HSC 2016 Economics Marathon (1 Viewer)

[2016boi]

Hi guys,

Had a few questions but didn't want to have three separate threads, so why not make a marathon where we post questions?

Sorry if it's a bit too early - these aren't exam questions as much as they are to clarify conceptual lapses:



1. What are the global factors that cause differences in the level of Eco growth and development between different economies? Global trade is pretty clear, but don't understand the theory behind global finance

2. What are the points in time where Australia abolished protectionist policies to liberalise trade? How far back do we need to know?

3. Does anyone have a stat for the global distribution of income and wealth in the early 1990s compared to now?

Thanks again.

 

[spatula232]

Re: 2016 HSC Economics marathon

1. What are the global factors that cause differences in the level of Eco growth and development between different economies? Global trade is pretty clear, but don't understand the theory behind global finance

There are a whole list of factors which can be found in the Dixon textbook if you have it. In terms of finance, think of it as investment. In order for an economy to expand its productive capacity (i.e. its PPF), FDI is required. Consequently, if an economy has a high inflow of FDI, this would likely lead to higher growth and thus development (e.g. Increase Y, Increase Living Standards, Increase Development). For example, low-income and developing nations are likely to not receive FDI, rather receiving short term investment, thus speculative. This means the nation is prone to capital flight (where speculators remove their investment from nations), causing a collapse in investment and likely growth. There are lots of stats which can be used for this section, yet I don't remember specifics.

2. What are the points in time where Australia abolished protectionist policies to liberalise trade? How far back do we need to know?

You go into this in more depth in Topic 2 with a the "Free Trade and Protection" section, so don't worry too much. In 1973, Whitlam introduced a 25% cut of all tariffs and was the first major abolition of protection. As of 2014, the average tariff rate was (I think) 1.4%. Again, don't worry too much about this now as it has its whole topic later on. Most importantly you should focus on the reasons for protections, advantages and disadvantages of free trade, the types of protections and similar skills.

3. Does anyone have a stat for the global distribution of income and wealth in the early 1990s compared to now?

... Someone else may ...

Hope this helps...

Next Q: Discuss one economic strategy from a country other than Australia which aims to promote economic development. 4

 

[davidgoes4wce]

Re: 2016 HSC Economics marathon

Just bought myself a copy of the Economics text book by Jeremy Buultjens 'HSC Economics' , studying it because I studied it in Year 11 and 12 back in my home state. Also did a bit of Microeconomics and Macroeconomics in university in my first few years. Very interesting subject.

 

[HashtagManthan]

Re: 2016 HSC Economics marathon

A strategy used to promote economic development within China is implementation of the education reform in 2010; still ongoing. This education reform was introduced to help increase employment for the economy as a whole. The education reform has currently allowed access for 90% of the population to gain education, allowing for a large portion of the population to gain higher levels of skills and knowledge required to work in high paying jobs, showcased through a decrease in unemployment rate from 4.3% in 2010 to 4.05% in 2014 and increase in literacy rate to 97.5% in 2015. This allows for higher wages for residents, increasing their purchasing power allowing them to purchase beneficial goods, increasing their quality of life and thus the HDI of the country. Due to a lower unemployment rate, the government has reduced the amount of social welfare payments being issued, using those accumulated funds in other areas of need, such as defence. This highlights the effectiveness of the education reform to promote economic development.

 

[davidgoes4wce]

Re: 2016 HSC Economics marathon

This might be a stupid question but in regards to Australia's Balance of Payments. If Australia borrows money from other international countries is there usually an interest associated with that?

 

[Ekman]

Re: 2016 HSC Economics marathon

This might be a stupid question but in regards to Australia's Balance of Payments. If Australia borrows money from other international countries is there usually an interest associated with that?

In economics you should always assume there is always interest whenever loans are taken out. So when Australia takes out a loan from another country, its known as an inflow of cash, recorded as a credit on the KAFA. The interest that is repaid when Australia repays its loan is recorded as a debit on the CA, and the actual repayments made on the loan is known as a debit on the KAFA, as money is flowing out of Australia.

 

[2016boi]

Re: 2016 HSC Economics marathon

Hey guys thanks for all the responses.

I have another question - May someone please explain the short-run Phillips Curve? I don't really understand the trade-off between unemployment and inflation, and how a fall in one leads or an increase in the other...thanks.

 

[elkedag]

Re: 2016 HSC Economics marathon

Hey guys thanks for all the responses.

I have another question - May someone please explain the short-run Phillips Curve? I don't really understand the trade-off between unemployment and inflation, and how a fall in one leads or an increase in the other...thanks.

Use your short run AS/AD model. The Phillips curve explains short-run AD shocks. When there is a short-run increase in AD, output increases (so unemployment should decrease as it is derived from the demand for production) and inflation increases. The opposite occurs with a short-run decrease in AD. However, this model breaks down in the long-run, or if there is a permanent supply shock.
a) Limitations of Phillips in modelling AD movements in the long-run
In the long-run, if AD exogenously increases for an economy at long-run equilibrium, supply will decrease in the long-run as inflationary expectations align with actual inflation, and there is a permanently higher level of inflation at the same level of output (and unemployment). Likewise, if AD exogenously decreases for an economy at long-run equilibrium, there will be permanently lower inflation at the same level of unemployment.

b) Limitations of Phillips in modelling permanent supply shocks
If there is a permanent supply shock (positive, for example), AS will increase and meet AD at an equilibrium at a new higher level of long-run output (i.e. long-run AS shifts right). This results in the economy being in equilibrium at a lower level of inflation and a lower level of unemployment.

 

[grom11]

Re: 2016 HSC Economics Marathon

Discuss the reasons for Australia's persistent current account deficit?

 

[grom11]

Re: 2016 HSC Economics Marathon

Equilibrium level of national income question

Need help with a question like this.

 

[ahllaynee]

Re: 2016 HSC Economics Marathon



How would you do this question: Calculate the new equilibrium level of income (Y) in Year 4 if investment increases by $40m.

 

[jiujiu1123]

Re: 2016 HSC Economics Marathon

Hi Ahllaynee,

I am not entirely sure whether this would be correct. However, this is my interpretation to the best of my ability.

In this closed economy, income would be primarily composed of consumption and investment.

Therefore, Y in year 1 would be 330.

In year 2, income increased by 80 while saving increased by 20, showing the MPS is 0.25.

This is confirmed by the data in year 3 where income also increased by 80 while saving increased by 20.

Thus, you can deduce the simple multiplier to be 1/0.25 which equals 4.

When investment increased by 40, the economy, in theory, experience an increase of 160.

Y in year 3 is 490.

Therefore, Y in year 4 would be 650.

 

[jiujiu1123]

Re: 2016 HSC Economics Marathon

I suppose I should continue with a question.

Explain the benefits and costs of low inflation(4).