HSC 2015 Economics Marathon (1 Viewer)

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

Identify TWO microeconomic reforms and discuss the impact of each reform on productivity and international competitiveness in the Australian economy (6 marks)

 

[Ekman]

Re: 2015 HSC Economics Marathon

Mpc=0.8
MPs=0.2
S=I
Therefore S= 40
40= -100 +0.2 Y
100 is negative because consumption is 100 so a loss of 100 units of savings must have occurred
Solve for Y
y=700

Alt method: Use the formula Y=C+I
Since Y=AS, and at equilibrium AD=AS, hence Y=AD, therefore Y=C+I+G+X-M, and you ignore external factors because ceterus paribus, thus you have Y=C+I

 

[rrulez]

Re: 2015 HSC Economics Marathon

Select TWO international organisations other than WTO and explain their role in promoting free trade in the global economy. 4 mrks.

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

Select TWO international organisations other than WTO and explain their role in promoting free trade in the global economy. 4 mrks.

IMF
By ensuring the stability of the financial system, the IMF fosters a stable environment for free trade to take place. It encourages the restructuring of economies through a principal of conditionality, whereby it assists economies financially by the condition they will improve efficiency through microeconomic and macroeconomic reform. This allows for both a stable financial environment that will not affect trade relationships (hindering globalisation of trade), as well as a policy environment that will potentially encourage growth in trade and export industries, promoting Global free trade.


The World Bank
Provides loans to developing nations to increases the rate of their economic development. This in the long term allows them to build infrastructure and export projects,achieve economies of scale. This potentially allows them to compete in the global marketplace and interact in global trade, thereby improving global free trade

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

Explain how labour market policies other than education and training aim to reduce structural unemployment (2)

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

If the government taxes a firm for their negative externalities, does it increase the social cost or the private cost

 

[Ekman]

Re: 2015 HSC Economics Marathon

If the government taxes a firm for their negative externalities, does it increase the social cost or the private cost

It raises the private cost the business initially pays to social cost. So essentially, the business is paying for their negative externalities (which is at the social cost level of equilibrium).

 

[rrulez]

Re: 2015 HSC Economics Marathon

Outline the causes of income inequality in Australia.

 

[Ekman]

Re: 2015 HSC Economics Marathon

Outline the causes of income inequality in Australia.

-Contractionary Fiscal Policy (reduction in welfare benefits, and other micro reforms from this)
-Decentralisation of wage determination
-Age (The peak average income is in the 40's so age plays a huge role)
-Gender (Males get paid more)
-Family background (If family has low income, due to the vicious cycle of income, the next generation has a greater chance of having low income)
-Lack of labour mobility
-Increase in unemployment (can link this back to age and gender)

Some abstract points:
-Increased inflation (This causes more percentage of incomes being spent, and their real income levels would decrease, since they have low bargaining power)
-Economic upturn (the rich people generally have their assets increase in price, and also rich people generally own businesses which will make more profits)

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

How does income inequality impose an economic cost on households in the Australian economy ? 3 marks

 

[Ekman]

Re: 2015 HSC Economics Marathon

How does income inequality impose an economic cost on households in the Australian economy ? 3 marks

-It encourages Conspicuous consumption
-Worsens the amount of people in the relative poverty line
-More welfare benefits that need to be paid
-Can cause long-term constraints for eco growth, as lower wages mean lower ability for people to consume
-Decreases utility, which links back to the first point

 

[Ekman]

Re: 2015 HSC Economics Marathon

How can taxation and government transfer payments be used to reduce the level of income inequality in the Australian economy? - 5 marks

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

How can taxation and government transfer payments be used to reduce the level of income inequality in the Australian economy? - 5 marks

Australia's method of progressive taxation results in higher income earners taxed more than low income earners to reduce the level of income inequality. Changes to the system of personal income tax such as raising taxation for higher income brackets and increasing the tax free threshold further aim to improve income equality. Taxation in other areas such as taxing negative externalities allow it to utilise these funds for discretionary changes in fiscal policy that aim to reduce the inequality divide, such as training for structurally unemployed, expansionary fiscal policy, the disability insurance scheme and the pension. The income inequality divide can also be seen to be bridged through the non-discretionary system of transfer payments, which during eco downturn pay out sums to those on the lower end of the income spectrum and other disadvantaged individuals

 

[Ekman]

Re: 2015 HSC Economics Marathon

Australia's method of progressive taxation results in higher income earners taxed more than low income earners to reduce the level of income inequality. Changes to the system of personal income tax such as raising taxation for higher income brackets and increasing the tax free threshold further aim to improve income equality. Taxation in other areas such as taxing negative externalities allow it to utilise these funds for discretionary changes in fiscal policy that aim to reduce the inequality divide, such as training for structurally unemployed, expansionary fiscal policy, the disability insurance scheme and the pension. The income inequality divide can also be seen to be bridged through the non-discretionary system of transfer payments, which during eco downturn pay out sums to those on the lower end of the income spectrum and other disadvantaged individuals

Solid response, just a couple of suggestions.
-No need to go in about taxing negative externalities because you open up a whole new can of worms and go off on a tangent about how the government makes money
-A reduction in the regressive taxation system
-A decrease in the criteria for people receiving welfare benefits, allows them to recieve benefits quicker and for more people.

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

I like the criteria for benefits, thanks for the add in !

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

Explain what is meant by the non-Accelerating rate of inflation (NAIRU) 4 marks
Im a little unsure of why its 4 marks :/

 

[Ekman]

Re: 2015 HSC Economics Marathon

Explain what is meant by the non-Accelerating rate of inflation (NAIRU) 4 marks
Im a little unsure of why its 4 marks :/

I guess the way I would answer is this is through:
-explaining what nairu consists of
-explain why unemployment is a trade off from inflation.
-explain how nairu is achieved
-explain how inflation increases as AD gets stimulated and relate it back to the composition of nairu and how it wont be reduced

 

[Gabriel Moussa]

Re: 2015 HSC Economics Marathon

Analyse the relationship between inflation and unemployment (4 marks)

 

[Study_like_a_nerd]

Re: 2015 HSC Economics Marathon

In the short run, high levels of inflation result from high levels of economic growth. When eco growth is high, the level of unemployment reduces, due the increase in demand for labour and the ability of businesses to hire more workers due to higher profits. However, this increase in demand for labour will result in inflation as consumption from individuals will increase. Similarly, when inflation decreases, the level of economic growth is also decreasing simultaneously, and thus the demand for labour decreases, causing an increase in the unemployment rate.

In the long run, there will be no trade off between unemployment and inflation. This is because according to the long run phillips curve, an economy will experience unemployment in the long run based on non-cyclical factors such as structural and frictional unemployment. Thus increasing AD to stimulate demand for labour will only create inflation.

 

[astab]

Re: 2015 HSC Economics Marathon

May someone tell me of the advantages and disadvantages of MERs (preferably 3 costs and 3 benefits, looking at eco growth, employment, external stability). Apologies if the question has been asked, just direct me to the page.