Economics Paper- Powlmao and Loapowm

7/28/2019 Economics Paper- Powlmao and Loapowm

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2012T R I A L H I G H E R S C H O O L

C E R T I F I CAT E EXAMINAT I O N

M a d e b y P o w l m a o / L o a p o w m

( J o s h U )

Economics

Total marks

100

General Instructions

Reading time5 minutes

Working time3 hours

Write using black or blue pen

Black pen is preferred Board-approved calculators may

be used

Write your Centre Number and

Student Number at the top of

pages 9, 11, 13 and 15

Section I Pages 28

20 marks

Attempt Questions 120

Allow about 35 minutes for this section

Section II Pages 916

40 marks

Attempt Questions 2124 Allow about 1 hour and 15 minutes for this section

Section III Pages 1718

20 marks

Attempt either Question 25 or Question 26


Section IV Page 19

20 marks




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2Paper made by Powlmao/Loapowm (Josh U)

Section I

20 marks



Use the multiple-choice answer sheet for Questions 120.

1 Which of the following is an example of a contractionary macroeconomic

policy?

(A) RBA selling second hand Commonwealth Government securities

(B) RBA buying second hand Commonwealth Government Securities

(C) RBA issuing new Commonwealth Government Securities to finance an increase inthe budget deficit

(D) RBA issuing new Commonwealth Government Securities to retire Governmentdebt

2 Which of the following economies is Australias largest export

market?

(A) China

(B) New Zealand

(C) United States of America

(D) European Union

3 The table shows selected data for a hypothetical economy

Year Export Price Index Import Price Index1 110 902 110 1103 80 120

Which of the following Statements is true?

(A) In Year 3 export prices rose faster than import prices

(B) In Year 2 the balance on goods and services worsened

(C) Between Year 1 and Year 3 the terms of trade improved

(D) In Year 3 import prices rose faster than export prices


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4 The table shows selected data for an economies Balance of Payments

Balance of Payments $ billion ($bn)

Exports 100

Imports 150

Net Services 80

Net Income -90

Net Current Transfers -15

Capital Transfers 50

Reserve Assets 5

According to the information above, which of the following statements is correct aboutan economy with a floating exchange rate?

(A) There is a surplus of $30 billion on the balance of Goods and Services

(B) There is a deficit of $30 billion on the Balance of Goods and Services

(C) There is a surplus of 75billion on the financial account

(D) There is a deficit of $55 billion on the financial account

5 The graph shows the foreign exchange rate for the Australia Dollar.

$A/$USAS1

AS0

90c

80c

AD

0Quantity $A

Which of the following would cause the change in the exchange rate as shown above?

(A) A decrease in portfolio investment inflows

(B) A decrease in import volumes

(C) A decrease in tourism into Australia

(D) A decrease in global protection levels


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6 Which statement best describes the operation of fiscal policy in comparison to theoperations of monetary policy?

(A) Monetary policy has a longer transmission tie lag and is more effective in

stimulating the economy during a recession

(B) Fiscal policy influences investment whereas monetary policy influences

consumption

(C) Fiscal policy has a more immediate impact on the economy and can influence

growth between economic sectors

(D) Monetary policy has a shorter transmission time lag and is more effective in

slowing the economy during a boom

7 The table shows data for a nations terms of trade.

Year Nominal GDP $bn CPI

1 250 100

2 345 120

What is the value of real GDP in year 2

(A) $208.3bn(B) $276.0bn

(C) $287.5bn

(D) $300.0bn

8 Which of the following best describes the characteristics of a developing economy

(A) Low absolute poverty, poor governance and reliance on foreign aid(B) Low income per capita, low levels of human development, small share of foreign

direct investment.(C) High absolute poverty, low levels of foreign indebtedness, strong social and political

institutions.(D) Reliance on service exports, low levels of government debt, high levels of economic

growth

9 What is the name of the body that is responsible for determining wages in

Australia?

(A) The Australian Industrial Relations Commission


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(B) The Australian Fair Pay Commission

(C) Fair Work Australia

(D) The Workplace Ombudsman

10 The graph shows the demand for and supply of Australian dollars.

$A in termsS1

of $US

S0

0.70

0.60

D

0 Q1 Q0 Quantity of $A

Which of the following is the most likely reason for the shift in the supply curve from

S0

to S1?

(A) An increase in foreign imports into Australia

(B) An increase in foreign financial investment in Australia

(C) A reduction in the net income deficit on the current account

(D) A decline in the international competitiveness of Australian firms

11 How would the Reserve Bank of Australia increase the cash rate in the short term moneymarket?

(A) Buy Government securities and increase liquidity

(B) Sell Government securities and increase liquidity

(C) Buy Government securities and decrease liquidity

(D) Sell Government securities and decrease liquidity

12 Which of the following is a use of a budget surplus by the Government

(A) Funding tax cuts

(B) Increasing spending on infrastructure projects


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(C) Financing an issue of government bonds

(D) The repayment of government debt

13 Which of the following best explains under-provision of public goods by the marketsystem?

(A) Only the government supplies public goods(B) Public goods are more expensive, so only high

income earners can afford to pay for them

(C) Firms supplying public goods cannot exclude thosewho are unwilling to pay for them

(D) Consumers do not demand public goods, so few aresupplied by the market.

14 Which of the following transactions would be recorded as a debit on the Current accountof the Balance of Payments?

(A) The purchase of shares in a US company by an

Australian Resident

(B) Borrowing from a Japanese Bank

(C) Interest paid to Australian lenders

(D) Dividends paid to foreign investors

15 Which of the following is an example of a bilateral trade agreement to which Australia isa part of?

(A) Closer Economic Relations Trade Agreement

(B) Australia China Free Trade Agreement

(C) ASEAN Australia New Zealand Free Trade Agreement

(E) ASEAN Economic Outlook

16 Which is the most appropriate macroeconomic policy mix if the Australian economy is

experiencing inflationary pressures?

(A) A decrease in taxation and the sale of government securities by the Reserve Bank


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(B) A decrease in government spending and the sale of government securities by the

Reserve Bank

(C) An increase in taxation and the purchase of government securities by the

Reserve Bank

(D) An increase in government spending and the purchase of government securities bythe Reserve Bank

17 Which of the following would least likely result from a centralize system of wagedetermination

(A)A more equal distribution of income(B)Lower levels of inflation(C)Rising levels of productivity(D)Lower wage growth

18 Which of the following types of inflation is least effectively addressed using monetarypolicy

(A) Demand pull inflation

(B) Cost push inflation

(C) Inflationary expectations

(D) Imported inflation

19 Which of the following is a characteristic of an automatic stabilizer?

(A) They counteract fluctuations in economic activity

(B) They do not operate when an economy falls into recession

(C) They are also known as the structural component of the budget

(D) They reinforce fluctuations in economic activity

20 An industry that generates pollution incurs both private and social costs.

What will happen to the quantity and equilibrium price when BOTH private and socialcosts are taken into account?

(A) Both output and price will fall.

(B) Both output and price will rise.

(C) Output will fall and the price will rise.

(D) Output will rise and the price will fall.


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Economics

Section II

40 marks


24Allow about 1 hour and 15 minutes for this section

Answer the questions in the spaces provided. These spaces provide guidance for the expectedlength of response.

Question 21 (10 marks)

(a) Outline two ways income inequality is measured 2

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(b) Distinguish between income and wealth 2

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Question 21 continues on page 10


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(c) Explain one factor contributing to income inequality in Australia 2

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(c) Discuss Government policies that can be ued to reduce wealth inequality in Australia 4

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Economics

Section II (continued)


(a) The table shows current account data for an economy.

Year 1 Unemployment

1 1063000

2 11280003 1186000

(i) Define the Natural rate of unemployment (NAIRU) 2

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(ii) Show the rate of change in unemployment from year 2 to year 3 2.

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Question 22 (continued)

(b) Explain ONE possible cause and ONE effect of unemployment 4

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(C) Examine the effectiveness of ONE economic policy used to reduce the rate ofunemployment 5

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End of Question 22


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Economics



(a) The table shows an exchange rate for an economy.

Calculate the movement shown above 1

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(b) Outline two factors that could have caused the movement in the diagram above 3

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$1.10

$1.00


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(b) Describe the impact of an improvement in Australias export competitivenesson Australias exchange rate 2

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(d) Explain the relationship between financial flows and the exchange rate 4

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End of Question 23


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Economics



(a) Define Monetary Policy. 2

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(b) Describe one recent trend in monetary policy and its effect in the economy 2

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Question 24 continues on page 16


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(c) Briefly explain how monetary policy can influence imported inflation 3

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(d) Explain how the Reserve Bank of Australia can use domestic market operationsto lower inflation in a economy 4

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Economics

Section III

20 marksAttempt either Question 25 or Question 26


Answer the question in a writing booklet. Extra writing booklets are available.

In your answer you will be assessed on how well you:

demonstrate knowledge and understanding relevant to the question

use the information provided

apply relevant economic terms, concepts, relationships and theory

present a sustained, logical and cohesive response


Explain the use of macroeconomic and microeconomic policies used by the AustralianGovernment to achieve the objectives of full employment and external stability. In your

response use the information below

OR


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use the information provided

apply relevant economic terms, concepts, relationships and theory



Explain the impacts of changes in the global economy on Australias financial and trade flows.

In your response refer to the below information.


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Section IV

20 marks



Answer the question in a SEPARATE writing booklet. Extra writing booklets are available.



apply relevant economic information, terms, concepts, relationships and theory



Examine the limitations of strategies to promote economic growth and development in an

economy other than Australia.

OR


Discus the economic implications of Australias continuing current account deficit.

End of paper


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