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Economics Stage 6 Syllabus
Economics Stage 6
Context for the Study of Economics
A key feature of this syllabus is its ‘problems and issues’ approach to the teaching and learning of
economics. The goal of this approach is to relate the content of economics to the economic problems
and issues experienced by individuals and society.
The key issues are:
•
economic growth and quality of life
•
unemployment
•
inflation
•
external stability of an economy
•
distribution of income
•
sustainable management of the environment.
The focus of the Preliminary course is on the practical problems and issues that affect individuals,
firms and governments.
In the HSC course, the problems and issues are studied in relation to the national economy and the
process of globalisation.
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Content: Economics HSC Course
10.1 HSC Topic One — The Global Economy
Analyse the economic role of individuals, firms, institutions and governments in the global economy
Explain the role of markets within the global economy
Analyse the impact of global markets on the Australian and global economies
Discuss policy options for dealing with problems and issues in contemporary and hypothetical
context
Analyse the impact of economic policies in theoretical and contemporary Australian contexts
Evaluate the consequences of contemporary economic problems and issues on individuals, firms and
governments
Examine the impact of the globalisation process on economic growth and the quality of life, levels of
unemployment, rates of inflation and external stability
Assess the potential impact on the environment of continuing world economic development
Investigate the global distribution of wealth and investigate the consequences of an unequal
distribution of global wealth
Discuss the effects of protectionist policies on the global economy
What is the impact on the global economy of international organisations and contemporary trading
bloc agreements Using statistics on trade and financial flows, what is the nature and extent of
global interdependence
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HSC Econ syllabus worksheet
Features of the global economy
Nature of the global economy and globalisation
•
What is the global economy
•
What is Gross World Product
•
Outline the characteristics of globalisation in terms of
trade
investment and
technology
finance
labour
•
Describe the international business cycle
Trade and financial flows
•
Outline changes in the size, pattern and direction of trade and investment
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How has the foreign exchange market changed?
•
Who are the main participants in foreign exchange markets?
•
What is the impact of changes in trade and financial flows on economies?
Free trade and protection
•
What is the basis of free trade — its advantages and disadvantages
•
The 4 main reasons for protection are
reason
Description
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What are the 6 methods of protection
Method
Description
Outline the effects of protectionist policies on the domestic and global economy
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What are trading blocs and agreements?
•
Outline the role, importance and influence in the global economy of blocs and agreements
•
What do the following stand for
EU
APEC
ASEAN
NAFTA
CERTA
What are International organisations
•
What role do International organisations play in the global economy?

How important are they?
HSC Econ syllabus worksheet
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What do the following stand for
Meaning
WTO,
Role
World Bank
IMF
Impact of globalisation on the standard of living in the global economy
Define ‘standard of living’
Variations in the standard of living in the global economy
•
What are income and Quality of Life indicators (give eg)
Contrasts in levels of development
•
What is the difference between growth and development
•
Why do different nations have different growth and development patterns ?
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outline the characteristics of
developing economies, (LDC)
Newly Industrialised
Countries (NICs),
high income economies
(AIEs)
transition economies,
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Outline the Impact of globalisation in the following areas
Impact
international convergence
trade, investment
transnational corporations
environmental consequences
the international business cycle
economic growth, development
and the quality of life
distribution of income and
wealth
financial markets
implications for government
economic policies
.
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10.2 HSC Topic Two — Australia’s Place in the Global Economy
analyse the impact of global markets on the Australian and global economies
discuss policy options for dealing with problems and issues in contemporary and hypothetical
contexts
evaluate the consequences of contemporary economic problems and issues on individuals, firms and
governments
•
•
•
•
•
•
•
•
evaluate the impact of the global economy on the Australian economy
examine the impact of changes in the global economy on Australia’s economic performance
analyse the relationship between international competitiveness and structural change in the
Australian economy
discuss the impact of free trade and protection policies on the quality of life in Australia
use supply and demand diagrams to explain how the value of a currency is determined (fixed
and floating exchange rate mechanisms
analyse the impact of movements in the exchange rate on the Australian economy
explain the relationship between the current account balance, net foreign debt and net foreign
liabilities
calculate and interpret the effects of changes in Australia’s terms of trade index.
Australia’s trade and financial flows
Value, composition and direction of Australia’s trade and financial flows
•
explain the following economic terms
Composition of
trade
Direction of
change
How has the direction and composition of trade changed in the last 100 years
•
outline recent trends in financial flows
What is Australia’s Balance of Payments?
HSC Econ syllabus worksheet
•
The BOP is structured into 2 parts. What does each part contain
1. Current Account (give recent figures for each category)
2. Capital and Financial Account
•
Explain the links between key Balance of Payments categories
•
How has the size and composition of Australia’s BOP changed over time?
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Outline briefly the reasons for these trends in the BOP
Issues associated with trends in the balance of payments, including:
•
Define the ‘terms of trade’
•
How does an improvement in the Terms of trade affect the BOP?
Analyse whether Australia’s current ‘terms of trade’ is favourable / unfavourable

Why calculate the size of the current account balance as a percentage of Gross Domestic Product
HSC Econ syllabus worksheet
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What is the difference between foreign debt and foreign liabilities

What is the difference between debt and equity

What is the current level of net foreign debt

Explain the link between CAD and the foreign debt
•
Define ‘international competitiveness’.

What factors affect a countries international competitiveness
Improve competitiveness
Hinder competitiveness
•
What is meant by the term ‘structural change’ in the Australian economy

What factors affect ‘structural change’?
Why is structural change important?
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Outline the relationship between international competitiveness and structural change.
Exchange rates
•
What is an exchange rate?

What is the Trade Weighted Index?
•
List the factors affecting the demand for and supply of Australian dollars
Demand for $A
Supply of $A
•
What is an appreciation of the $A

•
What is a depreciation of the $A
The 3 ways to determine exchange rates are
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
•
Briefly outline each method
What influence does the Reserve Bank of Australia have on exchange rates

What is it called when the RBA intervenes in the FOREX

List the advantages of a floating (flexible ) exchange rate?

How does the exchange rate affect ‘international competitiveness?
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How does a depreciation of the $A affect the BOP
How does a depreciation of the $A affect the foreign debt
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Draw a diagram and use it to explain the effects of a depreciation on the Australian economy
Free trade and protection
•
Australia’s policies regarding free trade and protection
HSC Econ syllabus worksheet
•
•

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the implications of Australia’s policies for individuals, firms and governments
implications for Australia of protectionist policies of other countries and international
organisations.
Discuss the impact of free trade and protection policies on the quality of life in Australia
HSC Econ syllabus worksheet
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10.3 HSC Topic Three — Economic Issues
25% of indicative time
The focus of this topic is the nature, causes and consequences of the economic issues and problems
that can confront contemporary economies.
Outcomes
A student:
H1
demonstrates understanding of economic terms, concepts and relationships
H2
analyses the economic role of individuals, firms, institutions and governments
H4
analyses the impact of global markets on the Australian and global economies
H7
evaluates the consequences of contemporary economic problems and issues on individuals,
firms and governments
H9
selects and organises information from a variety of sources for relevance and reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.
Content
Students learn to:
Examine economic issues
•
identify and analyse problems facing contemporary and hypothetical economies
•
examine the arguments for and against increasing economic growth rates
•
investigate the economic and social problems created by unemployment
•
analyse the adverse effects of inflation on an economy
•
analyse the effect of a continued current account deficit on an economy
•
investigate recent trends in the distribution of income in Australia and identify the impact of
specific economic policies on this distribution
•
analyse the economic and social costs and benefits of inequality in the distribution of income
•
examine the economic issues associated with the goal of ecologically sustainable development
•
use the tools of economics to analyse a contemporary environmental issue
Apply economic skills
•
calculate an equilibrium position for an economy using leakages and injections
•
determine the impact of the (simple) multiplier effect on national income
•
explain the implications of the multiplier for fluctuations in the level of economic activity in an
economy
•
calculate the unemployment rate and the participation rate using labour force statistics
•
interpret a Lorenz curve and a Gini coefficient for the distribution of income in an economy
•
synthesise and evaluate key problems and issues facing the Australian economy.
Students learn about:
Economic issues in the Australian economy
HSC Econ syllabus worksheet
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1. Economic growth
•
Define aggregate demand ( what is the equation)
•
What are injections (+ give equation)

What are withdrawals (+ give equation)
•
What is the equilibrium position of the economy

What is the simple multiplier (+ give equation)
•
Draw a diagram to help illustrate the multiplier concept

What is the effect of the simple multiplier on national income ?

Explain the implications of the multiplier for fluctuations in the level of economic activity in an
economy
HSC Econ syllabus worksheet

How is economic growth measured ?

List the sources of economic growth in Australia

List the effects of economic growth in Australia

Examine the arguments for and against increasing economic growth rates
For increasing economic growth
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Against increasing economic growth
HSC Econ syllabus worksheet

Explain how the business cycle relates to economic growth
Diag

What is the link between economic growth and quality of life?
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2. Unemployment
•
define the following
– labour force
–
participation rate
–
unemployment rate
•
Outline recent (1990s onwards) trends
•
types and causes
– cyclical
–
structural
–
frictional
–
seasonal
–
hidden
–
long term
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Causes of unemployment
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What is the natural rate of unemployment (draw the diag)
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Who are the main groups affected by unemployment ?
•
What are the effects (costs) of unemployment
– Separate the costs into
Economic costs
social costs
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Policies to address unemployment
How has globalisation affected employment in Australia?
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Inflation
Define inflation
A sustained ↑ in the general level of prices over time
•
What is the current Australian Bureau of Statistics measure of inflation
CPI
Measures s in price of a selected regimen of consumer g+s, measured monthly
•
Outline recent inflation trends ( 1990s on)
70-80s inflation av between 6% and 10%
1990 – 91 recession  inflation < 5%
Stayed below 3% for most of the 90s
1993 – RBA adopted inflation target of between 2 and 3% on average
over economic cycle
MER  cost pressures in Aust Productivity ↑ twice LT average
•
outline the causes of inflation
1. demand inflation
Agg D > agg S
Pressure for the price level to rise to ratio available output
amongst consumers
Explain inflationary gap diag
Keynes
Inflationary gap diag
Where Agg D (total spending) exceeds
the full employment level of Y
(capacity to produce goods). In the
diag the econy is operating at full
capacity at Yf. The equilibrium
level of national Y is Ye. Prices
rise as too much money chases too
few goods
In the diag ‘cd is the
inflationary gap as Agg D >aggS
Demand pull inflation diag
Equilibrium is at price ‘OP’
An  in Agg D shifts the curve to
the right creating a new Agg D
curve AD1. A new equilibrium at
price OP1 is created
This may occur if wages faster
than productivity  leading to 
C or an  in budget deficit leads
to more demand
Agg S
Agg D
c
d
0
Yf
Ye
National Y
HSC Econ syllabus worksheet
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2. What is cost inflation ?
Supply side inflation
A rise in labour or raw material costs  less can be produced a
give price. Producers put up prices to maintain profit margins to
cover the cost 
Explain cost push inflation diag
At equilibrium agg D equals aggS
at price ‘P’. an  in costs of
production causes the supply
curve to move to the left ( a
decrease in supply)
This creates a new higher
equilibrium Price ‘P1’
The econy experiences a
contraction in real GDP as the
higher price causes demand to
contract
3. What is imported inflation
Inflation caused by higher ‘M’
prices
High ‘M’ prices forces up consumer prices and the cost of
intermediate goods used by Austn producers who will then put up
their prices to compensate
4. What are inflationary expectations? How do they increase inflationary pressure?
When people see prices continually rising, they factor in future
price rises when bargaining wage deals ie demand larger pay 
Wage/price spiral where an econy experiences both demand pull and
cost push inflation  self perpetuating
 wages  cost of production   profits   prices
HSC Econ syllabus worksheet
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• Outline the (adverse) effects of inflation on an economy
1. Consumers
 purchasing power  real Ys
2. workers
 real wages
3. Producers
 cost of production  profits unless able to pass
  living standards
on in higher prices
May  costs by downsizing   unemployment
4. Exporters
 cost of production  international
competitiveness
 export receipts  deterioration
in Balance of Trade   CAD
5. Savers
 real value of saving
6. Investors
Uncertainty and higher costs  disincentive to invest
 disincentive to save
ie lower returns
7. Resources
Misallocation as some factor prices rise faster than
others
8. Govt
 cost as welfare payments

 tax revenue as Y  and bracket creep occurs
Outline and analyse the policy responses available to govt?
1.
Monetary Policy (MP)
Main weapon against inflation
Tight MP   interest rates contract the econy  D pull
inflation
2. Fiscal Policy (FP)
Contract econy  agg D  deficit or  surplus
 taxation receipts
 govt spending
3. MER
 cost pressures by making production more efficient , 
productivity and  competition to keep prices low
 Productivity double LT average during 1990s
 Deregulation and cutting protection (tariffs)  competition
 Taxation reform
HSC Econ syllabus worksheet
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External stability
Define external stability
Situation where a country earns enough export income to finance
import expenditure and any debt servicing obligations with the rest
of the world
Why is external stability important?
Affects economic management in Australia of domestic economy
Instability may lead to a depreciation of $A, rise in domestic
interest rates, valuation effect on foreign debt may debt
servicing costs and   CAD
How is external stability measured? (3 measures)
CAD / GDP ratio
Net foreign liabilities / GDP ratio
Net foreign debt ? GDP ratio
•
Outline trends in Australia’s external accounts
CAD is cyclical  grows when econy growing  imports of consumer
and capital goods
CAD range between - 4% and - 6.7% (2004/05)
Average - 4.6% of
GDP
Worrying aspect is debt servicing which now accounts for > 50% of
CAD
2005/6   consumer spending and  investment in mining capital to
capacity
Net foreign liabilities and Net foreign debt both grew to finance
CAD
Net foreign debt 30.9% of GDP (89/90) to 50.6% of GDP (2004/05)
last 10 years Av 43.8% of GDP
Net foreign liabilities  46% of GDP (89/90)
(04/05)
to 60.8% of GDP
HSC Econ syllabus worksheet
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What are the causes of external instability?








CAD
 foreign borrowing to
finance debt
Rising public sector
borrowing in 80/90s
Deteriorating balance of
trade  higher inflation
and  international
competitiveness
Falling commodity prices
80/90s  collapse in T/T
Saving / Investment Gap 
domestic saving unable to
finance all domestic
investment
 M volumes   protection
 exports  deteriorating
world econy, supply
constraints eg drought
 $A   debt servicing
commitments


Foreign debt
Persistent CAD

Investment by Australian bus
o/s   o/s debt
LT  $A
valuation effect

 Domestic savings

Federal budget deficits
 Why is low national saving a cause of CAD?
 The low national saving is a structural problem in the Australian
econy causing the CADs
 National saving is insufficient to finance domestic investment
National savings = public saving (by government) and private
saving
 Australia  relies increasingly on foreign saving to cover any
shortfall in national saving. Capital inflow  the foreign debt
which worsens CAD as Net income deficit 
 It is  argued that a way to  CAD was to national saving by 
the size of the budget deficit or  the budget surplus
Fitzgerald Report on National saving recommended the following to
boost saving:
 Eliminate budget deficit
 govt net debt to GDP ratio  privatization funds used to
retire debt
 Reform tax system
 Encourage private saving via superannuation
 Hawke govt  Superannuation Guarantee Levy  compulsory
superannuation
HSC Econ syllabus worksheet
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 Analyse the effect of a continued current account deficit on an economy
Financing successive CAD by borrowing o/s   debt servicing
commitment
Debt servicing costs  deterioration in CAD
CAD- foreign debt cycle
 CAD
 Net Y deficit
 Net foreign debt
 interest
Servicing costs
Only successive in CAD or retirement of debt obligations will
correct cycle
Pitchford Thesis
CAD and  Net Foreign debt is not a problem as long as the
borrowing is mainly private sector which borrow to invest in 
productive capacity which will  export income and is therefore
sustainable.
If o/s funds are used for recurrent expenditure , then this
unsustainable in LT
Note the Federal govt has shifted the emphasis of using FP to
correct a CAD, stating that in the medium term the budget will be
balanced to maintain and improve internal balance.
HSC Econ syllabus worksheet
Distribution of income and wealth
define Income
define wealth
What are the 2 measurements of distribution of Y and wealth?
Draw and explain the Lorenz curve
Draw and explain the Gini coefficient
•
Outline sources of income as a percentage of household income
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HSC Econ syllabus worksheet
•
What are the sources of wealth
•
Outline the dimensions and trends of inequality
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Dimensions and trends of inequality
Gender
age
Occupation
ethnic background
family structure
•
Outline economic and social costs and benefits of inequality
costs
Economic
social
Environmental management
•
What is ecologically sustainable development
benefits
HSC Econ syllabus worksheet
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What is intergenerational equity ?
•
Outline private and social costs and benefits of production— market failure
Costs
Benefits
Private
social
•
Distinguish between public and private goods
What are “ free riders”?
Examine the economic issues associated with the goal of ecologically sustainable development
1. Why are natural environments worth preserving
2. pollution control What is a ‘carbon tax’?
3. What are externalities ? Why are these costs not included in production costs?
HSC Econ syllabus worksheet
4. Distinguish between renewable and non-renewable resources
5. Depletion of renewable and non-renewable resources.
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10.4 HSC Topic Four — Economic Policies and Management
25% of indicative time
This topic focuses on the aims and operation of economic policies in the Australian economy and
hypothetical situations. The management of an economy is of central concern, including
contemporary Australian policies and alternative approaches.
Outcomes
A student:
H1
demonstrates understanding of economic terms, concepts and relationships
H2
analyses the economic role of individuals, firms, institutions and governments
H5
discusses alternative policy options for dealing with problems and issues in contemporary and
hypothetical contexts
H6
analyses the impact of economic policies in theoretical and contemporary Australian contexts
H7
evaluates the consequences of contemporary economic problems and issues on individuals,
firms and governments
H9
selects and organises information from a variety of sources for relevance and reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.
Content
Students learn to:
Examine economic issues
•
analyse the opportunity cost of government decisions to concentrate on solving specific
economic problems or issues
•
investigate structural changes in the Australian economy resulting from microeconomic reforms
•
apply economic theory to explain how a government could address an economic problem or
issue
Apply economic skills
•
explain how governments are restricted in the simultaneous achievement of economic objectives
•
use (simple) multiplier analysis to explain how governments can solve economic problems
•
analyse alternative ways to finance a budget deficit and their impact on the economy
HSC Econ syllabus worksheet
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•
•
•
•
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identify limitations on the effectiveness of economic policies
explain the impact of key economic policies on an economy
propose and evaluate alternative policies to address an economic problem in hypothetical and
the contemporary Australian contexts
explain, using economic theory, the general effects of macroeconomic and microeconomic
policies on an economy
select an appropriate policy mix to address a specific economic problem.
Students learn about:
Economic objectives in relation to:
•
economic growth
•
full employment
•
price stability
•
external stability
•
environment
•
distribution of income
Potential conflicts between objectives
The main policies available for economic management
Macroeconomic policies
•
rationale for macroeconomic policies — stabilisation and shifts in aggregate demand
Microeconomic policies
•
rationale for microeconomic policies including shifts in aggregate supply, efficiency
Fiscal policy
•
Federal Government Budgets and budget outcomes
•
effects of budgetary changes on resource use, income distribution and economic activity
•
methods of financing deficits
•
use of a surplus
Monetary policy
•
purpose of monetary policy
•
implementation of monetary policy — Reserve Bank of Australia
•
impact of changes in interest rates on economic activity, exchange rate
Structural change
•
effects of microeconomic policies on individual product and factor markets and the economy
•
regulation and deregulation
HSC Econ syllabus worksheet
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Trade policy
•
direct and indirect policies to promote or restrict trade
•
trade and industry policies in Australia
Prices and incomes policy
•
reasons for prices and incomes policies
•
possible prices and incomes policies in Australia
•
advantages and disadvantages of centralised and decentralised policies
Labour market policies
•
current industrial relations framework
– safety net, wage cases, enterprise bargaining, workplace agreements, individual contracts
– role of the courts, tribunals and the employment advocate
– arguments for and against the current mix of market and non-market forces used to
determine the returns to labour
•
work practices
•
dispute resolution
•
education and training, employment programs
Limitations on policy implementation
•
time lags
•
global influences
•
political constraints
Policy responses and their effects in dealing with the economic issues
•
economic growth
•
unemployment
•
inflation
•
external stability
•
distribution of income and wealth
•
management of the environment.
HSC Econ syllabus worksheet
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