Download Task 1 - Circular flow and economic management

Stage 2 Economics
Assessment Type 1: Skills and Application Task
Circular Flow and Economic Management (45 marks)
Purpose
This task is designed to give you the opportunity to demonstrate skills and conceptual
understanding in relation to the circular flow model and economic management.
Description of assessment
Refer to the source material and answer the questions that follow. Use diagrams to
support your answers.
Assessment conditions
Supervised. Open book. – class time. You will have one week to complete this
assessment task.
Learning Requirements
Assessment Design Criteria
1. know, understand, communicate, and
apply economic concepts, principles,
models, and skills
Knowledge and Understanding
The specific features are as follows:
KU1 Knowledge, understanding, and
application of economic concepts,
principles, models, and skills.
KU2 Understanding of the role of economic
systems in dealing with the economic
problem of scarcity.
Analysis and Evaluation
The specific features are as follows:
AE1 Analysis and evaluation of economic
issues and events (past and current)
using economic models and the skills
of economic inquiry.
AE2 Evaluation of the effects of
interdependence on individuals,
business, and government, locally,
nationally, and globally.
AE3 Analysis and evaluation of the impact
of economic change locally,
nationally, and globally.
AE4 Evaluation of the way in which
economic decisions involve costs and
benefits.
Communication
The specific features are as follows:
C1
Communication of economic
principles, models, and concepts.
C2
Use of economic terminology.
2. explain the role of economic systems in
dealing with the economic problem of
scarcity
3. evaluate the effects of interdependence
on individuals, business, and
governments locally, nationally, and
globally
4. evaluate and explain the way in which
economic decisions involve costs and
benefits
5. critically analyse and evaluate economic
issues and events (past and current)
using economic models and the skills of
economic inquiry
6. critically analyse and evaluate the impact
of economic change locally, nationally,
and globally.
Page 1 of 3
Use of diagrams
provides students
with the
opportunity to
demonstrate their
ability to
communicate in
different formats.
Stage 2 Economics Task
Ref: A303711 (January 2014)
© SACE Board of South Australia 2014
Performance Standards for Stage 2 Economics
A
Knowledge and
Understanding
Analysis and Evaluation
Communication
Comprehensive knowledge, indepth understanding, and
focused application of complex
economic concepts, principles,
models, and skills.
Astute and logical analysis and evaluation of economic issues and
events (past and current) using economic models and the skills of
economic inquiry.
Sophisticated communication of
economic principles and models,
and complex concepts.
Perceptive evaluation of the effects of interdependence on
individuals, business, and government locally, nationally, and
globally.
Consistent, clear, and
appropriate use of correct
economic terminology.
Comprehensive and wellinformed understanding of the
role of economic systems in
dealing with the economic
problem of scarcity.
B
Some depth of knowledge and
understanding, and focused
application, of a variety of
economic concepts, principles,
models, and skills.
Well-informed understanding
of the role of economic
systems in dealing with the
economic problem of scarcity.
Incisive analysis and evaluation of the impact of economic change
locally, nationally, and globally.
Insightful and well-informed evaluation of the way in which economic
decisions involve costs and benefits.
Well-considered analysis and evaluation of economic issues and
events (past and current) using economic models and the skills of
economic inquiry.
Well-considered evaluation of the effects of interdependence on
individuals, business, and government locally, nationally, and
globally.
Clear and accurate
communication of economic
principles and models, and a
variety of concepts.
Clear and appropriate use of
economic terminology.
Well-informed analysis and evaluation of the impact of economic
change locally, nationally, and globally.
Well-informed evaluation of the way in which economic decisions
involve costs and benefits.
C
Considered knowledge and
understanding, and competent
application, of economic
concepts, principles, models,
and skills.
Informed understanding of the
role of economic systems in
dealing with the economic
problem of scarcity.
Considered analysis and evaluation of economic issues and events
(past and current) using economic models and the skills of economic
inquiry.
Competent communication of
some economic principles,
models, and concepts.
Considered evaluation of the effects of interdependence on
individuals, business, and government locally, nationally, and
globally.
Appropriate use of economic
terminology.
Informed analysis and evaluation of the impact of economic change
locally, nationally, and globally.
Informed evaluation of the way in which economic decisions involve
costs and benefits.
D
Superficial understanding and
partial application of some
basic economic concepts,
principles, models, and skills.
Some recognition of the role of
economic systems in dealing
with the economic problem of
scarcity.
Basic consideration and description of one or more economic issues
and/or events (past and current) using some skills of economic
inquiry.
Communication of some basic
economic principles, models,
and concepts.
Basic consideration and description of one or more of the effects of
interdependence on individuals, business, and government locally,
nationally, and globally.
Some appropriate use of some
economic terminology, with
inconsistencies.
Recognition of aspects of the impact of economic change locally,
nationally, and globally.
Some awareness of the way in which economic decisions involve
costs and benefits.
E
Identification and attempted
application of one or more
basic economic concepts,
principles, models, or skills.
Limited recognition of the role
of economic systems in
dealing with the economic
problem of scarcity.
Emerging awareness of one or more economic issues or events
(past and current), with limited use of skills of economic inquiry.
Limited recognition of one or more of the effects of interdependence
on individuals, business, and government locally, nationally, and
globally.
Attempted communication of
one or more simple economic
principles, models, or concepts.
Limited use of economic
terminology.
Emerging recognition of an aspect of the impact of economic change
locally, nationally, and globally.
Limited awareness of the way in which economic decisions involve
costs and benefits.
Page 2 of 3
Stage 2 Economics Task
Ref: A303711 (January 2014)
© SACE Board of South Australia 2014
Stage 2 Economics
Assessment Type 1: Skills and Application
Circular Flow and Economic Management
Refer to the following information
You are the Treasurer of a medium sized country whose economy has been suffering a slowdown in
economic growth with GDP growth falling from 4.5% twelve months ago to just 0.2% at the current
time. Unemployment has begun to increase and business investment has declined. Productivity
growth has also slowed and there has been a gradual increase in imports over the past two years.
Using your knowledge of the circular flow model and the different policy options available to the
government complete the following tasks.
1. The following policies have been suggested to help this economy recover.
1. Increase interest rates
2. Special tax cuts to support new businesses
3. Increased welfare payments to pensioners
4. Decreased interest rates
5. Decreased personal tax rates for high income earners only
6. Lower taxes on imports (tariffs)
7. Increased government spending on infrastructure
8. Special payments to new home buyers
9. Cuts in spending on education
10. Government to employ more teachers, nurses and police
11. Increased taxes on imports (tariffs)
12. Grants and tax deductions for export industries
13. Payroll tax rebates for industries that employ more workers
14. Increased personal income tax
15. Increased tax on luxury items
a) Divide the policies under two headings. Appropriate/ Not Appropriate given current
economic conditions. Briefly explain why you selected each policy as appropriate or not
appropriate. Name the type of policy involved and use the terms contractionary or
expansionary in your explanation.
(30)
b) Using your knowledge of the circular flow of income model explain which two of the
policies that you listed as appropriate, would have the greatest expansionary effect on the
economy in question. Clearly identify which money flows are affected and which sectors are
most affected. Discuss possible problems that might be associated with the policy and any
differences between the short term and long term effects. Use a diagram and refer to the
expenditure multiplier in your answer.
(10)
c)
Explain why the use of a range of economic policies might be the best approach to economic
management for this economy.
(5)
Additional Comments
This task is structured such that students have the opportunity to demonstrate achievement at all levels against the
performance standards.
Part (a) requires a straightforward classification of policies. Students are directed to use specific terms in brief
explanations.
Part (b) requires students to demonstrate skills of analysis and evaluation but provides detailed instructions which
support students in focusing on key points in their response.
Part (c) is open-ended with no scaffolding provided. This allows students to demonstrate achievement in the specific
features at the highest level.
Page 3 of 3
Stage 2 Economics Task
Ref: A303711 (January 2014)
© SACE Board of South Australia 2014