Economics HSC marathon (1 Viewer)

[Mata10]

I'm going to try and revive this as HSC approaches:

Why is deflation worse than inflation?

Deflation is the reduction in the general level of prices in an economy. Although deflation is better from a buyer's point of view, it is costly for suppliers as it leads to reduction in production due to increased cost of production which can result in closing of industries and business, therefore increasing unemployment. Furthermore, deflation makes existing debts larger in real terms and can potentially lead to an economic downturn.

Define the Natural Rate of Unemployment (NAIRU). (2 Marks)

 

[Randox]

Deflation is the reduction in the general level of prices in an economy. Although deflation is better from a buyer's point of view, it is costly for suppliers as it leads to reduction in production due to increased cost of production which can result in closing of industries and business, therefore increasing unemployment. Furthermore, deflation makes existing debts larger in real terms and can potentially lead to an economic downturn.

Define the Natural Rate of Unemployment (NAIRU). (2 Marks)

The non accelerating rate inflation rate of unemployment refers to a level of unemployment which does not contain any cyclical unemployment. It is regarded as the level of full employment due to demand side policies being unable to decrease unemployment past this level (significantly) and inflation accelerating as a result of firms rising wages to compete for the same number of workers.

Outline how consistent current account deficits constrain the performance of the Australian economy. (4 marks)

 

[Mata10]

Explain how an increase in financial injections could stimulate economic activity through the multiplier process. (3 marks)