Federal Budget 2012-13

Posted on May 17, 2012 by freeman

The 2012 budget presented by the Treasurer Mr Swan, seems likely to have a highly contractionary stance. By this, economists mean that it will reduce aggregate demand and hence economic growth as the budget outcome moves from $44 bn deficit in 2012 to a $1.5bn surplus next year.

But all is not at it seems. What light can Ross Gittins shed? Read his article and see why.

For a comparison, consider the French government’s problems in returning the budget into surplus.
France’s budget woes
Well, perhaps that is not really the plan but the new President certainly has a job ahead to return the budget to a more sustainable level, especially given the consistently large deficits over a long time.

Posted in Extension, Year 12 | Leave a comment

Economic Issues: Unemployment

Posted on May 8, 2012 by freeman

Here is the worksheet for this issue:

Unemployment worksheet – word doc 

Here is the same document as a pdf:

Unemployment-qns1

Good luck
Mr F

 

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Economic Issue: Inflation

Posted on May 3, 2012 by freeman

Here is the worksheet for this issue:

Inflation qns – word doc 

Here is the same document as a pdf:

Inflation qns – pdf

This a follow up article for the members of our class who worry about this economic issue, and for those of you who do not.

Don’t worry, low inflation is here to help

Set your minds at ease. Note that this was written before the RBA cut rates by 50 basis points on 1 May.

Happy reading
Mr F

Posted in Homework, Year 12 | Leave a comment

Latest monetary policy adjustment

Posted on May 1, 2012 by freeman

What?

So, the RBA board determined that the best course of action for the Australian economy was to cut interest rates by “50 basis points”, which means that most of the interest rates in the economy will fall by around about 0.5 of a percentage point. The official interest rate level, that is more correctly referred to as the cash rate (which forms the basis for all the other interest rates in the economy) has been cut to 3.75%.

Consequence?

The effect of this change will include the following (once the banks pass on the cut to their customers by reducing their lending rates):

  • encourage consumer spending since new loans – home loans, personal loans, credit card accounts – will be cheaper and debt servicing will be cheaper for existing loans, thus freeing-up disposible income
  • businesses will borrow to invest in capital goods for the future
  • the AUD will depreciate as foreign investors seek a better return in economies other than Australia – exporters will be pleased but imports will become more expensive

Taken together, these effects will stimulate growth in aggregate demand and hence lead to faster economic growth.

Why?

Click to read the RBA’s media release that summarises their reasons for adjusting the cash rate.

What are the main reasons? Inflation? Global economic slowdown? Domestic weakness? Lack of cunsumer and business confidence? To help out the government?

Happy pondering

Mr F

Posted in Extension, Year 12 | Leave a comment

Economic policy mix

Posted on April 17, 2012 by freeman

Read Jessica Irvine’s piece about the Federal Govt’s “policy mix”.

What does this mean?
What is the current policy mix?
How does this compare to the situation in 2007 or even in 2008?
What does it mean for future economic growth?
Is it a good approach for the economy?

We will continue to hear a lot about this.
Mr F

Posted in General knowledge, Year 12 | Tagged , , , | Leave a comment

Board of Studies Help

Posted on March 26, 2012 by freeman

Thinking about examination preparation yet? While the Trials still seem a long way off, and the HSC exams further still, it is worth knowing what kinds of resources are out there to help.

Here is one from the Board of Studies

The HSC marker’s reports provide valuable insights into addressing the specific exam questions from last year’s paper.

Here is a link to the 2011 Economics exam paper.

Good luck with it
Mr F

Posted in Exams, Revision, Year 12 | Leave a comment

HSC Assessment Task 2

Posted on March 15, 2012 by freeman

The time has come to get started on your second assessment task. Click here for a copy of the task. Please note that there are three separate but related pieces to this puzzle:

1. the proposal: nominate the country you plan to research and provide a bit of background information about it. You will also be asked to speak for a couple of minutes in class about what you have already found out about this economy. You may find later that you wish to change your country afterwards and that is fine too.
If more than one person has chosen a particular country, a random selection process will be used to determine who will need to make another choice. Although this is element will not be marked, it is important.

2. research task and essay: this is the heart of the task. Do the finding-out and report your findings in an essay format. This will be marked out of 25.
You must include a bibliography and employ a suitable referencing format, according to the guidelines. Some assistance will be provided for this element.
Please make every effort to write the essay in your own words and take the time to draft and redraft your essay several times.

3. in-class writing task: on the hand-in date, you will be required to write a response to a question that further demonstrates your understanding of the key global economic issues that relate to your country.
The question will not be seen by you in advance but it will closely follow an element of the research topic. It will be marked out of five and you would not be expected to write more than two pages during the Economics lesson.

Research Links – the websites of reputable international organisations and Australian government sites have a wealth of reliable information that will be useful for this task.  Some of the better websites include:

World Trade Organization

World Bank

International Monetary Fund: http://www.imf.org/external/country/index.htm

Organisation for Economic Cooperation and Development: www.oedc.org

CIA Factbook: https://www.cia.gov/library/publications/the-world-factbook/index.html

Foreign Policy magazine: http://eurasia.foreignpolicy.com/category/topic/economics

The Economist magazine: http://www.economist.com/topics

Australia Department of Foreign Affairs and Trade

Reserve Bank of Australia:

The Central Bank and other government websites for your country may also be useful.

As always, please seek advice if you are having difficulty understanding the question, guidelines or marking criteria. Also be pro-active about meeting the deadlines.

Enjoy

Mr F

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Cashless Society

Posted on March 13, 2012 by freeman

This ABC article describes the increasing tendency of Australian consumers to use EFTPOS payment methods rather than cash to pay for goods and services.

What are the implications for banks and other FIs in the finance sector? What about for economic growth and the multiplier?

Posted in Extension, General knowledge, Year 12 | Tagged , , | Leave a comment

Fear the boom and the bust rap

Posted on March 12, 2012 by freeman

Watch this video. It is very clever rap song performed by artists as though they are British economist John Maynard Keynes and Swedish economist Friedrich Hayek, out on the town, discussing their conflicting views about economic management.

YouTube Preview Image

Here are the song lyrics.  You will need to read these through a second (or third) time to understand the differences in perspective.

Mr F

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