12 Economics Half Yearly Examination 2018 MACARTHUR I I I I€¦ · 12 Economics Half Yearly Examination 2018 / Student Number / / / / / I I I I / 2018 HALF YEARLY EXAMINATION Year

MACARTHUR ANGLICAN SCHOOL

General Instructions

• Reading time: 5 minutes

• Working time: 2 hours

• The supervising teacher will tell

you when to begin writing.

• Attempt ALL questions

• Write using black or blue pen

• Do NOT write in pencil

• Write answers on examination

paper and when indicated on

booklets provided

• Weighting= 25% of course

mark

Staff Use Only: No. of Candidates: 9 Sinden

12 Economics Half Yearly Examination 2018

/ Stud ent Numb er / / / / / I I I I / 2018

HALF YEARLY EXAMINATION

Year 12

ECONOMICS

Directions for this Examination

Total Marks : 70

Section I Pages 2-6

• 20 marks • Attempt Questions 1-20 • Use the multiple-choice answer sheet at the back of

the examination paper to answer this Section. • Allow about 30 minutes for this section.

Section II Pages 7-12

• 30 marks • Attempt Questions 21-23 • Allow about 50 minutes for this section.

Section III Page 13

• 20 marks • Attempt Question 24 • Allow about 40 minutes for this section .

Paper Set By: Mr Sinden Papers Returned To: Mr

Collection Procedures: Please collect in one bundle. Ensure student name is on examination paper, multiple choice sheet and examination booklet . Multiple choice answer sheets must be placed inside the front page of each student's examination paper . Teacher setting examination to indicate special requirements Examination Booklets

Macarthur Examination booklets 1 x 8-page per student

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SECTION I

20 marks Attempt Questions 1-20 Allow about 30 minutes for this section Use the multiple-choice answer sheet at the back of the examination paper to answer Questions 1-20.

1 Who is Australia's Head of State?

(A) Mrs James (B) Bill Shorten (C) Donald Trump (D) Queen Elizabeth II

2 Which of the following government organisations can have the biggest influence on Australia's exchange rate?

(A) The Exchange Rate Board (B) The Reserve Bank of Australia (C) The Australian Trade Commission (D) The 'Big Four' banks; CommBank, Westpac, National and ANZ

3 'Dirtying the float' is a method of exchange rate adjustment. Which of the following is an example of dirtying the float?

(A) Speculators selling the A$ (B) RBA buying the A$ during the GFC (C) Australian investors buying US$ to invest in US companies (D) Chinese coal importers selling the A$ to increase supply of the A$

4 Which international organisation is most likely to intervene if a nation experiences a trade problem with another country?

(A) World Bank (B) United Nations (C) World Trade Federation (D) World Trade Organisation

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5 What is the likely impact on the Australian economy if Australia increased protection levels in retaliation of US protectionist policies?

(A) An increase in short-term unemployment and an increase in long term unemployment

(B) A decrease in short-term unemployment and an increase in long term unemployment (C) An increase in short-term unemployment and a decrease in long term unemployment (D) A decrease in short-term unemployment and a decrease in long term unemployment

6 Which of the following reductions in protection would result in a direct improvement in the Federal government's budget outcome?

(A) A decrease in tariffs (B) A decrease in quotas (C) A decrease in subsidies (D) A decrease in bilateral trade agreements

7 What is the likely impact of reduced protection levels on the current account deficit?

(A) It will improve in the short term but worsen in the long term.

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(B) It will worsen in both the short and long terms. (C) It will worsen in the short term but improve in the long term. (D) It will improve in both the short and long terms.

The table shows hypotheticaJ data for the Australjan economy .

Loans owed by foreigners to Australians($ billions)

Loans owed by AustraJians to foreigners ($ billions)

Au tra.liaa assets owned by foreigners ($ billions)

Foreign assets owned by Au traJians ($ billions)

What is the value of Austra lia's Net Foreign Liabilities?

(A) $300 billion

(B) $400 billion

(C) $600 billion

(D) $ 1 I 00 billion

150

600

100

250

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9 Which of the following transactions would be recorded in the Primary Income component of the current account?

(A) The sale of computers from China to an Australian importer (B) The payment of foreign aid from Australia to build a bridge in Vietnam (C) The purchase of shares in an Australian mining company by a US firm (D) The payment of dividends by an Australian firm to a Japanese parent company

10 How are the weights of the Trade Weighted Index determined for the Australian dollar?

(A) The proportion of Australia's exports to its key trading partners (B) The export volume index compared to the import volume index (C) The proportions of Australia's trade with trading partners (D) The TWI is determined by the World Trade Federation

11 Which of the following correctly ranks, from largest to smallest, the sources of income as a percentage of Australian household income?

(A) Returns to labour, returns to enterprise, returns to land/capital, transfer payments (B) Returns to labour, transfer payments, returns to land/capital, returns to enterprise (C) Returns to labour, returns to land/capital, returns to enterprise, transfer payments (D) Returns to labour, returns to enterprise, transfer payments, returns to land/capital

12 Other things being equal, Australia's international competitiveness would be improved by an increase in which of the following?

(A) Australia's inflation and GDP growth (B) Australia's aggregate supply and quotas (C) Australian government spending and tariffs (D) The value of the Australian dollar and subsidies

13 Which of the following must have happened if there has been a movement in Australia's Terms of Trade from 105 to 115?

(A) The value of Australia's exports have increased relative to the value of Australia's imports (B) The value of Australia's imports have increased relative to the value of Australia's exports (C) The price of Australia's exports have increased relative to the price of Australia's imports (D) The price of Australia's imports have increased relative to the price of Australia's exports

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14 What would be the likely impact on an economy if the government increased tariffs on imported cars?

(A) The domestic price of cars would increase. (B) The market share of domestic producers would decline. (C) The supply of cars in the domestic market would increase. (D) Foreign producers would find it easier to access the domestic market.

15 The table shows selected data for a hypothetical economy .

Year Money GDP Population CPI ($ millions) (millions) - - - - - .._ -

1 1000 100 100

I 2 1500 150 110

All other things being equal, how are Gross Domestic Product (GDP) and the Human Development Index (HDI) most likely to change from Year 1 to Year 2?

(A) GDP and HDI both increase. (B) GDP increases and HDI decreases . (C) Real GDP and HDI both increase. (D) Real GDP and HDI both decrease.

16 Which of the following could be recorded as a credit in the current account of Australia's balance of payments?

(A) Expenditure on imports (B) Dividends paid to Australian investors (C) Australians buying a controlling interest in a Malaysian company (D) Repayments to Australian of a no-interest development loan to Thailand

17 Which statement best illustrates the difference between the effects of a tariff on imports and a quota on imports?

(A) A tariff increases the price of the imported good and a quota may decrease the supply of the domestic good.

(B) A tariff increases the price of the imported good and a quota may increase the supply of the domestic good.

(C) A tariff decreases the price of the imported good and a quota may increase the supply of the domestic good.

(D) A tariff decreases the price of the imported good and a quota may decrease the supply of the domestic good.

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18 The table shows selected data for a hypothetical economy.

Year 1

Export price index 100

Import price index 100

2 105 110 3 135 140

Which statement is correct for this economy?

(A) In Year 2 export prices rose more than import prices. (B) In Year 3 export prices rose at a faster rate than import prices. (C) Terms of Trade improved from Year 1 to Year 2. (D) Terms of Trade deteriorated from Year 2 to Year 3.

19 The table shows Terms of Trade data for a hypothetical economy.

Year 1 2 3

ToT 100 105 110

What happens to the To T from Year 1 to Year 3?

(A) They remain unchanged. (B) They increase at a constant rate. (C) They increase at a decreasing rate. (D) They increase at an increasing rate.

20 The table shows hypothetical balance of payments data for a country.

According to the information in the table, which statement is correct for the economy if it has a floating exchange rate?

(A) The balance on goods and services remains constant. (B) The current account deficit increases from Year 1 to Year 2. (C) The current account deficit decreases from Year 1 to Year 2. (D) Net errors and omissions in the current account increases from Year 1 to Year 2.

6


SECTION II

30 marks Attempt Questions 21-23 Allow about 50 minutes for this section Answer the questions in the spaces provided.

Question 21 (10 marks)

(a) Define Balance of Payments. (1 mark)

(b) Distinguish clearly between Net Foreign Debt, Net Foreign Liabilities and Net Foreign Equity. (3 marks)

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(c) Arrange the following information into a 'Balance of Payments'. Ensure you include all relevant headings and calculations. (6 marks)

Goods Exports $100bn Financial Derivatives -$15bn Service Debits $65bn Portfolio Investment Abroad $60bn Secondary Income Credits $1 0bn Net Acquisition and Disposal of non-produced non-financial assets -$1 bn Goods Imports $110 Primary Income Credits $50 Reserve Assets -$11 bn Portfolio Investment in Australia $100bn Primary Income Debits $90bn Direct Investment Abroad $50bn Direct Investment in Australia $95bn Service Credits $55bn Capital Transfers $2bn Secondary Income Debits $11 bn

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Question 22 ( 10 marks)

(a) A mining company in Australia is sold to a foreign investor.

Outline how this transaction can affect TWO components of Australia's balance of payments . (2 marks)

(b) Distinguish between direct investment and portfolio investment. (2 marks)

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(c) Discuss the costs and benefits for Australia of foreign direct investment. (6 marks)

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(a) List, in order of importance, Australia's THREE major trading partners. (2 marks)

(b) Briefly outline the changing direction in Australia's trade. (2 marks)

(c) Briefly outline the changing composition in Australia's trade. (2 marks)

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(d) Briefly explain the consequences of a high CAD. (4 marks)

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SECTION III

20marks Attempt Question 24 Allow about 40 minutes for this section Answer the question in the writing booklet provided. 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


Analyse the effects of changes in the value of the Australian dollar on the Australian economy .

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Documents

12 Economics Half Yearly Examination 2018 MACARTHUR I I I I€¦ · 12 Economics Half Yearly Examination 2018 / Student Number / / / / / I I I I / 2018 HALF YEARLY EXAMINATION Year