment in particular. Since these are both components of aggregate demand, and since they have been lowered, economic growth would also lower. Since inflation is the opposite of deflation, it prevents it so it's a benefit because there would be economic growth with MODERATE inflation.

Second point - debatable whether it is a positive. Perhaps mention that this increased revenue has benefits such as increased expenditure on transfer payments/infrastructure or government expenditure (redistributed) which increases aggregate demand. This Increased aggregate demand --> increased multiplier effect on the economy (increasing equilibrium level of national income) and hence results in economic growth which is beneficial for an economy.

Someone correct my analysis if I'm wrong

 

[GOsie]

It's good, I'm not sure why I made it a 2 mark question lol was meant to be 4 marks, but if it was then:

First point - Say that deflation is when prices are lowered and this results in less expenditure and investment in particular. Since these are both components of aggregate demand, and since they have been lowered, economic growth would also lower. Since inflation is the opposite of deflation, it prevents it so it's a benefit because there would be economic growth with MODERATE inflation.

Second point - debatable whether it is a positive. Perhaps mention that this increased revenue has benefits such as increased expenditure on transfer payments/infrastructure or government expenditure (redistributed) which increases aggregate demand. This Increased aggregate demand --> increased multiplier effect on the economy (increasing equilibrium level of national income) and hence results in economic growth which is beneficial for an economy.

Someone correct my analysis if I'm wrong

Thank you very much!
For my question:

Examine the impact of fiscal policy on Australia's level of national savings (4marks)

 

[enigma_1]

Thank you very much!
For my question:

Examine the impact of fiscal policy on Australia's level of national savings (4marks)

No worries!

Come on people! Answer ))

 

[mreditor16]

I would bump this thread and post a new question to get this going again. But I realise everyone is busy with English revision and studying for other exams in the first week. So, maybe try reviving this after English?

 

[GOsie]

For anyone wanting a break from English:

Briefly describe the consequences of a persistent current account deficit on the Australian economy. (5 marks)

 

[mreditor16]

For anyone wanting a break from English:

Briefly describe the consequences of a persistent current account deficit on the Australian economy. (5 marks)

hmm nice question. but I am slightly questioning the allocation of 5 marks :O

 

[GOsie]

hmm nice question. but I am slightly questioning the allocation of 5 marks :O

were you thinking more or less?

 

[trungduong12]

were you thinking more or less?

More definitely


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[enigma_1]

were you thinking more or less?

More definitely


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nah it's coz it's like an odd number.
It should either be 4 or 6 marks, but probably 4.

 

[trungduong12]

nah it's coz it's like an odd number.
It should either be 4 or 6 marks, but probably 4.

Why not 6
:$


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