Download 2B Task 6 Macroeconomics 2011

2B ECONOMICS
Task 6 Part A
Macroeconomics
Your task is to take photos or find articles from newspapers or the internet that indicate
that the Australian economy slowed down in 2011.
Provide a brief description of each photo or article, and explain whether it illustrates a
cause or a consequence of the economic downturn.
You have to produce/find 4 items relating to different events/situations.
This task is due on Thursday June 16. Total mark is 10.
The penalty for late submission is 1 mark per day.
2B ECONOMICS
Task 6 Part B
Macroeconomics Test 1
MULTIPLE CHOICE QUESTIONS
1.
Macroeconomics is the study of
(a)
(b)
(c)
(d)
2.
individual firms in the corporate sector.
national spending on public or collective goods.
the performance of the economy as a whole.
the financial sector as a whole and total money flows.
An increase in new building approvals would
(a) indicate that people have higher incomes as a result of an earlier change in economic
activity.
(b) indicate that economic activity will improve in the future.
(c) result in the government reducing the rate of land tax per property.
(d) occur at the same time that economic activity changes.
Questions (3) to (6) are based on the following data for an open economy:
3.
Government expenditure
Taxation receipts
Savings
Investment
Imports
Exports
120
115
110
115
95
75
total injections exceed total leakages.
the economy is in equilibrium.
unemployment can be expected to fall.
output can be expected to fall.
The trade sector has a
(a)
(b)
5.
$m
According to the data
(a)
(b)
(c)
(d)
4.
Sector
deficit of $95m.
surplus of $75m.
(c) deficit of $20m.
(d) surplus of $20m.
The government’s budget outcome is a
(a)
(b)
deficit of $115m.
surplus of $5m.
(c) surplus of $120m.
(d) deficit of $5m.
6.
If consumption expenditure is $300, then aggregate expenditure equals
(a)
(b)
(c)
(d)
7.
If, in a three-sector economy, the level of planned saving is less than the level of planned investment
then the level of inventories will
(a)
(b)
(c)
(d)
8.
$290m.
$740m.
$515m.
$610m.
fall and output, employment and income will rise.
fall as will output, employment and income.
rise and output, employment and income will fall.
rise as will output, employment and income.
The largest component of Australia’s GDP is
(a)
(b)
(c)
(d)
9.
The most stable component of aggregate expenditure is
(a)
(b)
(c)
(d)
10.
private consumption expenditure.
private investment expenditure.
government investment expenditure.
net exports.
investment because machines always break down.
consumption while the least stable is investment expenditure.
consumption while the least stable is government expenditure.
net exports because Australia has large supplies of raw materials.
A reduction in interest rates in an economy
(a)
(b)
(c)
(d)
will always lead to a large increase in investment.
may result in a small increase in investment when business expectations are low.
may result in a significant increase in investment when business expectations are low.
will enable all firms to increase their profit levels.
NAME: _____________________________________________
/22
2B ECONOMICS 2011
Task 6(b)
MULTIPLE CHOICE ANSWER SHEET
Put a cross right through the answer of your choice
1
a
b
c
d
6
a
b
c
d
2
a
b
c
d
7
a
b
c
d
3
a
b
c
d
8
a
b
c
d
4
a
b
c
d
9
a
b
c
d
5
a
b
c
d
10
a
b
c
d
DATA INTERPRETATION QUESTION
Australians hold back on spending
Despite the ongoing strength of mining and related industries, overall consumption expenditure
growth in the Australian economy is currently relatively subdued. In particular, there has been very
little growth in household consumption spending over recent months. The low rate of growth in
spending on retail items by Australian households may be at least partially explained by the
increase in interest rates that has taken place. Between October 2009 and November 2010, a series
of monetary policy tightenings saw the Reserve Bank increase the official overnight cash interest
rate from 3.0% to 4.75%. It is also possible that Australian retailers are experiencing a reduction in
sales as result of a shift in preferences by consumers towards direct on-line purchases from overseas
retailers.
It is possible that the sharp increase in the value of the Australian dollar over the past year has
been a catalyst to encourage shoppers to seek out direct overseas retailers. A higher $A makes
imported items cheaper.
Adapted from an article in Plain English Economics January 2011.
(a) List two reasons, according to the article, for the low growth rate in consumption expenditure on
Australian goods and services.
(2 marks)
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(b) Explain how these reasons caused the low growth rate in consumption expenditure on Australian
goods and services.
(4 marks)
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(c) Explain three factors that could cause consumption expenditure to increase.
(6 marks)
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DATA INTERPRETATION QUESTION
This question refers to the two graphs below.
(a) The trend, since 2003, is that household interest paid as a percentage of
disposable income is _______________________________.
Household debt has become greater than household disposable income since _____________.
(2 marks)
(b) Describe any relationships that appear to exist between the measures, in the above graphs,
since 2003.
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(3 marks)
(c) Explain how the change in household debt and interest paid, since 2003, may have impacted on
demand and output.
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(5 marks)