2019 HSC Eco Topic Test - Half-Yearly Exam BHHS PDF

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BAULKHAM HILLS HIGH SCHOOL HI GHERSCHOOLCERT I F I CA TE

2019

TOPIC TEST

Economics General Instructions

     

Total marks: 70

Reading time – 5 minutes Working time – 2 hours Write using black pen Calculators approved by NESA may be used Write your student number and teacher’s name on the multiple choice answer sheet Submit all handwritten notes with this test

Section I - 20 marks (pages 2-8)  Attempt Questions 1 – 20  Allow 35 minutes for this section Section II - 30 marks (pages 9-17)  Attempt Questions 21- 23  Allow about 50 minutes for this section Section III - 20 marks (page 19)  Attempt Question 24  Allow about 35 minutes for this section

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Question

Mark

Multiple Choice Q1-20

/ 20

Short Answer Q21

/ 10

Short Answer Q22

/ 10

Short Answer Q23

/ 10

Extended Response Q24

/ 20

TOTAL

/ 70

Section I 20 marks Attempt Questions 1 – 20 Allow about 35 minutes for this section Use the multiple- choice answer sheet for Questions 1-20 1. Which of the following is an economic argument for free trade? A. Increase short term unemployment and structural change B. Increase efficiency in resource use and specialisation C. Increase prices and quality of goods and services D. Increase self-sufficiency and economic growth

2. From which of the following would an economy experiencing a financial crisis be most likely to receive a low-interest loan? A. G20 B. World Bank C. World Trade Organisation D. International Monetary Fund

3. Which of the following would be the most likely impact of an increase in inflation in the United States of America (US)? US interest rates

Value of Australia dollar in terms of $US

A.

Increase

Depreciation

B.

Increase

Appreciation

C.

Decrease

Depreciation

D.

Decrease

Appreciation

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4. A Monetary Union involves A. the removal of tariff barriers between members, together with the acceptance of a common (unified) external tariff against non-members. B. the extension of free trade from just tangible goods, to include all economic resources. C. a single economic market, the adoption of a single currency and a common monetary policy D. a single economic market, a common trade policy, a single currency and a common monetary policy.

5. The diagram below shows the domestic markets for black shirts in Craftland.

World price

If the government decreases the quota on the import of black shirts to 100 which of the following would be true?

Price

Local production

A.

Falls from $25 to $20

Falls from 400 to 300

B.

Rises from $20 to $25

Falls from 400 to 300

C.

Rises from $20 to $25

Rises from 300 to 400

D.

Falls from $25 to 20

Rises from 300 to 400

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6. An economy has experienced average growth rates of 7-8% p.a. GDP in the last five years and manufacturing firms now dominate its industries.

Which of the following best describes this economy? A. Advanced B. Emerging C. Transitioning D. Developing

7. Which of the following is most likely to increase an economy’s Current Account Deficit? Exports

Domestic savings

A.

Decrease

Increase

B.

Decrease

Decrease

C.

Increase

Increase

D.

Increase

Decrease

8. The information below relates to changes in the value of the Australian dollar.

Year 1 2

$US 0.88 1.02

$A 1 1

All other things being equal, what is the effect of this change on imports into Australia and the level of foreign direct investment in the Australian economy?

Imports into Australia

Foreign Direct Investment in Australia

A.

Increase

Decrease

B.

Increase

Increase

C.

Decrease

Decrease

D.

Decrease

Increase

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9. The table shows selected data for an economy with a floating exchange rate system. Balance of Payments items Net primary income Financial account Imports Net services Capital account Net secondary income Exports

$ billion -55 ? 30 15 5 -5 20

What is the value of the financial account? A. $10 billion B. -$10 billion C. $50 billion D. -$50 billion

10. Which of the following is most likely associated with an upturn in the international business cycle? A. Decreased trade flows in the global economy B. Increased financial flows in the global economy C. Decreased migration of labour in the global economy D. Increased levels of domestic protection in the global economy

11. The Australian government is planning to increase its expenditure by $20 billion on building a new airport? If the economy’s equilibrium level of income is $300 billion and has a marginal propensity to consume of 0.75, what would Australia’s new national income be? A. $320

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B. $315 C. $360 D. $380

12. Which of the following explains why a country may have relative high levels of economic growth but a relatively low level of economic development? A. The country has relatively low GNI per capita B. The country has a poorly developed agriculture sector C. Individuals may be paying a very high level of income tax D. The country does not have a strong export sector

13. Ceteris paribus, what would the effects of a depreciation in the value of the Australian dollar have on the Australian economy? A. Increased inflation, increased international competitiveness, increased foreign debt B. Increased inflation, increased international competitiveness and decreased foreign debt C. Decreased inflation, decreased international competiveness, increased economic growth D. Decreased debt servicing costs, increased foreign debt, decreased economic growth

14. Which actions by the Reserve Bank of Australia are most likely to lead to a depreciation in the exchange rate?

A. B. C. D.

Cash Rate Increase Decrease Increase Decrease

Intervention in foreign exchange market Sell foreign currency Sell foreign currency Buy foreign currency Buy foreign currency

15. Which of the following is a limitation of the Trade Weighted Index? A. It does not reflect the importance of commodities in Australia’s exports

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B. It is not affected by changes in the interest rate C. It is weighted according to volumes of trade regardless of the currency in which export and import contracts are made in D. It covers 50% of Australia’s trade

16. Which of the following would be recorded in the Net secondary account? A. A payment from the Australian government to a US manufacturer of submarines B. A payment from Sydney resident for an online purchase in China C. A pension paid by the Italian government to a Italian migrant living in Australia D. Foreign aid payments from the Australian Government to Fiji for the building of a bridge

17. The table shows data for the budget outcome of an economy from Year 1 to Year 2.

Year 1 Year 2

Budget Outcome ($b) Surplus of 15.3 Surplus of 16.2

All other things being equal, what is the fiscal stance and the relationship between government spending (G) and taxation (T)? Fiscal Stance

Government spending(G) and taxation (T)

A . B.

Contractionary

G>T

Expansionary

G G

D .

Expansionary

T> G

18. Which of the following is a disadvantage of monetary financing a budget deficit? A. Foreign debt will increase B. There is an increase in debt servicing costs by the government C. There is a decrease in the money supply

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D. There is a risk of rising inflation if the economy is at full employment

19. Economic growth is measured by the percentage rate of change over a time period in? A. Gross Domestic Product per person B. Gross Domestic Product C. Real Gross Domestic Product per person D. Real Gross Domestic Product

20. The diagram shows domestic demand and supply curves for a hypothetical economy.

As a result of a change in trade policy in this economy, government revenue decreases by $400. What are the effects of this policy change on domestic producer’s revenue and foreign producer’s revenue?

B. C. D .

Change in Revenue -Domestic Producers 600 1000 -1000 -1000

Change in Revenue -Foreign Producers 800 1200 800 1200

End of Section I

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BAULKHAM HILLS HIGH SCHOOL HIGHER SCHOOL CERTIFICATE

2019

TOPIC TEST

Economics Section II Answer Booklet

30 Marks Attempt Questions 21-23 Allow about 50 minutes for this section Instructions

Answer the question in the spaces provided. These spaces provide guidance for the expected length of your response.  Extra writing space is provided on pages 16-17. If you use this space, clearly indicate which question you are answering.



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Please turn over

Question 21 (10 marks)

Marks

(a) Outline ONE effect of globalisation on external stability in an emerging economy. 2

……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………

(b) Explain key trends in the global distribution of income since the 1980’s. 3 ……………………………………………………………………………………………… ………………………………………………………………………………………………

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Question 21 continues on page 11

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Question 21 (continued) Marks (c) President Donald Trump announced a range of trade protection measures in 2018. His arguments for this action were to improve US national security, stop “dumping” of products in the US market, increase US employment, and reduce the US trade deficit. Discuss the economic validity of the President’s argument for trade protection. 5 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………

End of Question 21

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Question 22 (10 marks) Marks (a) Identify ONE primary income credit in the Balance of Payments. 1 ……………………………………………………………………………………………… ……

(b) Describe ONE multilateral free trade agreement OR ONE bilateral free trade agreement of which Australia is a part of. 2 Trade Agreement: ________________________________________________

……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………

(c) Distinguish between a floating and fixed exchange rate. 2 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………………………

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……………………………………………………………………………………………… ………………………………

Question 22 continues on page 13

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Question 22 (continued) Marks (d) Australia, in recent years has recorded frequent trade surpluses. Explain reasons for this trade surplus, with reference to the direction and composition of trade. 5 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………

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End of Question 22

Question 23 (10 marks) Marks (a) Explain the role of macroeconomic policy. 3 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………

(b) Explain the conflict that exists when a government attempts to simultaneously achieve low inflation and full employment. 3 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………………………………………

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Question 23 continues on page 15

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Question 23 (continued) Marks The table below shows economic data for an economy. Objective Economic growth Inflation Unemployment Distribution of income

Rate 2% Real GDP 2.8% CPI 6% Unemployment 0.4 Gini Coefficient

Acceptable range 2.5% - 3.5% Real GDP 2% - 3% CPI 4.5% - 5.5% Unemployment Rate 0.3 - 0.35 Gini Coefficient

(c) Discuss how fiscal policy could be used to address issues in this economy. 4 ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ………………………………

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End of Question 23

Section II extra writing space If you use this space, clearly indicate which question you are answering.

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Section II extra writing space If you use this space, clearly indicate which question you are answering.

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BLANK PAGE

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BAULKHAM HILLS HIGH SCHOOL HIGHER SCHOOL CERTIFICATE

2019 TOPIC TEST

ECONOMICS Section III 20 Marks Attempt Question 24 Allow about 35 minutes for this section Answer the question in the writing booklet provided. Extra booklets are available. Complete Student Number and Teacher’s name on the booklet. ___________________________________________________________________________ In your answer you will be assessed on how well you:  demonstrate knowledge and understanding relevant to the question  apply relevant economic information, terms, concepts, relationships and theory  present a sustained, logical and cohesive response ___________________________________________________________________________

Question 24 (20 marks) Evaluate the strategies used to promote economic growth and development in an economy other than Australia.

End of paper

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BAULKHAM HILLS HIGH SCHOOL HI GHERSCHOOLCERTI FI CAT E

2019 TOPIC TEST Economics SECTION I - ANSWER SHEET Total marks (20) Attempt Questions 1 –20 Allow about 35 minutes for this section

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