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QUESTION 2 Assume the Australian Government tightens regulations on working holiday visas. The economic effect of this policy would be (ceteris paribus) (A) a fall in the supply of seasonal labour. (B) arise in the supply of seasonal labour. (C) a fall in the demand for seasonal labour. (D) arise in the demand for seasonal labour.
QUESTION 3 In Australia taxation bracket creep (A) (B) (C) (D) is the result of indexing income tax bands to inflation. compensates taxpayers on the threshold taxation levels. raises tax revenue without explicitly increasing tax rates. occurs when tax revenue and expenditure work in opposition.
QUESTION 6 Which diagram best represents the trade-offs that should be considered with demand management policies at different points of the economic cycle? ( A) LRAS Price level Real GDP (C) Price level Real GDP (B) Price level (D) A LRAS LRAS Real GDP A : AD Real GDP
QUESTION 7 Which statement does not describe a relationship between an equitable distribution of income and economic growth? (A) (B) (C) (D) Higher aggregate supply leads to greater equality of income over time. Economic growth over time may reduce equality of income in market-based economies. Income inequality lowers aggregate demand due to the different propensities to consume. Some level of income inequality should encourage business investment and economic activity.
QUESTION 9 Consider the following data. � Employment in public administration and education has risen by 2.5 percentage points. � Employment in recreation and retail has fallen by 2.3 percentage points. Which statement correctly identifies the economic problem and the response required? Economic problem Policy response Resources are underutilised fiscal policy should be contractionary. monetary policy should be expansionary. aggregate supply policies should be used. Cyclical economic activity is slowing Structural unemployment has decreased Total unemployment has fallen demand management should be neutral.
QUESTION 10 The graph shows estimated taxes paid and transfers received by Australian householders. Total tax and transfers 60 / <7 Key U WB black stripe | |white 40 $ billion (oS) S 7 20 UY LL a 77) V//} 10 / 0 � �' � g�' �' �' � > os VY ed NY ea v * SS Y � Ne Private income ($ thousand) Identify the components of the key in the graph. Company tax Goods and services tax Capital gains tax Family tax benefits Goods and services tax Unemployment benefits Capital gains tax
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 1 A primary economic objective of the Australian Government�s budget in 2021 was (A) reducing inflation. (B) keeping employment high. (C) maintaining a stable exchange rate. (D) achieving a current account surplus.
QUESTION 4 An economy is experiencing decreasing levels of economic activity. A cause for unemployment rates remaining at 5% (ceteris paribus) might be (A) (B) (C) (D) a reduction in the number of hours worked. an increase in unemployment benefits. a rise in the number of school leavers. a delay in workers retiring.
QUESTION 5 Assume the Australian Government has simplified regulations in the medical and pharmaceutical industries. Identify the expected change to the aggregate demand/ageregate supply diagram (ceteris paribus). (A) Average prices rise and GDP decreases because the aggregate supply curve shifts to the left. (B) Average prices fall and GDP increases because the aggregate supply curve shifts to the right. (C) Average prices rise and GDP increases due to an expansionary movement along the aggregate supply curve. (D) Average prices fall and GDP decreases due to a contractionary movement along the aggregate supply curve.
QUESTION 7 Identify the correct statement. (A) | Increasing the goods and services tax to leads to | an increase in household standard of improve tax efficiency living. (B) | Raising the tax-free threshold to lift leads to | an increase in equity in income household consumption distribution. ) A (C) | Repaying Federal Government debt to leads to | an expansion in short-term economic overseas residents activity. Promoting competition in the financial a reduction in unemployment. industry
QUESTION 11 (12 marks) Analyse Sources 1-3 in the stimulus book to explain the impact of electricity prices on small and medium-sized businesses over the years 2014 to 2019. Draw a short-term AD/AS diagram in the space provided to support your explanation.
QUESTION 3 How is microeconomic reform represented in the aggregate demand / aggregate supply (AD/AS) model? (A) (B) (C) (D) The AS curve shifts to the right and real gross domestic product increases. The AD curve shifts to the right and real gross domestic product increases. There is an expansionary movement along the AS curve and real gross domestic product increases. There is an expansionary movement along the AS and AD curves and real gross domestic product increases.
QUESTION 11 (8 marks) Country A is dependent on oil exports. Their major oil destination country has discovered an environmentally sustainable substitute for oil. Explain and illustrate the effect on Country A using two different economic models.
QUESTION 1 At different stages of the business cycle automatic stabilisers always act to (A) change aggregate demand. (B) increase aggregate demand. (C) decrease aggregate demand. (D) maintain aggregate demand.
QUESTION 2 If the Australian Government decided to reintroduce an inheritance tax this policy would (ceteris paribus) (A) increase the budget deficit. (B) raise Australia’s foreign debt. (C) improve the distribution of income and wealth. (D) encourage people to save for their retirement income.
QUESTION 3 A movement in the cash rate from 3% to 4.5% is equal to (A) 0.15 percentage points. (B) 150 basis points. (C) 150 per cent. (D) 15 per cent.
QUESTION 4 Inflation targeting (A) guarantees that inflation remains within a band of 2% to 3%. (B) assists with managing an economy’s inflation expectations. (C) encourages the banking sector to pass on rate changes. (D) is most effective with cost-push inflation issues.
QUESTION 5 Assume the government significantly increases excise taxes on fuels to encourage more electric vehicles. How will this initiative affect the Australian economy? (A) increase domestic-based inflation (B) increase the supply of electric cars (C) raise employment in the Australian car industry (D) raise transportation costs of fruit and vegetables
QUESTION 6 To improve housing affordability a government plans to release more land for houses and introduce a first home owners’ grant. The likely impact is that house prices (A) should increase. (B) should decrease. (C) cannot be predicted. (D) would remain unchanged.
QUESTION 7 Capital goods Consumer goods The movement of an economy from point A to point B could be attributed to (A) moving manufacturing and research and development projects overseas. (B) increasing productivity in export-focused industries and technology change. (C) reducing investment in manufacturing and reducing cyclical unemployment. (D) an overseas supply chain issue changing production of consumer and capital goods.
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 9 A government is interpreting a model of a labour supply curve in a highly developed economy. E: Wage rate = L L3 Ly Hours worked Assuming the average wage moves from W to W employees’ marginal propensity to consume leisure will (A) increase. (B) decrease. (C) remain constant. (D) decrease at an increasing rate.
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 11 (4 marks) Explain one way that monetary policy is transmitted through the Australian economy following a rise in interest rates.
QUESTION 12 (4 marks) Assume the graph represents a recent event experienced by the Australian economy that required economic management. Price level Yo Yep Real GDP Explain a likely cause and short-term effect of the event.
QUESTION 13 (8 marks) Assume that the economy is at point A on the economic cycle and the Australian Government is considering its fiscal policy response. Real GDP Time Explain what is happening with income tax receipts at point A and whether income tax should be reduced.
QUESTION 14 (13 marks) The data and information shown represent an economic issue in Australia. Superannuation is a percentage payment from current income by an employee. The purpose is to save for a future income in retirement. Policy option 1 Policy option 2 Women given incentive to top up One-off taxation levy for low personal superannuation accounts superannuation balances Five-year income tax discount to older All Australians pay a one-off additional women if they pay significantly more into tax on their 2024 income to fix an their superannuation fund each year ... identified inequity ... 100 Compulsory 2S 90 } 2 oS superannuation =Q 80 introduced “HO 70 in 1992* S's 0 a : © c 62 90 z$ 40 Cc Be 30 Eg 20 2a 10 0 . . ; Baby boomer Generation X Millennial (born before 1965) (born before 1980) (born before 1995) * The introduction of compulsory superannuation in 1992 incentivised more Australians to save for their retirement. The nature of compounding magnifies the effect of early contributions to superannuation. Estimated work arrangements in Australia 1990 2020 es Analyse the economic issue indicated in the data and economic information provided. Which policy option should the government implement to improve equity in economic prosperity for all Australians?
QUESTION 15 (22 marks) Use all Sources 1—8 in the stimulus book to prepare your response. Explain the rationale for the scenario presented to reduce payroll tax in Australia. Evaluate the benefits and costs using the perspectives of households businesses and government.
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 6 Identify the sign of external instability in the Statement on Monetary Policy ceteris paribus. (A) (B) (C) (D) increases and decreases in the exchange rate lifting disposable income and consequent spending China�s higher demand for exports and commodity prices effects of the cash rate reduction on households and local businesses
QUESTION 7 From the information in the excerpt above what was the most likely position of the Australian economy on the economic cycle shown below when this statement was made? (A) Point A io (B) Point B (C) Poimt C (D) Point D Underlying growth trend Time � Public use �
QUESTION 14 (7 marks) Use Stimulus 1 2 and 3 in the stimulus book to analyse how the manufacturing industry has impacted the Australian economy.
QUESTION 15 (20 marks) Use Stimulus 4�9 in the stimulus book to evaluate the effectiveness of a microeconomic policy response that promotes long-term economic growth based on the manufacturing industry.
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