The net income deficit is also caused by structural factors. One structural problem is Australia’s high net foreign liabilities, and the servicing costs associated with those liabilities. It is no surprise that this figure has grown in line with Australia’s mounting borrowings from the rest of the world, both public and private. Property sector borrowings in particular have increased Australia’s foreign liabilities and servicing costs. High foreign liabilities has also risen due to persistent CADs, which require an inflow of foreign funds to match the deficit. This then increases the interest payments, or servicing cost, of that debt, thus exacerbating the CAD further. This is a self-perpetuating cycle called the ‘debt trap scenario’.
Very detailed and well explained, your turn to make/find a question!
Describe the relationship between unemployment and inflation
6 marks! gooCan we start being more general??Describe the relationship between unemployment and inflation
I would give you 2/6 for that
.. keep it to short answers mate, dont think anyone can actually be bothered to write out an extended response for a forum post..I would give you 2/6 for that
1.) Short Run Philip's Curve shows the relationship between the inflation rate and the unemployment rate in the short run, There is a tradeoff between inflation and unemployment with higher inflation associated with lower unemployment and higher unemployment with lower levels of inflation. Growth is the factor that ties this inverse relationship.
2.) Long Run Philip's curve shows there is no tradeoff between inflation and unemployment as there is a natural rate of unemployment. Attempts by the government to reduce unemployment will lead to higher inflation and no change in employment. When inflation is not rising, the level of unemployment remains the same known as Natural Accelerating inflation rate of unemployment which is due to frictional and structural factors in labor market.
Next question: Explain the monetary policy? Analyse it's effect on the Australian economy during an expansionary stance!
LOl i copied and pasted these from my noteskeep it to short answers mate, dont think anyone can actually be bothered to write out an extended response for a forum post..
Expansionary monetary policy involves the RBA buying second hand CGS to lower the cash rate and thus interest rate. Lower interest rates reduce the cost of borrowing, encouraging increase spending and investment by consumers and businesses. This will stimulate aggregate demand and economic activity, leading to increased output/GDP and thus economic growth
Environmental degradation is a negative externality, that is the cost which isn't shown in prices, for example Water pollution by industries that adds poisons to the water, which harm plants, animals, and humans.
Exams are written the previous year, your exam was written last year (for 2011 HSC)
It will benefit the poor (In the first few years) the compansation they will recieve is larger than what they will may, hence they will be better off
Affects AS, more efficient production, the usual bs...
You make a question
