Centre Number
Student Number
2011
TRIAL HIGHER SCHOOL CERTIFICATE
EXAMINATION
Economics
General Instructions
Total marks – 100
 Reading time – 5 minutes
Section I
 Working time – 3 hours
 Write using black or blue pen
 Board approved calculators may be used
 Use the multiple-choice answer sheet
provided
 Write your Centre Number and Student
Number at the top of this page, page 11
and the Multiple Choice Answer sheet
Pages 3-9
20 marks
 Attempt Questions 1-20
 Allow about 35 minutes for this part
Section II
Pages 11-18
40 marks
 Attempt Questions 21-24
 Allow about 1 hour and 15 minutes for this
part
Section III
Pages 19-20
20 marks
 Attempt ONE question from Questions 25
OR Question 26
 Allow about 35 minutes for this section
Section IV
Page 21
20 marks
 Attempt ONE question from Questions 27
OR Question 28
 Allow about 35 minutes for this section
Disclaimer
Every effort has been made to prepare this Examination in accordance with the Board of Studies documents. No guarantee or warranty is made or
implied that the Examination paper mirrors in every respect the actual HSC Examination question paper in this course. This paper does not constitute
‘advice’ nor can it be construed as an authoritative interpretation of Board of Studies intentions. No liability for any reliance, use or purpose related to
this paper is taken. Advice on HSC examination issues is only to be obtained from the NSW Board of Studies. The publisher does not accept any
responsibility for accuracy of papers which have been modified.
ECOTR11_EXAM
1
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ECOTR11_EXAM
Page 2
2011 TRIAL HIGHER SCHOOL CERTIFICATE EXAMINATION
ECONOMICS
Section I – 20 marks
Attempt Questions 1-20
Allow about 35 minutes for this section
Use the multiple-choice answer sheet provided for Questions 1-20
Select the alternative A, B, C or D that best answers the question. Fill in the response oval
completely.
Sample
2 + 4 = (A) 2
(B) 6
(C) 8
(D) 9
A
B
C
D
If you think you have made a mistake, put a cross through the incorrect answer and fill in the
new answer.
A
B
C
D
If you have changed your mind and have crossed out what you consider to be the correct
answer, then indicate this by writing the word correct and drawing an arrow as follows:
correct
A
1
2
B
C
D
What would be the impact on Australian farmers of the US government increasing
subsidies to its farmers?
(A)
Increased access to US markets
(B)
Decreased sales to US markets
(C)
Higher levels of Australian exports
(D)
Increasing employment levels on Australian farms
If Australia was to experience a sudden economic downturn, which of the following
consequences is unlikely to occur?
(A)
A sharp depreciation in $A as international demand for the currency falls
(B)
A decrease in income tax receipts
(C)
A fall in inflation due to the fall in import prices
(D)
A rise in employment as investment and spending increase
ECOTR11_EXAM
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Questions 3 and 4 refer to the Lorenz Curve for an economy.
3
Cumulative % of total income
C
A
B
0
100
Cumulative % of persons ranked by income
How is the Gini coefficient calculated?
(A)
(B)
(C)
(D)
4
Gini Coefficient = A+B/C
Gini Coefficient = B/C+A
Gini Coefficient = C/A+B
Gini Coefficient = A/A+B
What will be the likely effect on the economy if it experiences a severe recession and its
unemployment rate rises dramatically?
(A)
The Gini coefficient will fall
(B)
The Gini coefficient will increase
(C)
The Gini curve will move to the right
(D)
The Lorenz curve will move to the left
ECOTR11_EXAM
Page 4
5
6
7
8
Which of the following ultimately determines the value of the Australian dollar?
(A)
The market forces of demand and supply
(B)
Government intervention
(C)
The value of the US dollar
(D)
The cash rate
Which of the following objectives provides the Reserve Bank with the primary focus of
its decisions regarding monetary policy?
(A)
Full employment
(B)
Price stability
(C)
Exchange rate appreciation
(D)
External stability
Which international organisation would assist a developing country by providing
support for their currency and level of debt repayment in times of a financial crisis?
(A)
The World Bank
(B)
The International Monetary Fund
(C)
The United Nations
(D)
The International Financial Clearance Association
Which of the following describes Australia’s Trade Weighted Index (TWI)?
(A)
The average value of our exports to the world’s major currencies
(B)
The value of the Australian dollar in US dollars
(C)
The average value of the Australian dollar compared to the currencies of
our major trading partners
(D)
The value of Australia’s trade compared to other nations
ECOTR11_EXAM
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9
10
11
12
A decrease in which of the following would cause an increase in aggregate demand?
(A)
New construction
(B)
Interest rates
(C)
Government spending
(D)
Consumer spending
Which of the following would cause an increase in structural unemployment in
Australia?
(A)
A budget deficit
(B)
An increase in the labour force participation rate
(C)
A decrease in the cost of imported capital
(D)
A reduction in aggregate demand
Which of the following would improve global trade flows for developing countries?
(A)
An increase in European subsidies on agriculture
(B)
An increase in European quarantine restrictions on agriculture
(C)
An increase in European quotas on agriculture
(D)
An increase in European tariffs on agriculture
Which of the following is an example of discretionary fiscal policy?
(A)
Changes in the rate of unemployment benefits payable
(B)
Changes in taxation revenue due to an increase in corporate profits
(C)
Changes in welfare expenditure following an increase in unemployment
(D)
Changes in income tax revenue following a decrease in unemployment
ECOTR11_EXAM
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13
14
15
Which of the following government policies will reduce income inequality?
(A)
A decrease in the tax-free threshold to $5000
(B)
An increase in the highest marginal income tax rate
(C)
An increase in the rate of goods and services tax to 15 per cent for all
Australians
(D)
A reduction in transfer payments to retirees
A decrease in which of the following would influence the RBA to decrease interest
rates in Australia?
(A)
The Australian dollar
(B)
Productivity
(C)
Consumer spending
(D)
Household savings rates
Which of the following is a distinguishing feature of a newly industrialised economy?
(A)
A net outflow of foreign equity
(B)
A focus on export-oriented growth
(C)
Falling levels of education spending
(D)
A lack of foreign funds available for investment
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16
Year
1
2
3
Export Price
Index
101
106
118
Import Price
Index
96
101
111
Which of the following terms describes the movement in the terms of trade from year 1
to year 2?
17
18
(A)
Improvement
(B)
Constant
(C)
Appreciation
(D)
Deterioration
Which of the following strategies would assist the government in reducing the levels of
public debt in the short term?
(A)
A contractionary fiscal surplus
(B)
An increasingly expansionary fiscal deficit
(C)
An increase in the corporatisation of public enterprises
(D)
A reduction in the sale of public assets
Which of the following is a negative externality?
(A)
A fall in profits due to decreasing consumer demand
(B)
An increase in pollution from an increase in export output
(C)
An increase in government tax revenue from coal sales
(D)
A fall in tourists due to the appreciation of the Australian Dollar
ECOTR11_EXAM
Page 8
19
Year
2010
2011
Unemployment
Rate (%)
5.0
6.5
Employment (Millions)
8.8
8.9
Real Gross Domestic
Product
4.5
1.8
Which of the following reasons explains the change in unemployment in this
economy?
20
(A)
The labour force participation rate has fallen
(B)
The economy has had a downturn
(C)
Job vacancies have increased
(D)
The economy has experienced an economic upturn
Why do Australian investors borrow heavily from overseas?
(A)
The Australian government must repay the CAD each year
(B)
The Federal Government does not raise enough money in tax revenue
(C)
Australians do not save enough money to satisfy investors’ demand for funds
(D)
Foreign companies refuse to borrow from local banks
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2011 TRIAL HIGHER SCHOOL CERTIFICATE
EXAMINATION
Centre Number
Student Number
Economics
Section II
40 marks
Attempt Questions 21-24
Allow about 1 hour and 15 minutes for this section
Answer the questions in the spaces provided.
Question 21 (10 marks)
(a)
Marks
Define the term monetary policy.
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(b) Identify the term that describes the monetary policy stance when interest rates
fall.
1
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(c)
Marks
2
Describe the impact of the Reserve Bank buying securities on the official cash
rate.
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(d) Assess how a long term appreciation of the exchange rate would influence the
Reserve Bank’s stance on monetary policy.
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End of Question 21
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Question 22 (10 marks)
Marks
The following data is taken from the balance of payments of an economy.
Net Services
Net transfers
Goods Debits
Goods Credits
Net Income
$
Billion
- 20
40
480
360
-620
(a) Calculate the size of the current account deficit in this economy. (Show all
working)
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(b) Identify TWO items that would be recorded in the balance of payments as a
service debit.
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(c) Describe ONE structural factor that could contribute to an ongoing current
account deficit.
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Marks
4
(d) Explain TWO government policies that could be used to reduce an economy’s
current account deficit in the short term.
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Question 23 (10 marks)
Marks
(a) Define the term ecologically sustainable development.
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(b) Explain why the depletion of non-renewable resources is considered to be a market
failure.
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3
Marks
(c) Discuss the costs and benefits to the economy of using taxation to reduce the impact
of negative externalities on the environment.
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5
Question 24 (10 marks)
Marks
The diagram below shows the impact of a tariff on the market for dairy products in an
economy.
D
Price
S
D
Pe
Pt
Pw
D
S
Q1
Q3
Q4
Q2
(a) Define the term protection.
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(b) From the above diagram, identify the change in the amount of imports after the
imposition of the tariff.
1
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ECOTR11_EXAM
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Question 24 (continued)
Marks
(c) Reducing tariffs on the industry today will, in the long run, be better for the dairy
industry.
Carlos Wathon; Industry Assistance Commission
Explain how a reduction in protection can have a long term benefit for domestic
producers.
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(d) Explain how the policy of reducing protection in Australia influences the economy’s
direction and composition of trade.
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End of Section II
ECOTR11_EXAM
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4
2011 TRIAL HIGHER SCHOOL CERTIFICATE EXAMINATION
Economics
Section III
20 marks
Attempt either Question 25 OR Question 26
Allow about 35 minutes for this section
Answer the question in a writing booklet. Extra writing booklets are available.
In your answer you will be assessed on how well you:
▆ use your knowledge and the economic information provided
▆ apply economic terms, concepts, relationships and theory
▆ present a sustained, logical and well-structured answer to the question
Question 25 (20 marks)
Discuss the effects on the economy of changes in the stance of Australia’s fiscal policy over
time. In your answer you should refer to the economic information provided.
Source: www.budget.gov.au
''Even with the terms of trade close to a 140-year peak, the Gillard government is struggling to
return the budget to surplus on a sustainable basis,'' observed Stephen Anthony of consultancy
Macroeconomics.com.au, a former budget analyst for the Treasury.
But the budget manages, just, to get us there. Swan's task was complicated by the fact that tax
revenues slumped by an unexpected $16 billion over the next two years, a hangover of tax
losses from the economic downturn.
But promising a deficit in this budget of $22.6 billion and a surplus of $3.5 billion in the next,
Swan proposes a return to surplus just in time for the expected date of the next election.
This eases pressure on the demand side of the economy. This is important because, if the
government won't, the Reserve Bank will, and it'll do it through painful interest rate rises.
Source: Peter Hartcher, ‘Not tough, but definitely responsible’, Sydney Morning Herald, 11
May 2011
OR
ECOTR11_EXAM
Page 19
Question 26 (20 marks)
Discuss the short and long term impacts of structural change in the Australian economy. In
your answer you should refer to the economic information provided.
Source:Australian Productivity Commission, www.pc.gov.au
Productivity growth is a core source of growth in living standards.
Productivity growth means more value is added in production and this is
positively correlated with Australia’s economic growth. At the macro
level, productivity growth increases living standards because more real
income improves people's ability to purchase goods and services (whether
they are necessities or luxuries), enjoy leisure, improve housing and
education and contribute to social and environmental programs.
Productivity is the indicator that feeds Australia’s international
competitiveness and our long-term wealth.
Source: Angela Ninja
Australian Industry Advisory Group
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2011 TRIAL HIGHER SCHOOL CERTIFICATE EXAMINATION
Economics
Section IV
20 marks
Attempt either Question 27 OR Question 28
Allow about 35 minutes for this section
Answer the question in a SEPARATE writing booklet. Extra writing booklets are available.
In your answer you will be assessed on how well you:
▆ use economic data
▆ apply economic terms, concepts, relationships and theory
▆ present a sustained, logical and well-structured answer to the question
Question 27 (20 marks)
Analyse the impacts of international trade agreements on developing economies.
OR
Question 28 (20 marks)
Analyse the impact of global trade flows on Australia’s external stability.
End of paper
ECOTR11_EXAM
Page 21
Centre Number
Student Number
ECONOMICS – MULTIPLE-CHOICE ANSWER SHEET
ATTEMPT ALL QUESTIONS
Question
ECOTR11_EXAM
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
D
9
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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