2011 economics prelim es.pdf

8/11/2019 2011 Economics Prelim ES.pdf

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2011PRELIMINARY

EXAMINATION PAPER

Economics

General Instructions

Reading Time 5 minutes

Working Time 2 hours

Write using black or blue pen

Board-approved calculators

may be used

Write your Student Number at

the bottom of this page

Total Marks - 80

Section I Pages 27

20 marks

Attempt Questions 120

Allow about 20 minutes for this section

Section II Pages 811

20 marks

Attempt both Question 21 and Question 22


Section III Page 1213

20 marks Attempt either Question 23 or Question 24


Section IV Page 14

20 marks

Attempt either Question 25 or Question 26


THIS PAPER CANNOT BE RELEASED IN PUBLIC UNTIL AFTER 21st SEPTEMBER 2011This paper is used with the understanding that it has a Security Period.

Student Number: __________________________________

2011Preliminary PaperDisclaimer: This paper is written as a Preliminary

paper. It is designed to provide practice consistent

with the demands of the Preliminary course and its

examination. However, we do not guarantee it

predicts question content for a students actualPreliminar examination.


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Economics Preliminary 2011

Total Education Centre 2011 2

Section I

20 marksAttempt Questions 120


Use the multiple-choice answer sheet for Questions 120.

1 When are two goods A and B considered to be complementary?

(A) A rise in the price of A causes demand for B to increase

(B) A rise in the price of A causes demand for B to decrease

(C) A rise in the price of A causes no change in demand for B

(D) Income elasticity of demand for both goods are positive

2 What is a characteristic of perfect competition?

(A) A single firm produces the entire industry output.

(B) There is product differentiation.

(C) There is a low degree of competition.

(D) Each firm produces a homogeneous product.

3 What is productivity?

(A) Total production of goods and services

(B) Gross Domestic Product

(C) Output per unit of input

(D) One of the factors of production

4 Which of the following are included in the sources of income?

(A) Price, salaries, wages, interest

(B) Profits, interest, rent, wages

(C) Output

(D) Salaries


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5 What will happen to total consumer outlay if demand for a good is relatively priceinelastic?

(A) A rise in price will lead to a fall in total consumer outlay.

(B) A fall in the price will lead to a rise in total consumer outlay.

(C) A rise in the price will lead to no change in total consumer outlay.

(D) A fall in price will lead to a fall in total consumer outlay.

6 The following data is for an economy whose equilibrium level of income is given bythe equation Y= C + I + G + X - M

YEAR 1 YEAR 2 YEAR 3

Gross Domestic ProductPrivate Consumption

InvestmentGovernment Spending

500340

40140

530350

50120

560390

50130

In what year is there a leakage in the circular flow of income?

(A) Year 1 only

(B) Year 2 only

(C) Year 1 and 3

(D) Year 2 and 3

7 Which of the following is most likely to provide the greatest stimulus to domesticemployment and output in the short run?

(A) Decreased interest rates, decreased income tax rates and increased governmentexpenditure

(B) Decreased interest rates, increased income tax rates and decreased governmentexpenditure

(C) Increased interest rates, increased income tax and decreased government

expenditure

(D) Decrease interest rates, decreased income tax rates and decreased governmentexpenditure

8 What is the central problem that is faced by any economy?

(A) To distribute goods and services fairly

(B) To satisfy the unlimited wants with the limited resources

(C) To satisfy the limited wants with the unlimited resources

(D) To distribute resources between competing users


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9 This table shows the output of a firm using two inputs, labour and capital.

Labour

(units)

Capital

(units)

Output

(units)

100

200

20

40

100

180

What is the firm experiencing?

(A) Constant returns to scale

(B) Decreasing returns to scale

(C) Increasing returns to scale

(D) Short run period

10 Which policies does the Australian government use to redistribute income?

(A) Competition and environmental policies

(B) Monetary and Fiscal policy

(C) Taxation policy and social security transfers

(D) The provision of goods and services by public trading enterprises

11 When would the level of hidden unemployment tend to rise?

(A) The level of economic activity falls

(B) The level of economic activity rises

(C) The level of technology falls

(D) The level of technology rises


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12 This is a production possibility curve.

What is the opportunity cost of producing the first 200 cars on PPC1?

(A) One hundred computers

(B) One hundred and twenty five computers

(C) Two hundred computers

(D) Two hundred and seventy five computers

13 Which of the following is an example of a product market?

(A) The market for capital goods

(B) The market for motor vehicles

(C) The market for investment

(D) The financial market

14 Which group would be most burdened when an indirect tax is placed on a good that isrelatively inelastic?

(A) The consumers of the good

(B) Producers and consumers

(C) The producers of the good(D) The government

PPC 1

CARS400

200

0

100 125 200 400

COMPUTERS

X

Y

PPC


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15 What is the most common way by which wages are increased in Australia?

(A) The safety net increases

(B) Individual workplace agreements

(C) Industrial awards

(D) Enterprise bargaining agreements

16 The inability of the price mechanism to provide public goods is an example of whichof the following?

(A) Private costs

(B) Social costs

(C) Market failure(D) Externalities

17 This table is a simple income-tax schedule.

Taxable income Marginal tax rate

$1 - $25 000 20%

$25 001 - $35 000 30%

$35 001 - $50 000 40%$50 000 and over 50%

What is the approximate average rate of tax for an individual with a taxable income of$40 000?

(A) 5%

(B) 11%

(C) 22%

(D) 31%

18 A bank advertises a nominal interest rate of 7.5% on a savings account and theinflation rate is 2.5%.

Which of the following indicates the real rate of interest paid on the savings account?

(A) 10%

(B) 7.5%

(C) 5%

(D) 2.5%


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19 What is the quantity of money that exists in the economy at any given time called?

(A) Broad money

(B) Money base

(C) Money supply

(D) M3

20 What is the ultimate objective of monetary policy?

(A) to control inflation

(B) to control money supply growth

(C) to achieve non-inflationaryeconomic growth

(D) to supervise banking operations


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Section II

20 marks

Attempt Questions 21 22


Answer the questions in the spaces provided.

Question 21(10 marks)

The graph below represents Australians Household Savings Ratio.

(a) Describe the trend in the savings ratio from 2002 onwards. 2

(b) Explain the TWO components that make up consumer income. 2

Question 21 continues on page 9
http://www.rba.gov.au/chart-pack/household-sector.html


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Question 21 (continued)

(c) Explain TWO reasons why consumers may want to increase their savings. 2

(d) Discuss the impact of increased savings on the circular flow of income. 4

End of Question 21


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The following diagram shows the demand and supply of a particular good.

(a) Identify the current equilibrium price and quantity. 1

(b) Explain why the price 0X could not be maintained. 2

Question 22 continues on page 11


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Question 22 (continued)

(c) (i) The government places a price floor by entering the market as a buyer.

Identify the amount it would purchase. 1

(ii) Explain why the government may not want to intervene in the marketplace.

2

(d) Describe TWO factors that could shift the demand curve to the right. 2

(e) Explain what would happen to the supply curve when the demand curve shifts tothe right.

2

End of Question 22


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Section III

20 marks



____________________________________________________________________________

In your answer you will be assessed on how well you:

demonstrate knowledge and understanding relevant to the question

use the information provided

apply relevant economic terms, concepts, relationships and theory

present a sustained, logical and cohesive response


Describe the different types of budget outcomes used by the Australian government and

explain the budgets main economic functions.

Source: Australian Treasury

OR

Budgets must keep stimulus and investment flowingto support the economy in tough times, and lock insavings that will get us back to surplus when thetough times have passed. We must do this whilealso making the essential long-term investments thatput in place the building blocks of a more productiveand competitive economy into the future.
http://www.rba.gov.au/chart-pack/government.html


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Preliminary Economics 2010

Total Education 2011 13


Discuss the current changes in Australias labour market and their impact on the demand andsupply of labour.

Source: ABS

Source: ABS

Unemployment Rate

Employed Persons

Labour is a key input to economic activity.Availability, quality and flexibility of labour inputs areimportant influences on decision making by business.


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Total Education 2011 14

Section IV

20 marks



In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question apply relevant economic information, terms, concepts, relationships and theory present a sustained, logical and cohesive response


Examine the role of government in achieving economic and social goals in an Asian economy.

OR


The Reserve Bank has a significant role in the economy.

Examine its role in determining the cash rate and its influence on interest rates and the level ofeconomic activity.

End of paper


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Economics Preliminary Total Education 2011

Section I Multiple Choice Answer Sheet

Student Number/Name

2011 ECONOMICS PRELIMINARY EXAMINATION

Section I Answer Sheet

20 marks

Attempt Questions 1 20


Select the alternative A, B, C, or D that best answers the question. Fill in the response circlecompletely.

1 A B C D

2 A B C D

3 A B C D

4 A B C D

5 A B C D

6 A B C D

7 A B C D

8

A

B

C

D9 A B C D

10 A B C D

11 A B C D

12 A B C D

13 A B C D

14 A B C D

15 A B C D

16 A B C D

17 A B C D

18 A B C D

19 A B C D

20 A B C D


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Total Education 2011 1 Prelim Economics Marking Guidelines

2011 Preliminary Economics Marking Guidelines

MULTIPLE CHOICE ANSWERS

Correct answer and nature of question

1 B Demand and Supply 11 A - Labour

2 D - Firms 12 D Economic Problem

3 C - Productivity 13 B - Markets

4 B Sources of Income 14 A - Markets

5 D Demand 15 D Labour

6 B Circular Flow 16 C Markets

7 A Financial 17 C - Government

8 B Economic Problem 18 A Finance

9 B Labour 19 C Finance

10 C - Government 20 A - Finance

Question 21 (10 marks)

(a) (1 marks)

Outcomes Assessed: P1Describe the trend in the savings ratio from 2002.

Criteria Marks

Identifies and gives an explanation in the savings ratio 2

Identifies the trend in the savings ratio 1

Sample answer Upward trend from a negative in 2002 (disavings of negative 2-3%) to about 10% in

2010

(b) (2 marks)

Outcomes Assessed: P1Explain the TWO components that make up consumer income.

Criteria Mark

Identifies and explains the two relevant components 2

Explains one OR lists two components 1Answer suggestions

An explanation of the two components Y=C+S

(c) (2 marks)

Outcomes Assessed: P2Explain TWO reasons why consumers may want to increase their savings.

Criteria Mark

Explains two valid reasons 2

Explains one valid reason or lists two 1Answer suggestions

Reasons for increasing savings could include fear of job losses, global recession,

increasing interest rates


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(d) (4 marks)Outcomes Assessed: P7Discuss the impact of increased savings on the circular flow of income.

Criteria Mark

Provides in detail the effects of a savings on the circular flow of income 3-4

Outlines briefly how savings can impact on the circular flow of income 1-2Sample answer

Savings is a leakage and therefore any increase in savings will reduce consumptionspending which will reduce production and employment and further reduce income. Ifthis leakage is matched by and injection such as investment then the level of economicactivity will increase


(a) (2 mark)

Outcomes Assessed: P8

Identify the current equilibrium price and quantity.

Criteria Mark

Correctly identifies the equilibrium price and quantity 1

Sample answerP-price, B-quantity

(b) (2 marks)

Outcomes Assessed: P8Explain why the price 0X could not be maintained.

Criteria Mark

Provides a valid explanation why this price could not be maintained 2

Lists a reason 1

Sample answer

Excess supply exists (AYZC) not enough demand. This means suppliers are unable to sellthe goods and prices must fall. Thus there will be an extension in demand and acontraction in supply.

(c) (3 marks)

Outcomes Assessed: P8, P11If the government placed a price floor by entering the market as a buyer, identify the amount itwould purchase. Explain why the government may not want to intervene in the market place.

Criteria Mark

Identifies the price floor and explains why the government will not interfere 2-3

May identify the price floor, very limited explanation 1

Answer suggestions

Price floor -0X

Government would not wish to distort the market by placing a price floor as this leadsto a misallocation of resources.


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(d) (2 marks)Outcomes Assessed: P3Describe TWO factors that could shift the demand curve to the right.

Criteria Mark

Provides a description of two valid factors 2

Describes one valid factor OR lists two 1Answer suggestions

Valid factors include increase in taste, increase in income, price of complementary

goods fall, price of substitutes rise, increase in population

(e) (2 marks)

Outcomes Assessed: P1Explain what would happen to the supply curve when the demand curve shifts to the right.

Criteria Mark Provides a valid explanation of the change in the supply curve 2

Lists a reason for this movement 1

Answer suggestions

There is an extension in supply more will be supplied at a higher price


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Outcomes Assessed: P1, P2, P5, P7, P8, P9, P10

Describe the different types of budget outcomes used by the Australian government andexplain the budgets main economic functions.

MARKING GUIDELINES

Criteria Marks

Demonstrates a clear and concise knowledge and understanding of different

types of budget outcomes and explains their main economic functions

Integrates appropriate economic terms, relevant concepts, relationships and

theory

Synthesises own information with the information provided to develop a

sustained, logical and cohesive response

17-20

Demonstrates clear knowledge and understanding of different types of

budget outcomes and explains their main economic functions.

Consistently uses appropriate economic terms, relevant concepts,

relationships and theory

Uses own information and the information provided to develop a logical and

cohesive response

13-16

Describes of different types of budget outcomes and explains their economic

functions

Uses some of the information provided

Uses appropriate economic terms, concepts and relationships

Uses own information and the information provided to develop a coherent

response

9-12

Outlines types of budget outcomes and explains some economic functions

Uses some appropriate economic terms, concepts and relationships

Uses information to develop a generalised response

5-8

Makes some mention of budget outcomes and limited outline of their

functions Uses some economic terms and/or concepts

Presents a limited response

1-4

Answers could include

Government Budget deals with the governments expenditure and revenue

Describes the types of budget outcomes surplus, deficit, balanced, also include

expansionary and contractionary budgets

Main economic functions included internal balance (during the global financial

crisis), external balance, redistribution of income, resource allocation, ecologicalsustainable development, sustainable economic growth


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Outcomes Assessed: P1, P2, P3, P7, P8, P9, P10

Discuss the current changes in Australias labour market and its impact on the demand forand supply of labour.

MARKING GUIDELINES

Criteria Marks

Demonstrates a clear and concise knowledge and understanding of the

changes in Australias labour market and its impact on the demand for

and supply of labour

Integrates appropriate economic terms, relevant concepts, relationships

and theory

Synthesises own information with the information provided to develop

a sustained, logical and cohesive response

17-20

Demonstrates clear knowledge and understanding of the changes in

Australias labour market and its impact on the demand for and supplyof labour



Uses own information and the information provided to develop a

logical and cohesive response

13-16

Describes the changes in Australias labour market and identifies some

impact on the demand for and supply of labour

Uses some of the information provided

Uses appropriate economic terms, concepts and relationships Uses own information and the information provided to develop a

coherent response

9-12

Outlines some changes in Australias labour market and may identify

some factors relating to the demand for and supply of labour



5-8

Makes some mention of Australias labour with some reference to the

demand for and supply of labour

Uses some economic terms and/or concepts


1-4


Labour market is where individuals seeking employment interact with employeeswho want to obtain the most appropriate labour skills for their production process.

Factors affecting the demand for labour derived demand, productivity, level ofoutput

Factors affecting the supply of labour skills, experience, mobility, participation rates

Current trends increasing casual and part time work, increasing female participationrates, decline in unskilled work, greater job flexibility, upward trend in the demandfor labour, downward trend in the unemployment rate.

These current trends will then impact on the quality and size of Australias labourmarket need for increased training and skills especially in the mining area, increasedin demand for labour via - migrants with specialised skills, need for greater mobilityof labour


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Outcomes Assessed: P2, P4, P7, P8, P10

Examine the role of government in achieving economic and social goals in an Asianeconomy.

MARKING GUIDELINES

Criteria Marks


role of government in an Asian economy in achieving economic and

social goals


and theory

Synthesises own information with the information provided to develop

a sustained, logical and cohesive response

17-20

Demonstrates knowledge and understanding of the role of governmentin an Asian economy in achieving economic and social goals.




logical and cohesive response

13-16

Describes some aspects of the role of government in an Asian economy

in achieving economic and social goals



coherent response

9-12

Outlines some aspects of the role of government in an Asian economy

in relation to some goals



5-8

Outlines some aspects of the role of government in an Asian economy

May refer to some examples of economies other than Australia

Uses some economic terms and/or concepts


1-4


Identification an appropriate Asian economy

Outline a range of economic and social goals- employment, economic growth and

economic development, stability, ecological sustainability, education, quality of life,

standards of living

Role of government in achieving these objectives- success of policies (macro/micro),

limitations on government policy, political philosophy, external influences,

Comparisons with Australia and other countries


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Outcomes Assessed: P1, P5, P7, P8, P10

The Reserve Bank has a significant role in the economy.

Examine its role in determining the cash rate and its influence on interest rates and the levelof economic activity.

MARKING GUIDELINES

Criteria Marks


role of the Reserve Bank in determining the cash rate and its influence on

interest rates and the level of economic activity


and theory

Synthesises own information with the information provided to develop a

sustained, logical and cohesive response

17-20

Demonstrates knowledge and understanding of the role of the Reserve

Bank in determining the cash rate and its influence on interest rates and

the level of economic activity



Uses own information and the information provided to develop a logical

and cohesive response

13-16

Describes some aspects of the role of the Reserve Bank in determining

the cash rate and interest rates and the level of economic activity


Uses own information and the information provided to develop a coherent

response

9-12

Outlines some aspects of the role of the Reserve Bank and its influence



5-8

Outlines some aspects of the role of the Reserve Bank

May refer to some examples of economies other than Australia

Uses some economic terms and/or concepts Presents a limited response

1-4


Explanation of the role of the Reserve Bank relating to its influence over interest rates

and prices

Explanation of the cash rate and how it is determined

The link between the cash rate and interest rates in general

The impact of interest rates on the level of economic activity levels of savings,

consumption, investment, prices, external markets, international competitiveness


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PRELIMINARY ECONOMICS MAPPING GRID

Exam Section Question Marks Syllabus/Course

outcomes

Content Answer

Section 1Multiple Choice

1 1 P1 Government and theeconomy

A

2 1 P8 Markets B3 1 P1 Consumers and Business D

4 1 P11 Labour markets D

5 1 P1 Labour markets C

6 1 P11 Markets A

7 1 P7 Introduction to economics D

8 1 P7 Introduction to economics C

9 1 P8 Markets C

10 1 P2 Markets B

11 1 P1 Labour markets A

12 1 P8 Labour markets A

13 1 P11 Introduction to economics B

14 1 P1 Financial markets C


A


C

17 1 P11 Consumers and Business D

18 1 P1 Financial markets B


C

20 1 P6 Financial markets D

Section IIShort answers

21 10 P2, P7, P11 Introduction to economics N/A

22 10 P1, P2, P3, P6,P7

Markets N/A

Section IIIStimulusresponses

23 20 P1, P2, P6, P7,P9

Government and theeconomy

N/A

24 20 P1, P2, P3, P5,P7, P9

Financial markets N/A

Section IVExtendedresponses

25 20 P1, P2, P3, P7,P8,

Markets N/A

26 20 P1, P2, P3, P5,P7, P8

Labour markets N/A

2011 economics prelim es.pdf

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