Economics Marathon 2014 anyone??? (5 Viewers)

[GOsie]

Why not 6
:$


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You answer the question as if it was out of 6

nah it's coz it's like an odd number.
It should either be 4 or 6 marks, but probably 4.

You answer the question as if it was out of 4





Basically I wanted just a brief explanation of the consequences, like 10 sentences or so. The sort of things you'd write in a CAD essay, but without all the fancy extra stuff.

 

[mreditor16]

I was thinking less :/

 

[GOsie]

I was thinking less :/

Out of 3 for you

 

[mreditor16]

anyway, anyone willing to offer up an answer??

 

[enigma_1]

For anyone wanting a break from English:

Briefly describe the consequences of a persistent current account deficit on the Australian economy. (4 marks)

anyway, anyone willing to offer up an answer??

lol ok I'm answering this for a 4 marker then :/

A current account deficit is when the Australia's payments for goods and services and the liabilities to the rest of the world are greater than Australia's receipts for G+S and the rest of the world's liabilities to Australia. In the last 2 decades, Australia’s Current account deficit has averaged -4.5% of GDP which has been deemed to be unsustainable because it has exceeded the economic growth rate. Although a current account deficit is seen to support economic growth, if it persists, it can lead to a self-perpetuating cycle which may be detrimental to the Australian economy.

1) If there is a persistent Current Account deficit due to a high net primary income deficit (evident in Australia’s Balance of payments) this will result in increased net foreign liabilities due to the debt servicing costs which Australia must pay. This would be a problem since 40% of Australia’s foreign debt is denominated in foreign currencies. Hence, the valuation effect of the floating exchange rate via ER fluctuation such as a depreciation may lead to the foreign debt requiring more AUDs to finance it which would be more expensive and hence unfavourable.
2) A persistent Current Account deficit may lead to the risk of a foreign debt accumulation cycle especially if the CAD as a percentage of GDP exceeds the economic growth rate. This would make the CAD unsustainable resulting in a downgrading of Australia’s credit rating by international rating agencies, which would detract investors from investing in Australia thus reducing FDI flows into Australia.

Omgg ok I;m worried, haven't touched eco in like a week coz of English (((((((

Someone tell me if my answer even makes sense (

Guys please keep this thread going

 

[mreditor16]

For anyone wanting a break from English:

Briefly describe the consequences of a persistent current account deficit on the Australian economy. (5 marks)

lol ok I'm answering this for a 4 marker then :/

A current account deficit is when the Australia's payments for goods and services and the liabilities to the rest of the world are greater than Australia's receipts for G+S and the rest of the world's liabilities to Australia. In the last 2 decades, Australia’s Current account deficit has averaged -4.5% of GDP which has been deemed to be unsustainable because it has exceeded the economic growth rate. Although a current account deficit is seen to support economic growth, if it persists, it can lead to a self-perpetuating cycle which may be detrimental to the Australian economy.

1) If there is a persistent Current Account deficit due to a high net primary income deficit (evident in Australia’s Balance of payments) this will result in increased net foreign liabilities due to the debt servicing costs which Australia must pay. This would be a problem since 40% of Australia’s foreign debt is denominated in foreign currencies. Hence, the valuation effect of the floating exchange rate via ER fluctuation such as a depreciation may lead to the foreign debt requiring more AUDs to finance it which would be more expensive and hence unfavourable.
2) A persistent Current Account deficit may lead to the risk of a foreign debt accumulation cycle especially if the CAD as a percentage of GDP exceeds the economic growth rate. This would make the CAD unsustainable resulting in a downgrading of Australia’s credit rating by international rating agencies, which would detract investors from investing in Australia thus reducing FDI flows into Australia.

Omgg ok I;m worried, haven't touched eco in like a week coz of English (((((((

Someone tell me if my answer even makes sense (

Guys please keep this thread going

just some pointers from what I briefly read:

* the question is hypothetical in nature, it is asking for you to deal with the topic at a conceptual and theoretical level - thus, in my opinion, including the bolded sentence is largely unnecessary and eats up words with little reward

* the blue part needs to be properly explained and drawn out

* the underlined part may appear like a sweeping generalisation as it is now, so try to talk about why, and then insert that sentence in afterwards

* be careful with your use of abbreviations - if you overdo it, it will detract from your answer

* the orange part needs to be properly explained more, imo

as it is, you've got good stuff - it just seems jumbled and some bits need more clarification/explanation - so 3 out of 4

 

[enigma_1]

just some pointers from what I briefly read:

* the question is hypothetical in nature, it is asking for you to deal with the topic at a conceptual and theoretical level - thus, in my opinion, including the bolded sentence is largely unnecessary and eats up words with little reward

* the italicised part needs to be properly explained and drawn out

* the underlined part may appear like a sweeping generalisation as it is now, so try to talk about why, and then insert that your sentence in

* be careful with your use of abbreviations - if you overdo it, it will detract from your answer

* the orange part needs to be properly explained more, imo

as it is, you've got good stuff - it just seems jumbled and some bits need more clarification/explanation - so 3 out of 4

Thanks heaps for the feedback mreditor!!

 

[GOsie]

lol ok I'm answering this for a 4 marker then :/

A current account deficit is when the Australia's payments for goods and services and the liabilities to the rest of the world are greater than Australia's receipts for G+S and the rest of the world's liabilities to Australia. In the last 2 decades, Australia’s Current account deficit has averaged -4.5% of GDP which has been deemed to be unsustainable because it has exceeded the economic growth rate. Although a current account deficit is seen to support economic growth, if it persists, it can lead to a self-perpetuating cycle which may be detrimental to the Australian economy.

1) If there is a persistent Current Account deficit due to a high net primary income deficit (evident in Australia’s Balance of payments) this will result in increased net foreign liabilities due to the debt servicing costs which Australia must pay. This would be a problem since 40% of Australia’s foreign debt is denominated in foreign currencies. Hence, the valuation effect of the floating exchange rate via ER fluctuation such as a depreciation may lead to the foreign debt requiring more AUDs to finance it which would be more expensive and hence unfavourable.
2) A persistent Current Account deficit may lead to the risk of a foreign debt accumulation cycle especially if the CAD as a percentage of GDP exceeds the economic growth rate. This would make the CAD unsustainable resulting in a downgrading of Australia’s credit rating by international rating agencies, which would detract investors from investing in Australia thus reducing FDI flows into Australia.

Omgg ok I;m worried, haven't touched eco in like a week coz of English (((((((

Someone tell me if my answer even makes sense (

Guys please keep this thread going

There are plenty of good points in here, but I feel like you waste a bit of time with how you approach it. In short answers, you don't need to give an opening paragraph explaining what the CAD is. If it was asked, it would probably be the question before and worth 2-3 marks. I think you could just jump straight into answering.

You could be a little clearer in your answer too. Points you could include but are not limited to:
* A large CAD, if seen as unsustainable, may lead to contractionary fiscal and monetary policy being implemented to improve the deficit on the BOGS and PNY accounts. This may lead to a reverse multiplier effect on economic growth.

* A CAD is often seen as a ‘speed limit’ on future economic growth. Increased CADs and foreign debt means any extra income is spent servicing debt rather than investing. This prevents extra growth as a multiplier effect does not occur.

* Potential loss of investor confidence which could increase the vulnerability of our exchange rate - however, recently Australia is seen as a safe haven and has retained a AAA credit rating.

As mreditor has said, 3/4 probably.

mreditor, are my points valid?

 

[enigma_1]

There are plenty of good points in here, but I feel like you waste a bit of time with how you approach it. In short answers, you don't need to give an opening paragraph explaining what the CAD is. If it was asked, it would probably be the question before and worth 2-3 marks. I think you could just jump straight into answering.

You could be a little clearer in your answer too. Points you could include but are not limited to:
* A large CAD, if seen as unsustainable, may lead to contractionary fiscal and monetary policy being implemented to improve the deficit on the BOGS and PNY accounts. This may lead to a reverse multiplier effect on economic growth.

* A CAD is often seen as a ‘speed limit’ on future economic growth. Increased CADs and foreign debt means any extra income is spent servicing debt rather than investing. This prevents extra growth as a multiplier effect does not occur.

* Potential loss of investor confidence which could increase the vulnerability of our exchange rate - however, recently Australia is seen as a safe haven and has retained a AAA credit rating.

As mreditor has said, 3/4 probably.

mreditor, are my points valid?

Thanks for your feedback!! d

 

[Intrinsic]

There are plenty of good points in here, but I feel like you waste a bit of time with how you approach it. In short answers, you don't need to give an opening paragraph explaining what the CAD is. If it was asked, it would probably be the question before and worth 2-3 marks. I think you could just jump straight into answering.

You could be a little clearer in your answer too. Points you could include but are not limited to:
* A large CAD, if seen as unsustainable, may lead to contractionary fiscal and monetary policy being implemented to improve the deficit on the BOGS and PNY accounts. This may lead to a reverse multiplier effect on economic growth.

* A CAD is often seen as a ‘speed limit’ on future economic growth. Increased CADs and foreign debt means any extra income is spent servicing debt rather than investing. This prevents extra growth as a multiplier effect does not occur.

* Potential loss of investor confidence which could increase the vulnerability of our exchange rate - however, recently Australia is seen as a safe haven and has retained a AAA credit rating.

As mreditor has said, 3/4 probably.

mreditor, are my points valid?

Good stuff, but I personally think that you should be careful with how you introduce general comments about the CAD. It's not the CAD itself that could lead to unsustainability, it's whether the CAD is increasing or the CA Surplus is decreasing. I also think it's important to acknowledge that what is considered as an 'unsustainable' CAD can be subjective - a good example of this would be Paul Keating (6% of GDP) and Peter Costello (7% wasn't considered as a potential crisis)

 

[mreditor16]

There are plenty of good points in here, but I feel like you waste a bit of time with how you approach it. In short answers, you don't need to give an opening paragraph explaining what the CAD is. If it was asked, it would probably be the question before and worth 2-3 marks. I think you could just jump straight into answering.

You could be a little clearer in your answer too. Points you could include but are not limited to:
* A large CAD, if seen as unsustainable, may lead to contractionary fiscal and monetary policy being implemented to improve the deficit on the BOGS and PNY accounts. This may lead to a reverse multiplier effect on economic growth.

* A CAD is often seen as a ‘speed limit’ on future economic growth. Increased CADs and foreign debt means any extra income is spent servicing debt rather than investing. This prevents extra growth as a multiplier effect does not occur.

* Potential loss of investor confidence which could increase the vulnerability of our exchange rate - however, recently Australia is seen as a safe haven and has retained a AAA credit rating.

As mreditor has said, 3/4 probably.

mreditor, are my points valid?

quite valid and good pointers

repped

 

[GOsie]

quite valid and good pointers

repped

Thanks What is repped? haha

 

[enigma_1]

Thanks What is repped? haha

Lel I was gonna rep you but it says:

You have given out too much Reputation in the last 24 hours, try again later.

 

[enigma_1]

Thanks What is repped? haha

hahah it's when the points for the green bars under people's name increases because they did good deeds, lyk you! And when you have enough the bar increases in length. You rep people by clicking on the bottom left star icon in a person's post

 

[Pikachuisgod]

What is the crowding out effect?

 

[wgy182]

What is the crowding out effect?

Crowding out effect occurs when government spending is financed through borrowing from the private sector, soaking up funds in AU's private domestic savings pool, thereby putting upward pressure on interest rates. This "crowds out" private sector investors who cannot borrow at the higher interest rates and has less access to private domestic savings as lenders prefers to lend to the government (AAA credit rating).

Can someone check this? I am not sure if its correct.

 

[GOsie]

Let's get this thread going again

Explain two effects of rising inflation on the Australian economy (4 marks)

In your response, refer to your prescribed text and ONE other related text of your own choosing... or something like that

 

[enigma_1]

Let's get this thread going again

Explain two effects of rising inflation on the Australian economy (4 marks)

In your response, refer to your prescribed text and ONE other related text of your own choosing... or something like that

WHATTTTtttttttttt????? gg no re

eco =/= engrish

 

[GOsie]

WHATTTTtttttttttt????? gg no re

eco =/= engrish

Okay just the first part then.
Explain two effects of rising inflation on the Australian economy (4 marks)

 

[GOsie]

Bump. Cmon guys where are all your economic (animal) spirits