VCAA Economics 3 & 4 2008 Exam

[Julian H]

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No it definitely was not, but did include money to be invested in the trading program

[bec0003]

Originally Posted by Julian H

No it definitely was not, but did include money to be invested in the trading program

Yep i agree. You'll get a good mark though if you mentioned the number i reckon.
do you have any of the multiple choice questions by any chance?

[footyfan]

was it really worth 10 marks, For the question about combating climate change, I was going to talk about carbon trading but I didnt know specific information on it so I took another approach and said awareness is a key issue and that in order to combat climate change we need to to be further educated on how climate chnage is caused and what we can do to prevent it .So I wrote more about education do you recon thats ok?

[tellyremote]

I think i did poorly on the short answers:

Would an automatic stabiliser be when people increase their income and therefore go into the next income tax bracket?
Would a discretionary be increasing cigarette prices so people around them don't have to breath in the fumes?

Also for climate change i said bring in the individual carbon emmissions thing. Where how much outputs you have you have to pay for or something like that. Think that's ok?

[Julian H]

Automatic stabilisers are the cyclical component of budget and basically make up 2 things:
1) Personal income tax as the revenue government makes from this increases in times of economic growth as more people earn factor income while decrease as unemployment increases and less earning income.

2) SOcial security: During high unemployment outlays increase as govt has to pay more transfer payments, while decreases when more are employed and less relient on social wage from government.

Discretionary

Discretionary stabilsers are structural component and are specific government actions such as income tax cuts such as 40 billion or so over 4 years implemented in this years budget, so i think that your one with cigarettes is right, depends on how well u explained it.

[tellyremote]

Yeah thanks for that the discretionary one was a bit out of left field but i believe i explained it reasonably well and should get marks for it.

[bec0003]

Originally Posted by tellyremote

I think i did poorly on the short answers:

Would an automatic stabiliser be when people increase their income and therefore go into the next income tax bracket?
Would a discretionary be increasing cigarette prices so people around them don't have to breath in the fumes?

Also for climate change i said bring in the individual carbon emmissions thing. Where how much outputs you have you have to pay for or something like that. Think that's ok?

Your automatic is right and probably far better than mine which was about the budget stance automatically stabilising the economy. it wasnt an example
however i dont think your discretionary is exactly correct, not that i would know for sure, its just a discretionary stabiliser is about how the budget effects the economy, and cigarette fumes affect peoples health not the economy.

[tellyremote]

Yeah i think its a bit dodgy but i said raising tax on cigaretts which will raise the price, this deters people from smoking and therefore the negative externalities (health risks) are minimised. I think it's wrong but think i'll get any marks?

What about my climate change policy suggestion?

[langlece]

Originally Posted by tellyremote

Yeah i think its a bit dodgy but i said raising tax on cigaretts which will raise the price, this deters people from smoking and therefore the negative externalities (health risks) are minimised. I think it's wrong but think i'll get any marks?

Hmm sorry, but I really don't think so, but it depends on what angle you took.
The whole point of the cigarette tax is to discourage the negative externalities of smoking, bad health. They don't have a tax on them to decrease (or increase if it was dropped) the level of economic growth, which is what a discretionary stabiliser does. However if you argued that it improves people's health and therefore worker's productivity, or maybe the savings on spending in the health system therefore allowing spending to go somewhere else, it might have worked.
What angle did you take?


The whole point of a stabiliser is that it acts in a counter-cyclical nature, to smooth out the peaks and troughs. It does't really have anything to do with externalities, it's the general level of economic activity.

A discretionary stabiliser, eg the budget outlays, have to be changed at the discretion of the government to try and stimulate or slow down economic activity. ie to have the desired effect, they need to be changed in some way. In a recession, aggregate demand is decreased, as there are more people unemployed and confidence is shot. So Income Tax Levels may be cut to give people more disposable income, or interest rates could be cut to give them more discretionary income, meaning these are discretionary stabilisers.

[bec0003]

Originally Posted by langlece

So Income Tax Levels may be cut to give people more disposable income, or interest rates could be cut to give them more discretionary income. A discretionary stabiliser, eg the budget outlays, have to be changed at the discretion of the government to try and stimulate economic activity. ie to have the desired effect, they need to be changed in some way.

I agree about the smoking, but remember for every left field answer there's a left field marker out there...perhaps fans of the climate change question :S. i dont think you'll get the mark but you can still get 3/4 for the overall q for your defs and automatic example.

also, to langlece, income tax levels being cut is a discretionary decision, im pretty sure. a low income earner moving from a high to low tax bracket would be an automatic stabiliser.

[langlece]

Yeah that's what I was trying to say, it got a bit lost in my massive spiel. LOL I'll change it to make more sense

[bec0003]

you dont have any of the multiple choice questions by any chance?
im just going to keep asking!!!!!!! someone must!!!!

[zammitm1]

Originally Posted by Julian H

This years budget allocated 2.6 billion to "tackle climate change" which included promised advances in the carbon trading scheme

i was going to write this, but the question wasn't a specific "what has the federal government done" it was more of a what COULD they do, so you didnt need to talk about this specifically.
i hadnt actually studied for anything like that, so i just said a subsidy for hybrid and diesel vehicle buyers to help with climate change and promotion of cleaner fuels, paired with an excise tax rise on regular petrol.

[tellyremote]

Also my other terrible answer along with the discretionary:

Market Failure example 2:
Market failure occurs when a country cannot produce at the optimum level of output. An example of this is when a country has an optimum levl of output at 100 units. The country only produces at 90 units, effectively wasting 10 units of potential output.


I no this answer is deplorable but do you think it could be possible of sneaking a mark or 2?

[wildkt]

yeah i read it as a COULD question and went along the track of investment in 'clean engerys' and talked about the heavy realiance on coal power in australia as a contributing factor to our massive carbon footprint. Solar, wind, nuclear and tidial as options or alt to fossil fuels. this idea allows you to talk about effeiceny in resource allocation in especailly how ineffiecnt coal powed stations are if u felt nerdy enough and had enough time.... i guess it helps when u do chem