Economics 2025 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 applicable, throughout the response with a clear connection to the question
• apply relevant economic information, terms, concepts, relationships and theory, where applicable, to support their response
• present a sustained, logical and cohesive response that addresses the question where applicable
• review their response to ensure that it addresses the question requirements.

Question 21

In better responses, students were able to:

• demonstrate a clear understanding of one role of the OECD and provide a specific example (a)
• describe in detail the limitations of using income as the sole measure of quality of life (b)
• recognise the traditional inverse relationship between economic development and environmental sustainability and/or that world economic development can also lead to increased international cooperation to improve environmental sustainability (c)
• incorporate case study material where relevant.

Areas for students to improve include:

• identifying the role of the OECD (a)
• demonstrating a clear understanding of the different components of the Human Development Index
• identifying the impact distribution of income can have on quality of life (b)
• demonstrating understanding that economic development can lead to improved environmental outcomes in the longer term due to increased awareness and international cooperation (c).

Question 22

In better responses, students were able to:

• demonstrate an understanding of a global factor that could cause the exchange rate movement shown, that is, a depreciation of the AUD (a)
• recognise that the exchange rate movement shown in the diagram was a depreciation in the value of the AUD (a)
• explain clearly the direct method of currency intervention known as ‘dirtying the float’ (b)
• provide a comprehensive discussion of the effects of a depreciation of a currency on domestic businesses (c).

Areas for students to improve include:

• distinguishing between global factors causing a change in an exchange rate and domestic factors causing such a change (a)
• identifying that the exchange rate movement was a depreciation resulting from decrease in demand for the AUD (a)
• identifying the difference between direct and indirect intervention in an exchange rate (b)
• demonstrating understanding of the effects of both a depreciation and an appreciation of an exchange rate on various sectors of an economy (c).

Question 23

In better responses, students were able to:

• outline clear reasons why a group may experience higher unemployment (a)
• identify a specific group which experienced higher unemployment (a)
• provide a valid reason for a decrease in the participation rate (b)
• use the data provided to justify a rise in unemployment, noting that unemployment had risen from below to above the NAIRU (c)
• demonstrate a comprehensive understanding of how two relevant policies could reduce the NAIRU, noting that supply side policies will shift the NAIRU, whereas demand expansion policies will reduce unemployment (d).

Areas for students to improve include:

• engaging with any provided data in their response (b,c,d)
• understanding the difference between unemployment and participation rates
• differentiating between policies which reduce unemployment and those which shift the NAIRU (d)
• identifying valid reasons for a fall in participation rates, rather than reasons for rising unemployment (b).

Question 24

In better responses, students were able to:

• use key economic objectives such as price stability, full employment and stabilisation of economic activity when outlining the purpose of monetary policy (a)
• demonstrate a comprehensive understanding of at least two impacts on an economy of a decrease in the cash rate (c).

Areas for students to improve include:

• clearly recognising the purpose of monetary policy and how it is different from the mechanism used to apply monetary policy in Australia (a)
• using precise economic terms, for example ‘money supply’ rather than ‘AUD’ to avoid confusion of maintaining the cash rate with changes in exchange rates (b)
• understanding the definition of the cash rate and its relationship with interest rates.

Question 25

In better responses, students were able to:

• explain clearly the cyclical and structural reasons affecting both trends and composition of the Balance of Payments
• explain clearly the relationship between the financial account and the net primary income section of the current account
• explain trends (changes over time) impacting the various elements of the Balance of Payments, such as balance of goods and services, net primary income and the financial account
• demonstrate a clear understanding of the various factors which can impact the Balance of Payments, such as the terms of trade, international competitiveness, foreign investment and overseas borrowing.

Areas for students to improve include:

• understanding all the elements that make up the Balance of Payments, rather than just the current account
• understanding the inverse relationship between the two sides of the Balance of Payments, that is, between the current account and the capital and financial account
• distinguishing between trends (changes over time) in the Balance of Payments and reasons for these trends.

Question 26

In better responses, students were able to:

• integrate the dimensions and trends with the related effects on the Australian economy instead of compartmentalising responses into dimensions or effects
• provide reasons for the presence of dimensions of inequality and use these reasons to explain the nature of the effects on the Australian economy
• elaborate on the relationships between the primary and secondary effects of inequality and the broader impacts on the Australian economy
• support their arguments with relevant theory, illustrative examples and statistical evidence about the dimensions, trends and effects of inequality in Australia.

Areas for students to improve include:

• incorporating relevant ideas and evidence about dimensions and trends beyond the stimulus items on age and gender
• using economic terminology relevant to economic inequality and avoiding general language, unsubstantiated opinions and personal anecdotes
• responding specifically to the dimensions and effects of inequality, rather than reinterpreting it as a question on the causes of inequality and the policy responses to address inequality.

Question 27

In better responses, students were able to:

• demonstrate clear understanding of how the government pursues economic objectives, including the use of different policies
• relate comprehensively how different economic objectives may conflict with each other
• demonstrate analysis through relevant examples, deeper explanations and graphs, integrating relevant, correctly drawn and labelled diagrams (such as the Phillips curve or a PPC curve) to support the theoretical explanation of conflict
• provide examples from the Australian economy that add context to the analysis, such as referring to specific policy decisions by the Reserve Bank of Australia (RBA) or government spending that highlighted the prioritisation of one objective over another.

Areas for students to improve include:

• supporting statements with evidence and relevant data from the Australian economy
• clearly identifying and defining the separate objectives being analysed for conflict
• analysing the cause of the conflict, for example, resource constraints, aggregate demand pressures, rather than just stating that a trade-off exists
• integrating relevant economic theory and policies causing the conflict.

Question 28

In better responses, students were able to:

• draw out the implications of various methods of protection
• support the implications with evidence from Australian firms and government
• apply relevant economic terms, concepts and relationships relating to protection
• use diagrams to support the analysis of the methods of protection.

Areas for students to improve include:

• developing an analysis, rather than an explanation, of the methods of protection
• applying an analysis specifically to Australian firms and government, rather than the broader economy
• supporting statements with evidence relating to protection, rather than free trade
• referring specifically to diagrams that have been included in the response.