Market dominance or just good business

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A prime example of an oligopolistic market in Australia, the supermarket industry across the nation, is coming under scrutiny again. Is it fair that Coles or Woolworths be allowed to open an oversized store in a small town? Can it be claimed that their motivation is to eliminate an independent supermarket?

Does it matter to consumers? What are the alternatives? Can online shopping really unseat the big end of town?

Read the article and dig a little deeper. What if you were in charge of the ACCC?

Read the related articles as well:
1. ACCC’s power, October 2011
2. ACCC crackdown, October 2011.

Mr F

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State of Play or What is Wrong With the Economy?

Here is an article about the state of the Australian economy. It highlights the difficult decision that the RBA faces, especially when it seems not to be in full possession of all the relevant data.

My bet…the RBA will leave rates on hold, especially given their 50 point cut last month. This is especially relevant for the topic on econ policy but also applies to the Econ Issues topic on the policies that are useful for addressing various problems.

Tell me, and each other, what you think.

Good reading
Mr F

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Preliminary Economics Assessment Task 2

Here is the notification and revision guide for this task. 
2012PEconAT2 Notification

Please contact me if you have difficulties with it.

Mr F

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Federal Budget 2012-13

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.

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Economic Issues: Unemployment

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

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

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Latest monetary policy adjustment

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

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Economic policy mix

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

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Board of Studies Help

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

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