2017 economics written examination...2017 economics exam 2 section a continued section a –...
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ECONOMICSWritten examination
Thursday 2 November 2017 Reading time: 2.00 pm to 2.15 pm (15 minutes) Writing time: 2.15 pm to 4.15 pm (2 hours)
QUESTION AND ANSWER BOOK
Structure of bookSection Number of
questionsNumber of questions
to be answeredNumber of
marks
A 15 15 15B 5 5 65
Total 80
• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpenersandrulers.
• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.
• Nocalculatorisallowedinthisexamination.
Materials supplied• Questionandanswerbookof24pages• Answersheetformultiple-choicequestions• Additionalspaceisavailableattheendofthebookifyouneedextrapapertocompleteananswer.
Instructions• Writeyourstudent numberinthespaceprovidedaboveonthispage.• Checkthatyournameandstudent numberasprintedonyouranswersheetformultiple-choice
questionsarecorrect,andsignyournameinthespaceprovidedtoverifythis.• AllwrittenresponsesmustbeinEnglish.
At the end of the examination• Placetheanswersheetformultiple-choicequestionsinsidethefrontcoverofthisbook.
Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.
©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2017
SUPERVISOR TO ATTACH PROCESSING LABEL HEREVictorian Certificate of Education 2017
STUDENT NUMBER
Letter
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2017ECONOMICSEXAM 2
SECTION A – continued
SECTION A – Multiple-choice questions
Instructions for Section AAnswerallquestionsinpencilontheanswersheetprovidedformultiple-choicequestions.Choosetheresponsethatiscorrectorthatbest answersthequestion.Acorrectanswerscores1;anincorrectanswerscores0.Markswillnotbedeductedforincorrectanswers.Nomarkswillbegivenifmorethanoneansweriscompletedforanyquestion.
Question 1RelativescarcitycanbestbedefinedasA. wantsinrelationtoneeds.B. wantsinrelationtoresources.C. unlimitedwantsinrelationtolimitedresources.D. limitedwantsinrelationtounlimitedresources.
Question 2Whichoneofthefollowingmighthelptoreduceagovernment’sbudgetdeficit?A. aslowingofgrowthintheworldeconomyB. reducingthemarginalrateofpersonalincometaxC. removingthemeanstestonsomeitemsofgovernmentwelfareD. removingtheexemptionsofeducationandfoodfromthegoodsandservicestax(GST)
Question 3Whichoneofthefollowingisunlikelytoincreaseproductivity?A. increasingtariffsB. labourskillstrainingC. innovationinworkpracticesD. investmentinphysicalcapital
Question 4WhatwouldbetheeffectonthemarketforGoodXiftherewereariseinthepriceofasubstitutegood?A. ThedemandcurvewouldshiftleftandtheequilibriumpriceofGoodXwoulddecrease.B. ThesupplycurvewouldshiftleftandtheequilibriumpriceofGoodXwouldincrease.C. ThedemandcurvewouldshiftrightandtheequilibriumpriceofGoodXwouldincrease.D. ThesupplycurvewouldshiftrightandtheequilibriumpriceofGoodXwoulddecrease.
Question 5Whatisthemostlikelyeffectofadecreaseinthetariffonanimportedgood?A. alossofjobsforoverseassuppliersB. afallinthepriceofacompetingdomesticgoodC. ariseinthepriceofacompetingdomesticgoodD. anincreaseinemploymentinthedomesticsector
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3 2017ECONOMICSEXAM
SECTION A – continuedTURN OVER
Question 6Overtime,whichoneofthefollowingwouldmostlikelyincreaseaggregatesupplyintheeconomy?A. reducingtheagepensionB. reducingskilledmigrationC. reducingtheretirementageD. reducingfundingforapprenticeships
Question 7ConsiderthefollowinghypotheticalConsumerPriceIndex(CPI)data.
Year CPI
1 100
2 110
3 121
TheincreaseintheannualrateofinflationfromYear2toYear3isA. 10%B. 11%C. 20%D. 21%
Question 8Accordingtothefive-sectorcircularflowmodeloftheeconomy,ariseinthetotalvalueofinjectionsrelativetothetotalvalueofleakagesismostlikelytoresultinA. adecreaseinconsumptionandadecreaseinlevelsofaggregatedemand.B. adecreaseintotalincomesandariseintheunemploymentrate.C. neitheradecreaseinconsumption,levelsofaggregatedemandandtotalincomes,norariseinthe
unemploymentrate.D. adecreaseinconsumption,levelsofaggregatedemandandtotalincomes,andariseinthe
unemploymentrate.
Question 9Thefollowinginformationreferstoahypotheticalcountry’stermsoftrade.
Year Import price index Export price index
1 100 100
2 104 117
ThechangeinthetermsoftradefromYear1toYear2mostlikelymeansthat,forthiscountryA. theexchangeratewillfall.B. thecurrentaccountdeficitwillrise.C. thevalueofimportsisgreaterthanthevalueofexports.D. moreimportscanbeboughtwithagivenvolumeofexports.
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2017ECONOMICSEXAM 4
SECTION A – continued
Question 10Thequantitydemandedforaproductincreasesbyahigherpercentagethanthedecreaseinthepriceofthatproduct.Whatisthisknownas?A. demandelasticityB. demandinelasticityC. supplyelasticityD. supplyinelasticity
Question 11Whatnameisgiventothetypeofefficiencywhereresourcesarereallocatedtoincreasechoiceandmeetthechangingtastesandneedsofconsumers?A. dynamicefficiencyB. allocativeefficiencyC. productiveefficiencyD. intertemporalefficiency
Question 12Considerthefollowingdatarelatingtoahypotheticalcountry’sbalanceofpaymentsfor2016–2017.
Item $ billion (b)
netgoods +110
netservices –50
netprimaryincomes –90
netsecondaryincomes +25
Fromthisdata,thebalanceofpaymentsoncurrentaccountwouldbeaA. $15bsurplus.B. $15bdeficit.C. $5bsurplus.D. $5bdeficit.
Question 13Asthelevelofaggregatedemandslows,thebudgetoutcomewillA. improveasunemploymentincreases.B. deteriorateasunemploymentincreases.C. improveassocialsecuritypaymentsdecrease.D. deteriorateassocialsecuritypaymentsdecrease.
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5 2017ECONOMICSEXAM
END OF SECTION ATURN OVER
Question 14WhentheReserveBankofAustraliabuysgovernmentsecuritiesontheovernightmarket,theeffect willbetoA. increasethesupplyofcashinthemoneymarketandincreasethecashrate.B. decreasethesupplyofcashinthemoneymarketandincreasethecashrate.C. increasethesupplyofcashinthemoneymarketanddecreasethecashrate.D. decreasethesupplyofcashinthemoneymarketanddecreasethecashrate.
Question 15Whichoneofthefollowingisanexampleofgovernmentcapitalexpenditure?A. personalincometaxrefundsB. paymentofunemploymentbenefitsC. provisionoftransportinfrastructureD. governmentloanstotertiarystudentsforuniversityfees
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2017ECONOMICSEXAM 6
SECTION B – Question 1–continued
Question 1 (11marks)a. Explainoneeffectofcompetitivemarketsontheefficiencyofresourceallocation. 2marks
b. Distinguishbetweenpublicgoodsandcommonaccessresources. 3marks
SECTION B – Written responses
Instructions for Section BAnswer allquestionsinthespacesprovided.
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7 2017ECONOMICSEXAM
SECTION B – Question 1–continuedTURN OVER
c. Identifyarecentexampleofgovernmentinterventioninmarketsandexplainhowitunintentionallyledtoadecreaseintheefficiencyofresourceallocation. 3marks
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2017ECONOMICSEXAM 8
SECTION B – continued
d. Selectoneofthefollowingaspectsofbudgetarypolicy:• spendingontrainingandeducation• researchanddevelopmentgrants• subsidies
Explainhowincreasedfundingonthisaspectofbudgetarypolicymightinfluenceaggregatesupplyandthegoalofstrongandsustainableeconomicgrowth. 3marks
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9 2017ECONOMICSEXAM
SECTION B – continuedTURN OVER
CONTINUES OVER PAGE
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2017ECONOMICSEXAM 10
SECTION B – Question 2–continued
Question 2 (9marks)Belowisascheduleofdemandandsupplyforstrawberriesduringoneweekinthesummerof2016.
Price (per punnet)
Quantity demanded (no. of punnets)
Quantity supplied (no. of punnets)
$5 140000 30 000
$8 120000 50 000
$10 80 000 80 000
$12 60 000 90000
$14 30 000 110 000
a. Constructademandandsupplycurvediagramusingthedatainthetable.Ensureallaspectsofthegrapharelabelledappropriately. 3marks
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11 2017ECONOMICSEXAM
SECTION B – continuedTURN OVER
b. Assumingthemarketforstrawberriesisaperfectlycompetitivemarket,identifytheequilibriumpriceandquantitytraded,andexplainwhatismeantby‘equilibrium’. 2marks
c. Assumethatduringthesummertherewasaperiodofunseasonablycoldweatherandtheoutputofstrawberrieswasnegativelyaffected.
Drawthisscenarioonthegraphinpart a.,clearlyshowingtheadjustmenttothemarketconditions. 2marks
d. Explaintheadjustmenttotheequilibriumpriceandquantity. 2marks
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2017ECONOMICSEXAM 12
SECTION B – Question 3–continued
Question 3 (28marks)TreasurerScottMorrisonstatedinhis2016–2017BudgetspeechthattheAustralianGovernmenthasa‘planforjobsandgrowth’.
a. Describethe2016–2017performanceoftheAustralianeconomyintermsof‘jobsandgrowth’. 4marks
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13 2017ECONOMICSEXAM
SECTION B – Question 3–continuedTURN OVER
b. Selectoneofthefollowingaggregatesupplypolicies:• welfarereformpolicy• taxreformpolicy• immigrationpolicy
Explainhowthispolicymightbeimplementedtoincrease‘jobsandgrowth’. 4marks
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2017ECONOMICSEXAM 14
SECTION B – Question 3–continued
c. Selectanaggregatesupplypolicyfromthelistinpart b. Youmayusethesamepolicythatyouselectedinpart b. oradifferentpolicyfromthelist.
Outlineonestrengthandoneweaknessofusingthispolicytoincreaseemploymentandratesofeconomicgrowth. 4marks
d. Explainhowaggregatedemandpolicieshaveinfluenced‘jobsandgrowth’in2016–2017. 8marks
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15 2017ECONOMICSEXAM
SECTION B – Question 3–continuedTURN OVER
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2017ECONOMICSEXAM 16
SECTION B – Question 3–continued
e. Evaluateonestrengthandoneweaknessofusingeachofbudgetarypolicyandmonetarypolicyinachievingincreased‘jobsandgrowth’. 8marks
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17 2017ECONOMICSEXAM
SECTION B – continuedTURN OVER
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2017ECONOMICSEXAM 18
SECTION B – Question 4–continued
Question 4 (9marks)
2010 2011 2012 2013 2014 2015 2016–1
0
1
2
3
4
5
%
–1
0
1
2
3
4
5
%
year ended
Consumer Price Inflation
quarterly(seasonally adjusted)
2017
Source:adaptedfromABS;RBAChartPack, ‘TheAustralianEconomyandFinancialMarkets’,September2017,p.4
a. Referringtothegraphabove,assesstheextenttowhichAustraliahasbeenabletoachieveitsgoaloflowinflation(pricestability)in2016–2017. 3marks
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19 2017ECONOMICSEXAM
SECTION B – continuedTURN OVER
b. Explainoneeconomicfactorthatmighthaveinfluencedthegoaloflowinflation(pricestability)in2016–2017. 2marks
c. DiscussthelikelyeffectofthebehaviourofConsumerPriceInflationonthestanceandfocusofmonetarypolicyduringthepasttwoyears. 4marks
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2017ECONOMICSEXAM 20
SECTION B – Question 5–continued
Question 5 (8marks)
2010 2011 2012 2013 2014 2015 2016 2017–9
–6
–3
0
%
–9
–6
–3
0
%
Current account balanceper cent of nominal GDP
Source:adaptedfromABS;RBAChartPack, ‘TheAustralianEconomyandFinancialMarkets’,September2017,p.17
a. Referringtothegraphabove,outlineonefactorthatmightexplainthetrendinAustralia’scurrentaccountbalancein2015–2016and2016–2017. 2marks
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21 2017ECONOMICSEXAM
TURN OVER
b. ExplainthelikelyeffectoftradeliberalisationonanytwoofAustralia’sdomesticmacroeconomicgoals. 6marks
END OF QUESTION AND ANSWER BOOK
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2017ECONOMICSEXAM 22
Extra space for responses
Clearly number all responses in this space.
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23 2017ECONOMICSEXAM
TURN OVER
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2017ECONOMICSEXAM 24
Ananswerbookisavailablefromthesupervisorifyouneedextrapapertocompleteananswer.Pleaseensureyouwriteyourstudent numberinthespaceprovidedonthefrontcoveroftheanswerbook.At the end of the examination, place the answer book inside the front cover of this question and answer book.