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Economics of Enterprise
(a) What is the difference between the balance of trade and the current account deficit?
(b) Can a country continually have a current account deficit and continue to borrow from the rest of the world?
(c) How can a country reduce its current account deficit?
(d) Is a depreciation in a country’s exchange rare necessarily a bad thing? Explain
(b) Can a country continually have a current account deficit and continue to borrow from the rest of the world?
(c) How can a country reduce its current account deficit?
(d) Is a depreciation in a country’s exchange rare necessarily a bad thing? Explain
Economics of Enterprise
(a) When the economy approaches full employment, why does demand-pull inflation become a problem?
When the economy is heading into a recession what economic policy instruments can the government and the central bank use to prevent this from occurring? Will these instruments work to prevent the onset of recession?
When the economy is heading into a recession what economic policy instruments can the government and the central bank use to prevent this from occurring? Will these instruments work to prevent the onset of recession?
Economics of Enterprise
What is the difference between discretionary fiscal policy and the automatic stabilisers? How can the budget actually affected by the business cycle or economic activity in general? What is the most non-inflationary way of financing a budget deficit?
Economics of Enterprise
If you wanted to increase aggregate demand how would you do it for:
Consumption demand
Investment demand
Net exports
Which one of these types of expenditure also have an effect upon the Aggregate supply side of the economy?
Consumption demand
Investment demand
Net exports
Which one of these types of expenditure also have an effect upon the Aggregate supply side of the economy?
Economics of Enterprise
The Reserve Bank of Australia is preparing to reduce interest rates in the near future. Why does the Bank want to do this? What is the Bank’s overriding target?
If the bank does raise interest rates how would it affect the Australian economy?
If the bank does raise interest rates how would it affect the Australian economy?
Economics of Enterprise
Which of the following are major explanations of the sustained economic growth that Australia has achieved over the past 50 years?
(a) A closing of the gap between actual and potential output. Yes/No
(b) Increases in labour productivity. Yes/No
(c) Technological progress. Yes/No
(d) Sustained increases in the capital stock. Yes/No
(e) Reductions in unemployment. Yes/No
(f) Increases in human capital. Yes/No
(a) A closing of the gap between actual and potential output. Yes/No
(b) Increases in labour productivity. Yes/No
(c) Technological progress. Yes/No
(d) Sustained increases in the capital stock. Yes/No
(e) Reductions in unemployment. Yes/No
(f) Increases in human capital. Yes/No
Economics of Enterprise
Which of the following would cause a growth in the money supply? If your answer is ‘possibly’ explain the circumstances under which the answer would be ‘yes’.
(a) The selling of government securities to banks. . Yes / No / Possibly
(b) A fall in interest rates. Yes / No / Possibly
(c) An increase in government expenditure, financed by borrowing from the banking sector.
Yes / No / Possibly
(d) A cut in taxes. Yes / No / Possibly
(e) The purchase of government securities by the Reserve Bank from the banking sector.
Yes / No / Possibly
(f) It is agreed by the Treasurer and the Governor of the Reserve Bank to
reduce the target rate of inflation Yes / No / Possibly
(g) GDP rises and there is an upward-sloping money supply curve (with respect to interest rates).
Yes / No / Possibly
(a) The selling of government securities to banks. . Yes / No / Possibly
(b) A fall in interest rates. Yes / No / Possibly
(c) An increase in government expenditure, financed by borrowing from the banking sector.
Yes / No / Possibly
(d) A cut in taxes. Yes / No / Possibly
(e) The purchase of government securities by the Reserve Bank from the banking sector.
Yes / No / Possibly
(f) It is agreed by the Treasurer and the Governor of the Reserve Bank to
reduce the target rate of inflation Yes / No / Possibly
(g) GDP rises and there is an upward-sloping money supply curve (with respect to interest rates).
Yes / No / Possibly
Economics of Enterprise
Will the following lead to cost-push or demand-pull inflation, or both?
(a) The Reserve Bank cuts interest rates and the economy booms.
Cost-push / Demand-pull / Both
(b) As a result of falling unemployment, trade unions become more militant and demand higher wages.
Cost-push / Demand-pull / Both
(c) The government raises the rate of GST. Cost-push / Demand-pull / Both
(d) The government cuts income tax rates and raises government expenditure at a time of near full employment.
Cost-push / Demand-pull / Both
(e) Increasing industrial concentration leads to more oligopolistic collusion to raise prices.
Cost-push / Demand-pull / Both
(a) The Reserve Bank cuts interest rates and the economy booms.
Cost-push / Demand-pull / Both
(b) As a result of falling unemployment, trade unions become more militant and demand higher wages.
Cost-push / Demand-pull / Both
(c) The government raises the rate of GST. Cost-push / Demand-pull / Both
(d) The government cuts income tax rates and raises government expenditure at a time of near full employment.
Cost-push / Demand-pull / Both
(e) Increasing industrial concentration leads to more oligopolistic collusion to raise prices.
Cost-push / Demand-pull / Both
Economics of Enterprise
Give three reasons why the AD curve is downward sloping.
Why is the AS curve upward sloping (at least in the short run)?
Why is the AS curve upward sloping (at least in the short run)?
Economics of Enterprise
Give two things that could shift the AD curve to the right.
