QUESTION 57 (5 marks)
A proposed hospital budget contains a $900 million new building, $60 million annual cleaning contracts and $30 million annual income grants to patients. Classify each outlay and explain one reason why the building’s demand and supply effects occur on different timelines.
Practice marking scheme
Answer
Building: capital; cleaning: current; income grants: transfers. Construction demand precedes possible capacity benefits.
Working
The building creates a durable public asset; cleaning purchases a current service; patient grants redistribute income. Construction initially increases demand for labour and materials. Completed facilities may later improve health-service capacity and workforce health/productivity. Procurement, construction and staffing delays mean that long-run benefits are not available on announcement day.
Marking criteria
- Correctly classifies all three outlays. [2 marks]
- Explains the initial demand effect. [1 mark]
- Explains the later capacity benefit and a relevant lag. [2 marks]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabusCompare your working with the guide above.