Economics 2021 HSC exam pack

Students should:

• read the question carefully to ensure that they do not miss important components of the question
• have a clear understanding of key words in the question and recognise the intent of the question and its requirements
• use the first page of the answer booklet for an extended response to develop a plan to assist in the logical sequencing of information
• engage with what the question is asking rather than presenting a pre-prepared response
• relate to the question throughout the response rather than just at the beginning
• sustain their judgements, where appropriate, throughout the response with a clear connection to the question
• apply relevant economic information, terms, concepts, relationships and theory, where appropriate, to support their response
• present a sustained, logical and cohesive response that addresses the question where appropriate
• review their response to ensure that it addresses the question requirements.

Question 21

In better responses, students were able to:

• outline one influence of the G20 on the global economy in a concise manner (a)
• define both a trading bloc and a monetary union with clear characteristics (b)
• identify two or more economic development strategies used by an economy other than Australia (c)
• describe two or more strategies used to promote economic development in an economy other than Australia (c)
• provide clear judgement and links on the extent to which the strategies were successful or unsuccessful in promoting economic development impacting the quality of life in an economy other than Australia (c)
• integrate data into the response to support the clear judgement that was made (c).

Areas for students to improve include:

• knowing how the G20 may influence the global economy in providing solutions to global economic issues (a)
• understanding that a trading bloc is a ‘preferential’ trade agreement with trade liberalisation within that bloc and a monetary union has characteristics such as a common currency and coordinated monetary policy (b)
• not confusing economic growth with economic development (c)
• using relevant data on the quality of life rather than on quantitative economic growth to demonstrate economic development (c)
• being able to evaluate the effectiveness or two or more strategies used in promoting development with reference to positive or negative data rather than stating the policy or describing the strategy.

Question 22

In better responses, students were able to:

• draw a straight line to the left of the private cost curve (a)
• explain how one specific market-based policy has or could affect environmental sustainability including the actual or possible impact of the policy on price and quantity
• refer to data to demonstrate the example, such as the Carbon Tax leading to an increase in price and a decrease in quantity (b)
• explain, with supporting data, two or more limitations of economic policies such as market based and regulations, on Australia being able to achieve environmental sustainability.

Areas for students to improve include:

• ensuring all parts of the question are addressed, for example, not leaving the graph bare or knowing a negative shifted the supply curve to the left
• knowing the definition of market-based policies rather than commenting on regulations, targets or even monetary and fiscal policies and recognising the link with market-based policies to price and quantity (b)
• following the specific instruction in the question by writing about more than one limitation in respect to more than one economic policy and knowing what they are from the syllabus (c).

Question 23

In better responses, students were able to:

• outline clear links between increasing the minimum wage, raising costs for firms and passing these on through higher prices resulting in cost push inflation (a)
• offer a comprehensive explanation of low inflation and clearly link this to its effects, providing clear cause and effect relationships and referring to the Australian economy throughout the response (b)
• demonstrate a comprehensive understanding of the process of microeconomic policies addressing supply constraints within the labour market to reduce the NAIRU (c)
• provide at least one Australian example to demonstrate how a micro economic policy could address skills mismatches or limitations, such as a lack of education and/or training, to reduce the NAIRU (c).

Areas for students to improve include:

• demonstrating an understanding of factors that may cause cost-push rather than demand-pull inflation (a)
• knowing the difference between low inflation within the target band, low inflation below the target band and deflation (b)
• clearly explaining what the NAIRU is and how it can be reduced with explicit reference to the Australian economy (c)
• explaining the links between the concepts rather than just identifying or sketching them (b, c).

Question 24

In better responses, students were able to:

• clearly link an increase in global protection to a decrease in trade and, therefore, a decrease in demand for Australia’s exports and hence a decrease in demand for the Australian dollar (a)
• give an accurate definition for the trade weighted index (TWI) stating that the US dollar or the Australian dollar is a bilateral comparison. They were also able to clearly explain that, whilst the US dollar is one of the countries in the TWI, the volume of trade with the US is low compared to Australia’s major trading partners such as China and Japan (b)
• analyse effects, both positive and negative, of an appreciation of the AUD with clear and detailed links, which were then related to the impact on the Australian economy, for example, leakages would exceed injections and so Aggregate Demand and economic growth would fall, or improvement in external stability due to valuation effect, or even higher living standards due to greater variety of low-cost imports (c).

Areas for students to improve include:

• demonstrating their understanding of the link between increasing protectionist policies, trade and demand for the Australian dollar rather than simply stating there would be less demand, or the Australian dollar would depreciate (a)
• not confusing the trade weighted index (TWI) with the customer price index and incorrectly referring to a basket of goods and services rather than a basket of currencies of our major trading partners (b)
• clearly answering the question asked regarding how the Australian dollar can both appreciate against the US dollar and depreciate against the TWI at the same time (due to varying volumes of trade) (b)
• knowing the effects of an appreciation of the Australian dollar in detail and not confusing these with a depreciation (c)
• following the key word ‘analyse’ in respect to effects of an appreciation on the Australian economy (c).

Question 25

In better responses, students were able to:

• address all three objectives: unemployment, income distribution and external stability
• make a judgement on all three objectives
• effectively use relevant data to support their evaluations of effectiveness
• integrate the stimulus provided in their response and use additional knowledge to present a sustained response
• demonstrate understanding of fiscal policy using relevant economic terms and concepts.

Areas for students to improve include:

• integrating references to the stimulus material rather than just rewriting some of the stimulus as part of their answer
• linking statements to the question
• using the information and data supplied to support their response as directed.

Question 26

In better responses, students were able to:

• use the stimulus to comprehensively explain the effectiveness of expansionary and contractionary monetary policy on economic growth
• explain the many limitations of monetary policy on economic growth, income distribution and external stability
• identify and expand on the indirect relationship between monetary policy and its effectiveness on income distribution and external stability.

Areas for students to improve include:

• developing a cohesive response using separate paragraphs to elaborate on an evaluation of each aspect required in the question
• using the stimulus graph to articulate where and why monetary policy has been effective in relation to economic growth
• knowing the limitations of monetary policy and explaining how these impact on its effectiveness
• exploring those limitations to make a well-informed, logical judgement of the effectiveness of monetary policy with respect to economic growth in Australia.

Question 27

In better responses, students were able to:

• integrate the theory underpinning protectionist policies with illustrative examples from the global economy
• form judgements of the global effects of free trade agreements and protectionist policies supported by relevant evidence, including statistics
• integrate an assessment of the effects of a range of different contemporary free trade agreements and protectionist policies.

Areas for students to improve include:

• relating the effects of free trade agreements and protectionist policies on Australia to the wider global economy if they refer to Australian examples
• expressing judgements about the effects of free trade agreements and protectionist policies
• providing logical reasoning for judgements made
• addressing the topic of free trade agreements directly rather than discussing the phenomenon of globalisation more generally
• referring to formal trade agreements and any relevant statistics included accurately.

Question 28

In better responses, students were able to:

• provide a clear understanding of the differences between trade and financial flows
• offer a detailed assessment of how a variety of changing global factors influenced Australia’s trade and financial flows over the past 10 years
• establish good links between concepts
• substantiate economic theory with relevant examples and accurate data and statistics
• address the relevant time frame and refer to the question
• effectively integrate well drawn and labelled diagrams.

Areas for students to improve include:

• using economic terms rather than general terms, for example, referring to ‘direct foreign investment’ rather than just ‘money’
• linking together concepts to demonstrate deeper understanding, for example, the Balance of Goods and Services, the Current Account balance, and the Capital and Financial Account balance
• specifically addressing the focus of the question and its timeframe and not adding irrelevant material
• covering all parts of the question and supporting points with examples or data to add depth to the response.