HSC 2015 Economics Marathon (1 Viewer)

[Ekman]

Re: 2015 HSC Economics Marathon

I've heard this terminology to be used for curves since its sliding up n down (contraction expansion), but say if it was labour market reforms that completely shift the curve to the right e.g.(Decentralized wage system). Would it be okay to use 'increase'. Sorry if this is confusing it's much easier to see the actual curve ^^

Correct me if im wrong but, having a decentralised wage system will have no effect on shifting the labour supply or demand curves. It removes the price floor (assuming the minimum wage is set above the equilibrium wage), which essentially causes an expansion in demand, as the wage rate for a particular economy will be at the equilibrium wage. It also allows enterprise bargaining, which has more to do with income inequality rather than unemployment.

 

[Ekman]

Re: 2015 HSC Economics Marathon

My bad, Ekman is right there, as usual. In the case of increasing the minimum wage, think of a demand and supply curve with the price rising. At that given price, supply would expand (rise up the curve) and demand would contract (slide down) -- I think. I believe it is similar to a floor price from Year 11 (where the price is locked above equilibrium), there is an excess of demand relative to supply.

An increase or decrease is where the whole curve shifts; so yes, a decentralised system would increase supply due to efficiencies.

But doesn't it improve allocative efficiency, I don't see how that can increase supply. It just means that labour is being allocated most efficiently, which will cause aggregate supply to increase, but not sure about labour supply.

 

[exeternal]

Re: 2015 HSC Economics Marathon

Correct me if im wrong but, having a decentralised wage system will have no effect on shifting the labour supply or demand curves. It removes the price floor (assuming the minimum wage is set above the equilibrium wage), which essentially causes an expansion in demand, as the wage rate for a particular economy will be at the equilibrium wage. It also allows enterprise bargaining, which has more to do with income inequality rather than unemployment.

isn't decentralizing the wage system considered as a labour market reform, meaning its a long term policy which is aimed to address the supply side?

 

[Ekman]

Re: 2015 HSC Economics Marathon

Correct me if im wrong but when they say 'supply side', I think they are referring to the aggregate supply of an economy, not the supply of labour. In my opinion, having a decentralized wage determination system will cause an increase in aggregate supply, there is no denying that, because there is a greater incentive to work harder and more productive. However what I am arguing is that having a decentralized wage determination system will cause a decrease in the supply of labour because first of all it wont have any impact on above-award wage labour, it will only affect labour that are dependent on safety nets. If it becomes decentralised then the low wage labour will lack incentive to work, mainly because they have low bargaining power, and possibly the equilibrium wage level could be less than welfare, hence there would be a greater incentive for them to be on welfare rather work with low pay. Thus the labour supply will decrease

 

[lpodtouch]

Re: 2015 HSC Economics Marathon

Explain how an improvement in Australia's BOGS affects the level of economic activity in the Australian economy (4 marks)

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Explain how an improvement in Australia's BOGS affects the level of economic activity in the Australian economy (4 marks)

An improvement in the BOGS indicates that there is an increase in X revenue. Generally an increase in X revenue means that economic activity is increasing due to the increase in aggregate demand as AD= C+I+G+(X-M). Furthermore, when X revenue increases, business profits will be increasing, thus they will be more inclined to hire workers, reducing the unemployment rate. If unemployment rate is decreasing, then there will be an increase in disposable incomes which will increase consumption by individuals, leading to an increase in economic activity. Increased in X revenue and services will lead to increase in investment into businesses due to their increased profitability. The increase in investment into Australian firms will also lead to an increase in economic activity. An improvement in BOGS, also indicates that the demand for the AUD is increasing as foreigners need to purchase AUD to purchase Australian goods and services. This will lead to the appreciation of the AUD. An appreciation leads to the increase in purchasing power by individuals which will increase consumption and thus this will improve economic activity. An appreciation will also lead to reduced debt as it will cost lower to pay of foreign debt (valuation effect). This will improve Australia's external stability and maintain Australia's triple A credit rating which will increase investments into Australia and lead to increased economic activity.

Anyone is free to add to this

 

[atargainz]

Re: 2015 HSC Economics Marathon

An improvement in the BOGS indicates that there is an increase in X revenue. Generally an increase in X revenue means that economic activity is increasing due to the increase in aggregate demand as AD= C+I+G+(X-M). Furthermore, when X revenue increases, business profits will be increasing, thus they will be more inclined to hire workers, reducing the unemployment rate. If unemployment rate is decreasing, then there will be an increase in disposable incomes which will increase consumption by individuals, leading to an increase in economic activity. Increased in X revenue and services will lead to increase in investment into businesses due to their increased profitability. The increase in investment into Australian firms will also lead to an increase in economic activity. An improvement in BOGS, also indicates that the demand for the AUD is increasing as foreigners need to purchase AUD to purchase Australian goods and services. This will lead to the appreciation of the AUD. An appreciation leads to the increase in purchasing power by individuals which will increase consumption and thus this will improve economic activity. An appreciation will also lead to reduced debt as it will cost lower to pay of foreign debt (valuation effect). This will improve Australia's external stability and maintain Australia's triple A credit rating which will increase investments into Australia and lead to increased economic activity.

Anyone is free to add to this

Since it's specifying BOGS, you should also talk about how the CAD would improve and the implications of that i.e, investor confidence, credit rating, financial inflows. Also the BOGS does not improve with only with increase of exports, it could also be affected by a decrease in imports or a relative movement in both. The effects of a decrease in imports should be discussed along with the increase in exports, i.e import competing firms will grow and maybe even talk about imported inflation.

 

[Ekman]

Re: 2015 HSC Economics Marathon

An improvement in the BOGS indicates that there is an increase in X revenue. Generally an increase in X revenue means that economic activity is increasing due to the increase in aggregate demand as AD= C+I+G+(X-M). Furthermore, when X revenue increases, business profits will be increasing, thus they will be more inclined to hire workers, reducing the unemployment rate. If unemployment rate is decreasing, then there will be an increase in disposable incomes which will increase consumption by individuals, leading to an increase in economic activity. Increased in X revenue and services will lead to increase in investment into businesses due to their increased profitability. The increase in investment into Australian firms will also lead to an increase in economic activity. An improvement in BOGS, also indicates that the demand for the AUD is increasing as foreigners need to purchase AUD to purchase Australian goods and services. This will lead to the appreciation of the AUD. An appreciation leads to the increase in purchasing power by individuals which will increase consumption and thus this will improve economic activity. An appreciation will also lead to reduced debt as it will cost lower to pay of foreign debt (valuation effect). This will improve Australia's external stability and maintain Australia's triple A credit rating which will increase investments into Australia and lead to increased economic activity.

Anyone is free to add to this

Contradictory point there. An appreciation will cause an increase in purchasing power for consumers, to purchase foreign goods. This will incentivise purchasing overseas rather than domestically as it will be cheaper. This will actually hinder domestic economic growth.

Also im not sure if you should go too much into CAD, as the question asks for what impacts it has on economic activity, rather than external stability. I would probably go only as far as saying the increase in foreign direct investments. So all ill mention that it will increase economic growth, increase level employment, which increases disposable incomes, which further improves quality of life. These 4 components will get you the 4 marks in my opinion.

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Why would there be higher levels of foreign investment into an economy as it becomes more economically developed?

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Discuss the role of the government in attempting to achieve environmental sustainability 5

This questions seems very broad - would you talk about regulations, market based policies, international agreements and targets under this question, and also briefly discuss market failure and ESD?

 

[Ekman]

Re: 2015 HSC Economics Marathon

Why would there be higher levels of foreign investment into an economy as it becomes more economically developed?

Greater investor confidence. You wouldn't want to invest into a country that is politically corrupt and has a bad credit rating.

 

[atargainz]

Re: 2015 HSC Economics Marathon

Discuss the role of the government in attempting to achieve environmental sustainability 5

This questions seems very broad - would you talk about regulations, market based policies, international agreements and targets under this question, and also briefly discuss market failure and ESD?

Seems like you've pretty much answered your own question lol. I would think those are the main points you would talk about and probably need some prominent examples for, eg RET (Renewable Energy Target), Environmental Protection and Biodiversity Act (EPBC), Kyoto Protocol etc. Not too sure whether market failure is necessary though.

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Explain how a deterioration in the terms of trade will impact on the Balance of Payments 5

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Explain how ONE labour market policy may influence the level of structural unemployment 3

 

[lpodtouch]

Re: 2015 HSC Economics Marathon

Explain how an increase in productivity in a hypothetical economy could impact on TWO components of its balance of payments (4 marks)

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

Explain how an increase in productivity in a hypothetical economy could impact on TWO components of its balance of payments (4 marks)

An increase in productivity would result in an efficient allocation of resources in an economy. Thus efficient and productive production of goods will lead to lower prices and thus increase export competitiveness. This will lead to an increase in export purchases by foreigners and further lead to an increase in X revenue on the BOGS. This will potentially have a positive impact on the current account, as the improvement on the BOGS will reduce the CAD.
Another component of the BOP which could be impacted by an increase in productivity is the investment section of the financial account. As firms will become more productive and earn higher levels of profits, they will be favourable options for foreigners to invest into. Thus this increase in the investments into firms of the economy will increase the surplus on the financial account. Simultaneously, the NPI deficit will also increase, as the rates of returns on these investments (i.e. dividends and profits) will increase. Though the financial account will be in surplus, the NPI deficit will rise and this will also lead to an increase in the CAD.

 

[exeternal]

Re: 2015 HSC Economics Marathon

Explain how a deterioration in the terms of trade will impact on the Balance of Payments 5

Explain how a deterioration in the terms of trade will impact on the Balance of Payments 5

As ToT deteriorates, meaning import price has increased relative to export price, thus the BOGS component of the CA may experience more a more negative/less positive outcome. This is due to the fact that import prices has increased, meaning expenditure on given amount of imports will be higher, consequently worsening the BOGS as net goods becomes more negative.

Additionally, a deterioration in ToT may lead to a decrease in oversea investor confidence, where individuals expect the economy's export price to continue falling, thus investors may delay their investments into Australia. This maylead to a lower negative on the FDI/Portfolio component of the KFA, resulting in decreased CAD assuming investors does delay their investments.

its 3am idk what im saying soz

 

[rrulez]

Re: 2015 HSC Economics Marathon

If the Japanese government decides to increase its beef quotas,what will be the effects to both domestic and foreign producers? 3 mrks

 

[RecklessRick]

Re: 2015 HSC Economics Marathon

If the Japanese government decides to increase its beef quotas,what will be the effects to both domestic and foreign producers? 3 mrks

Domestic
- more competition = lower domestic prices
- less competitive in domestic market, lose market share, decreased revenues, increased unemployment
Foreign
- greater access to foreign markets
- greater market share in Japanese market, increased revenues, increased employment

 

[exeternal]

Re: 2015 HSC Economics Marathon

Explain the relationship between ToT and International competitiveness. 4 marks