Questions:topic 1 (1 Viewer)

[the.chosen.one]

two questions i need help with....

(c) Demonstrate the difference between a real shock and a financial shock and how each might be transmitted between economies.

(d) Discuss how Australia has dealt with the challenges presented by globalisation. 4

thanks for any help =]

 

[-pari-]

anyone know (C) on th financial/real shocks? i dont see the difference?

 

[williamc]

^dunno, bit of a stab. Financial shock, meaning a rapid decrease or increase in financial flows, meaning a rapid depreciation or appreciation of the $. This obviosuly impacting on the economy, and how it interacts with other economies (change in exports and imports)

I havn't encountered the term "real shock" in yr 12.

 

[Conspirocy]

two questions i need help with....

(c) Demonstrate the difference between a real shock and a financial shock and how each might be transmitted between economies.

thanks for any help =]

I don't think the course covers real and financial shocks in the depth you are asking about it.

If we were to say that fluctuations in the economy come from changes in aggregate demand and supply then I would say that a shock is an exogeneous event that shifts these curves.

Shocks obviously disrupt the economy by pushing output and employment away from their natural levels.

We know that AD=AS

We also know that AD= C + I + G + (X - M)

I would argue rather crudely that real shocks influence everything. And that financial shocks influence Investment, specifically money demand and supply and Investment demand and thus interest rates. This interpretation could be wrong.

Supply shocks would definetly be classified as real shocks in my opinion.

As for how they are transmitted, that is relevant to your hsc course and is a textbook answer.

 

[blakegman]

real shocks are rapid changes in the price of tangible goods such as oil.

a financial shock is to do with currency, such as a rpid depreciation

might have already been said