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Questions: 9 Pages: 8 ©Copyright for part(s) of this examination may be held by individuals and/or organisations other than the Tasmanian Qualifications Authority.

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Tasmanian Certificate of Education

ECONOMICS

Senior Secondary

Subject Code: ECN315111

SAMPLE External Assessment

2011

Section A

On the basis of your performance in this examination, the examiners will provide results on the following criterion taken from the course statement: Criterion 3 Demonstrate knowledge and understanding of economic terms

and concepts.

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CANDIDATE INSTRUCTIONS You MUST ensure that you have addressed the externally assessed criterion on this examination paper. You must answer FIVE questions from this section. You must write brief and clear answers for each of the questions you have chosen. All answers must be written in the spaces provided on the examination paper. Each question is worth 6 marks. (5 x 6 = 30 marks) This examination is 3 hours in length. It is recommended that you spend approximately 36 minutes in total answering the questions in this booklet. All written responses must be in English.

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Question 1 Briefly explain how the free market answers the four economic questions. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks) Question 2 Briefly explain four determinants of demand. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

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Question 3 Present and explain a diagram of the circular flow of income. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks) Question 4 Briefly explain the terms structural unemployment and cyclical unemployment. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

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Question 5 Briefly explain the term automatic stabilisers. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

Question 6 Briefly explain the term cost push inflation. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

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Question 7 Briefly explain the term economic development. Support your answer by explaining the components of the Human Development Index. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

Question 8 Briefly explain, using a diagram, what is meant by the term floating exchange rate. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

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Question 9 Briefly explain why Australia trades with other countries. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (6 marks)

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This question paper and any materials associated with this examination (including answer booklets, cover sheets, rough note paper, or information sheets) remain the property of the Tasmanian Qualifications Authority.


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ECONOMICS

Senior Secondary



2011

Section B

Time: approximately 36 minutes

On the basis of your performance in this examination, the examiners will provide results on the following criterion taken from the course statement: Criterion 4 Demonstrate knowledge and understanding of economic data.

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CANDIDATE INSTRUCTIONS You MUST ensure that you have addressed the externally assessed criterion on this examination paper. You must answer SIX questions from this section. ALL questions in Part 1 and THREE questions from Part 2. You must write brief and clear answers for each of the questions you have chosen. All answers must be written in the spaces provided on the examination paper. Each question is worth 5 marks. (6 x 5 = 30 marks) This examination is 3 hours in length. It is recommended that you spend approximately 36 minutes in total answering the questions in this booklet. All written responses must be in English.

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PART 1

ALL questions in this part are compulsory for all students.

Question 10 The diagram below represents the free market (no government intervention) for vanilla ice cream (2 litre containers). Briefly explain two reasons that could explain the change in price from P1 to P2. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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D1

P1

P2

$

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Question 11

Country A

Number of Persons Population 22,000,000 Number Unemployed 1,200,000 Number Employed 12,000,000 Number aged 15 and over 16,000,000 Number who would seek employment if economic growth increased and the unemployment rate decreased.

600,000

Examine the above table. Calculate the unemployment rate for Country A. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... Calculate the participation rate for Country A. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 12 The diagram below shows the Australian market for shoes. WP is the world price. Use the diagram to explain the effect of a tariff (T) where WP + T is the world price plus the tariff. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. ............................................................................................................................................. (5 marks)

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WP + T

WP

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PART 2

Answer THREE questions from this part.

Question 13 The diagram below represents the market for wool. Recently, a rural independent Member of Parliament has advocated a wool price floor scheme on the basis that the free market price, P1, causes problems.

Using the diagram, show and briefly explain the likely effect of the proposed floor price scheme. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 14

Initial Price per Item Period 1

Quantity Sold, Per Week, Period 1

Price Per Item Period 2

Quantity Sold, Per Week, Period 2

Product A $50.00 1,000 $55.00 960 Product B $60.00 2,000 $55.00 2,100

Examine the data shown above. For product A is the price elasticity of demand elastic or inelastic in the price range $50.00 to $55.00? ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... For product B is the price elasticity of demand elastic or inelastic in the price range $60.00 to $55.00? ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 15 For Country B an increase in investment expenditure of $20 Billion changes the equilibrium level of National income by $57.14 Billion. Calculate the Marginal Propensity to Consume. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 16

Country C

2010 2011 Real GDP - $ Billions 1,100 1,144 CPI 128 135 Government Expenditure - $ Billions 330 378 Government Revenue - $Billions 315 401

Calculate the Growth rate of Country C. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... Calculate the inflation rate of Country C. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... Calculate the budget surplus/(deficit) for 2010 and 2011. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 17 Recently the exchange rate between the Australian dollar ($ Aust) and the United States of America dollar ($ US) reached parity - i.e. $ 1.00 Aust = $ 1.00 US. Assume that the Australian dollar depreciates to $1.00 Aust = $0.85 US. What would be the extra cost/savings for an Australian importer that has a contract to purchase goods, from the US, with a purchase price of $10 000 000 US? ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... What would be extra cost/savings for an US importer that has a contract to purchase goods, from Australia, with a purchase price of $8 000 000 Aust. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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Question 18 The diagram below shows the world market for wheat. Assume that both the European Union (EU) and the United States of America (US) increase subsidies for their domestic wheat producers. Use the above diagram to explain the likely effect on world prices. ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... (5 marks)

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ECONOMICS

Senior Secondary



2011

Section C


On the basis of your performance in this examination, the examiners will provide results on the following criteria taken from the course statement: Criterion 5 Demonstrate knowledge and understanding of economic problems.

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CANDIDATE INSTRUCTIONS You MUST ensure that you have addressed ALL of the externally assessed criteria on this examination paper. Answer ALL THREE questions in this section. All answers must be written in the spaces provided on the examination paper. Each question is worth 10 marks. (3 x 10 = 30 marks) This examination is 3 hours in length. It is recommended that you spend approximately 36 minutes in total answering the questions in this booklet. All written responses must be in English.

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Question 19 Name two types of market failure (excluding merit goods) and the associated problems (ie. the problems of each type of market failure that you have named). (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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Question 20 Explain three main problems caused by unemployment. (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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Question 21 Explain three main problems that might be caused by a current account deficit that is consistently high as a percentage of GDP. (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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ECONOMICS

Senior Secondary



2011

Section D


On the basis of your performance in this examination, the examiners will provide results on the following criteria taken from the course statement: Criterion 6 Demonstrate knowledge and understanding of economic solutions.

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CANDIDATE INSTRUCTIONS You MUST ensure that you have addressed ALL of the externally assessed criteria on this examination paper. Answer ALL THREE questions in this section. All answers must be written in the spaces provided on the examination paper. Each question is worth 10 marks. (3 x 10 = 30 marks) This examination is 3 hours in length. It is recommended that you spend approximately 36 minutes in total answering the questions in this booklet. All written responses must be in English.

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Question 22 Explain how the Government can intervene in the market to assist in solving the problem of an insufficient supply of energy efficient houses. (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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Question 23 Explain how fiscal policy can be used to assist in solving the problem of demand-pull inflation. (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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Question 24 Explain how globalization can assist in the development of less developed countries. (10 marks) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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ECONOMICS

Senior Secondary



2011

Section E


On the basis of your performance in this examination, the examiners will provide results on the following criteria taken from the course statement: Criterion 7 Analyse and evaluate economic issues and information.

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CANDIDATE INSTRUCTIONS You MUST ensure that you have addressed ALL of the externally assessed criteria on this examination paper. You must answer ONE question from this section. Your answer must be written in the space provided on the examination paper. You must write clear and detailed answers for the question you have chosen. This section is worth 30 marks. (1 x 30 = 30 marks) This examination is 3 hours in length. It is recommended that you spend approximately 36 minutes in total answering the questions in this booklet. All written responses must be in English.

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Question 25 Analyse and evaluate the proposition that there should be no Government intervention in markets other than to raise taxes and, with the funds raised, provide defence, public health care, public education and law and order. Question 26 Analyse and evaluate the strengths and weaknesses of fiscal policy. Question 27 Analyse and evaluate the proposition that a high current account deficit and associated high foreign debt do not constitute problems.

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Question Number: (In the box write the number of the question you have answered.) ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

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