TOPIC 3 2019

2018

2017

2015

2014

Question 28 (20 marks) Discuss the role of government in attempting to achieve environmental sustainability in Australia.

2013

Answers could include:

• Types of unemployment • Economic cycles and cyclical employment • Underemployment and hidden unemployment • Participation rate • Recession, GFC • Confidence, spending effects • Social costs • Fiscal position, automatic stabilisers • Booms, Commodity/resource booms • Structural change –industries, states • Long-term and frictional unemployment • Labour market policies • Education and training • Minimum wages • Centralised vs decentralised labour market • Labour mobility

Section IVCandidates showed strength in these areas:

to identify and analyse the causes and effects of unemployment (Q.28) using relevant economic diagrams to support arguments

Candidates need to improve in these areas:

using accurate data and relevant examples to support arguments providing a balanced response to both causes and effects of unemployment on the

Australian economy (Q.28) supporting responses with more contemporary references to the Australian economy

2010

Question 26In better responses, candidates provided a balance between the consequences of an unequal distribution of income and wealth and a range of policies that could be used to reduce inequality. They highlighted both the positive and negative consequences of inequality and related this to government initiatives that have been undertaken to reduce the impact of inequality. Some examples of the government initiatives that were addressed in these responses included, the compulsory superannuation levy, raising the tax-free threshold, and specific labour market programs. As well, a number of these candidates made reference to industrial relations reforms, including recent increases in the minimum wage, and the shift from Australian Workplace Agreements to Enterprise Agreements. In better responses, candidates examined the indirect impact of monetary policy on the distribution of income and wealth, highlighting the benefits of increasing interest rates to higher-income earners and owners of assets and the resulting increase in income inequality.

In addition, in better responses, candidates distinguished between the concepts of income and wealth, as well as highlighting the relationship between the two. The use of the stimulus material, together with additional economic data and examples, was a feature of these responses. This was coupled with an integration of relevant terminology and an analysis of appropriate economic theory.

In weaker responses, candidates tended to focus on one part of the question (either consequences or policies) rather than providing a balanced response. Alternatively, the discussion of policies tended to be generalised, without offering specific examples of policies that related directly to inequality. Commonly, candidates who used prepared responses placed an emphasis on the measurement and causes of inequality rather than consequences and policies. Typically, there was a limited use of economic terms and concepts in these responses.

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Question 27In better responses, candidates analysed and explained the relationship between the cause and effect of fluctuations in Australia’s external stability. These responses were well structured, with a clear understanding of external stability and provided a balance between the causes and effects of these fluctuations.

They typically developed a concise and comprehensive analysis, linking the relationship and implications of current economic information. For example, they identified and analysed the issue of a low level of national saving, resulting in a need to borrow from overseas, and the implications of this on foreign liabilities, debt-servicing costs and the current account deficit. These responses often linked these effects back to fluctuations in Australia’s external stability.

A common feature of these responses was the integration of relevant economic theory and diagrams related to external stability. Typically, they discussed other features of external stability such exchange rate movements, Australia’s terms of trade, the Pitchford thesis and international competitiveness. In better responses, candidates commonly referred to both positive and negative effects of fluctuations in Australia’s external stability and were supported with current economic examples and data.

Weaker responses were typically general, with candidates merely stating causes and sketching in general terms a limited explanation of external stability. For example, candidates may have stated that a low level of national savings exists, but did not explore the relationship between the cause and effect of this on Australia’s external stability. Some candidates relied heavily on prepared responses, for example, on exchange rates, without directly relating fluctuating exchange rates to external stability or on policy responses without relating it to the causes or effects. Commonly, in weaker responses, candidates did not provide a balanced coverage of the causes and effects and simply described some causes and/or effects of fluctuations in Australia’s external stability.

2009

Question 28 Sample answer/Answers could include: • Global economic crisis • GWP • Increased trade flows – direction/composition • Globalisation • Increased financial flows • Technology transfer • Internationalisation of the labour force • Expansion of FDI • Increasing dominance of TNCs • Changes in the value of the $A • International business cycle • IMF, WTO, G8 • Net foreign debt, net foreign equity, net foreign liabilities • Changes in economic growth • CAD • Debt servicing ratio • International competitiveness • National savings • Cost of servicing foreign liabilities • Investor confidence • Interest rates • Unemployment • Fiscal stimulus • ‘Loose’ monetary policy • Business and consumer confidence

Question 28Better responses analysed the relationship between changes in the global economy and its impact on Australia’s economic growth and external stability. The impact of the global financial crisis (GFC) on Australia’s economic growth was well supported by reference to economic data. These responses then developed the flow-on impacts on Australia’s policy responses. They analysed the impacts of the global financial crisis on external stability and how changes in trade volumes, terms of trade, investment flows and exchange rates affected Australia’s current account deficit (CAD).

Better responses also analysed changes other than the GFC, such as the trade liberalisation of the past two decades and the emergence of China. Impacts of these changes on Australia’s economic growth and external stability were well analysed and supported by economic data.

Weaker responses gave lengthy descriptions of the causes of changes in the global economy, in particular the GFC. Detailed accounts of the mechanisms of exchange rate changes and interest rate changes were also prevalent in weaker responses.

The effects of changes were poorly dealt with in weaker responses. Very detailed accounts of the Australian government’s recent fiscal policy and monetary policy initiatives were itemised without reference to the question asked. Clear understanding of some key terms like ‘external stability’ and ‘terms of trade’ was not evident in weaker responses.