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QUESTION 4 Within a total government budget of $300 billion the planned surplus for the year was $4 billion. In that year the actual budget recorded an unplanned increase of $6 billion in government expenditure. In the following year the planned deficit was $2 billion. This suggests that (A) the budget outcome is expansionary. (B) the budget outcome is contractionary. (C) the government is aiming to repay debt. (D) the government expects a recession in the following year.
QUESTION 11 (6 marks) The JobSeeker payment is the main income support payment for Australians over 22 years of age who are unemployed and looking for work. Explain how automatic stabilisers operate and describe how JobSeeker payments stabilise the economic cycle. Draw a diagram in the space provided to support your answer.
QUESTION 13 (9 marks) An economic scenario 1s provided. The 2021/22 federal budget is expected to deliver a deficit of $4.2b at the end of June Export data s 7022. A $7.1b surplus is anticipated the hows coal exports are expected to fall from 2021 to 202 following year. by approximately $70 billion � 2022 (Forecast released May ) (Data released 10 J uly 2022) CPI data shows that movements in the consumer price index (CPI) and the wage price index (WPI) were below 2% for the three years to June 2022. (Data updated 31 July 2022) Use the scenario to explain two relationships and their economic effects. Evaluate the merit of achieving a budget surplus in your answer.
QUESTION 14 (28 marks) Use Stimulus 1-8 in the stimulus book to evaluate whether government intervention to influence either housing demand or housing supply would be more effective in reducing housing price pressures and improving living standards.
Difficulty: A
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Paper 1
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2020
Stimulus 3: This stimulus has not been published for copyright reasons
Stimulus 7: Excerpt from Property Council of Australia "Increasing housing supply" (This stimulus has not been published for copyright reasons)
QUESTION 8 Assume the current account has shown the trend in the graph for the last 16 quarters. Current account 0 > �5 =| AS) = -10 Ae So �-15 5 oe mo -20 �25 Q1 Q2 Q3 O24 QI Q Q3 O4 QI Q2 Q Q4 QI Q Q3 4 Time (quarters) Which fiscal strategy would be most effective in addressing this issue in Australia (ceteris paribus)? (A) stimulating the economy to encourage spending on domestic goods and services (B) liberalising trade policies to make the economy more competitive (C) replacing overseas borrowing with domestic sources of finance (D) improving the efficiency of the foreign exchange market
QUESTION 9 The images provide information about the economic situation in Country A. Stimulus redacted. Which response to the situation does not represent a sustainable economic policy approach in Country A? (A) (B) (C) (D) an increase in skilled migration to raise technical knowledge and skills an increase in taxation incentives to encourage the delay of retirement an increase in the taxation base to finance pension transfer payments an increase in childcare subsidies to raise workforce participation
Difficulty: B
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Paper 1
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2021
QUESTION 10 The table shows labour market data for an economy. Year Labour force Employed (000) persons (�000) Based on the data in the table fiscal policy measures (A) should be avoided because the number of employed persons has increased. (B) do not need to be changed because the employment rate is unchanged. (C) could be contractionary because the unemployment rate is falling. (D) could be expansionary because the employment rate is rising.
QUESTION 4 A proposal to change Australia�s GST to a rate of 15% would be aiming to (A) stabilise aggregate demand in the economy. (B) decrease government revenue. (C) contract the economy. (D) broaden the tax base.
QUESTION 6 Assume the Australian federal treasurer has handed down a deficit budget for the coming fiscal year and subsequently there is a sudden downturn in consumer demand. The most likely change to the budget is (ceteris paribus) (A) no change in unemployment benefit payments and the budget target is still achievable. (B) an increase in unemployment benefit payments and a smaller budget deficit. (C) adecrease in unemployment benefit payments and a smaller budget deficit. (D) an increase in unemployment benefit payments and a larger budget deficit.
QUESTION 12 (7 marks) These measures are extracts from an Australian federal budget scenario. IE Introduction of a temporary budget repair levy on incomes over $150 000 for three years. Assistance for low-income single parents with a new allowance of $1000 per annum for each child aged 6 to 12. Continuation of the move by the former government to increase the Age Pension age limit to 69 by 1 July 2023 and further increase the Age Pension age limit to 72 by 1 July 2035. A temporary pause on CPI indexation of payments and programs including eligibility thresholds for Family Tax Benefit and JobSeeker; thresholds for the Medicare Levy Surcharge Private Health Insurance Rebate and most Medicare Benefits Schedule fees; and Local Government Financial Assistance Grants. A reduction in the growth of federal hospital and education funding to make the states more accountable for spending and delivery of services. Based on the initiatives presented explain the fiscal stance in this federal budget.
QUESTION 8 If the Reserve Bank of Australia increases interest rates relative to our trading partners it will cause (ceteris paribus) (A) adepreciating effect on the exchange rate. (B) areduction in the federal budget deficit. (C) an inflow of foreign financial capital. (D) a decrease in export prices.
QUESTION 10 The data shows an economic scenario over a three-year period. Nominal GDP (¢ billion) Budget surplus ($ billion) Which economic policies would improve this situation? (A) raising the age pension and increasing income taxes (B) selling government assets and reducing retirement age (C) increasing retirement age and decreasing health expenditure (D) increasing job seeker payments and decreasing income taxes
QUESTION 1 What is the fundamental role of fiscal policy? (A) controlling the budget deficit (B) establishing automatic stabilisers (C) reducing government regulations (D) making revenue and expenditure decisions
QUESTION 3 Which of the following Australian Federal Government policy decisions would increase inflationary pressures (ceteris paribus)? (A) raising personal income taxes (B) setting a surplus federal budget (C) appreciating the Australian dollar (D) increasing government expenditure
QUESTION 5 Identify the most likely effect of a government decision to finance a budget deficit by borrowing from domestic sources (ceteris paribus). (A) The exchange rate of the Australian dollar will depreciate. (B) Australian interest payments on foreign debt will fall. (C) Money supply in Australia will increase. (D) Interest rates in Australia will rise.
QUESTION 12 (5 marks) Unemployment rate (Australia) 22 | | 18 I Aged 15-24 4 | D 14 i oD l 3 =| 3 10 5 I rove l 6 : Total ; | 1983 1990 1997 2004 2011 2018 Explain why and how the Federal Government intervened in the economy in 1991. Use evidence from the graph to support your answer.
QUESTION 13 (11 marks) Read the following excerpts from a newspaper article about the Australian economy. Consumer confidence fell in December and unless consumers continue spending the recovery could be jeopardised. Australians spend excessively and do not save adequately therefore adversely affecting the nation�s economic health. The government is considering personal income tax cuts to stimulate economic growth. Use the information above to evaluate the impact on economic growth of targeting a certain sector for tax relief.
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