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NCEA Level 2 Economics (90795) 2011 — page 1 of 5 Assessment Schedule – 2011 Economics: Describe international trade and its causes and effects using economic models (90795) Evidence Statement Question ONE (a) (b) (c) Evidence Achievement TWO of: See Appendix One The WTO ruling will result in imports into Australia of New Zealand apples. This will reduce the price of apples in Australia from PA to PT. The imports and lower price will result in a lower quantity supplied by Australian growers and lower incomes. The ruling will result in increased exports of apples from New Zealand. This will increase the price of apples in New Zealand from PNZ to PT. The exports and higher price will result in greater quantity supplied by New Zealand growers and greater incomes. The higher price (PT) that results from the trade will mean that New Zealand consumers will need to pay that higher price to compete with Australian consumers for the same apples. This results in a decrease in quantity demanded by New Zealand consumers. PT, X and M correctly identified Price / Quantity supplied / income falls in Australia Price / Quantity supplied / income rises in New Zealand. Merit Excellence General explanation of TWO of: In-depth explanation of BOTH of: the impact on Australian apple growers the impact on New Zealand apple growers the impact on New Zealand apple growers the impact on New Zealand consumers AND the impact on New Zealand consumers. a direct and accurate reference to the two-country model. NCEA Level 2 Economics (90795) 2011 — page 2 of 5 Question TWO (a) (b) (c) Evidence Achievement TWO of: See Appendix Two New Zealand has a comparative advantage in food production as each food unit has a lower opportunity cost of 0.4 car units than India where each food unit has an opportunity cost of 0.87 car units. When overseas investment funds come into New Zealand this has the impact of putting the Financial Account into surplus to offset the Current Account deficit. These funds will be supplied in return for interest or profit / dividends. The increase in overseas investment funds will most likely result in an increase in the outflow of interest / profit / dividends which is a Balance on Income outflow. This increased outflow is likely to increase any Current Account deficit. X and M correctly illustrated for India and New Zealand New Zealand has a comparative advantage in food production the financial account is directly affected by overseas investment funds. Merit Excellence General explanation of TWO of: In-depth explanation of BOTH: why New Zealand has a comparative advantage in food production the effect of overseas investment on the financial account the effect of overseas investment funds on the Current Account. the impact on the financial account the impact on the Current Account AND explains the link between financial and the current account. NCEA Level 2 Economics (90795) 2011 — page 3 of 5 Question THREE (a) (b) (c) Evidence Achievement TWO of: See Appendix Three If there is a negative impact on the reputation of New Zealand grown kiwifruit, then there would likely be a decrease in the world demand for New Zealand kiwifruit. The decrease in demand will result in a decrease in the price New Zealand gold kiwifruit exporters will receive. The loss of gold kiwifruit production will shift the S curve to the left. As there is no change in New Zealand demand or the world price, the decrease in S will result in a decrease in exports and export income. The fall in exports and production will mean that BOP gold kiwifruit growers will earn less income, although this will only be the case for those growers whose vines are affected. The loss of income for the growers will mean that they have less money to spend on consumption and investment. Therefore other BOP businesses that supply the industry, or earn part of their income from the consumption of growers and their workers, will face lower sales and income. Hence less will be produced due to the lower demand for their goods and services. The overall impact will be a reduction in the GDP of the BOP region. S curve is shifted to the left and labelled, and X is correctly shown Decrease in the price New Zealand gold kiwifruit exporters will receive Merit Excellence General explanation of TWO of: In-depth explanation of ALL of: the decrease in the price New Zealand gold kiwifruit exporters will receive the impact on BOP gold kiwifruit growers of decreased exports the impact on BOP gold kiwifruit growers the impact on other BOP businesses the impact on other BOP businesses. the impact on the region’s GDP. Exports will decrease and BOP gold kiwifruit growers and other BOP business will lose income. Judgement Statement Achievement Achievement with Merit Achievement with Excellence Minimum of: 2A Minimum of: 2M Minimum of: 2E NCEA Level 2 Economics (90795) 2011 — page 4 of 5 Appendix One The two-country model New Zealand apple market Price Price Australian apple market S PA S X PT M PNZ D D QA Appendix Two Quantity QNZ Quantity NCEA Level 2 Economics (90795) 2011 — page 5 of 5 Appendix Three