Economics questions and solutions

Browse original practice and official past-paper questions. Each question has its own link, with its source and worked solution.

186 questions · Page 6 of 8

1. Q35 · Original practice · 5 marks
   Calculate APC and APS at each income level, then MPC between the two observations. Explain why using APC in the simple multiplier would be inappropriate.
   Macroeconomic objectives and theory
2. Q36 · Original practice · 4 marks
   A hypothetical…
   Macroeconomic objectives and theory
3. Q37 · Original practice · 4 marks
   A simple multiplier estimate assumes households spend 80% of additional income on domestic goods. In practice some spending goes to imported products and some income is taxed. Explain why the original estimate may overstate domestic output growth.
   Macroeconomic objectives and theory
4. Q38 · Original practice · 4 marks
   Calculate total leakages and injections. Predict the initial pressure on national income, then calculate the export value that would balance these flows if the other values were unchanged.
   Macroeconomic objectives and theory
5. Q39 · Original practice · 6 marks
   A successful Australian film-production hub attracts additional overseas orders. Assume unused productive capacity and no immediate change in production costs. Explain the initial effect using an AD/AS diagram that you draw and label.
   Macroeconomic objectives and theory
6. Q40 · Original practice · 6 marks
   Flood damage closes a major freight route and raises delivery costs across many industries. Explain the short-run effects using a labelled AD/AS diagram. Distinguish this event from demand-pull inflation.
   Macroeconomic objectives and theory
7. Q41 · Original practice · 5 marks
   A transport innovation lowers production costs while a consumer-confidence shock reduces spending. Both shifts occur before prices adjust. Explain what can and cannot be predicted about real GDP and the price level without knowing the relative shift sizes.
   Macroeconomic objectives and theory
8. Q42 · Original practice · 5 marks
   A regional economy moves from B to A on the supplied diagram. Later, successful research raises its productive capacity. Explain the distinction between the two changes, including one limitation of the PPC model.
   Macroeconomic objectives and theory
9. Q43 · Original practice · 5 marks
   Real GDP rises from $2400 billion to$2496 billion, while population rises from 24 million to 25.2 million. Calculate real GDP per capita in each period and its percentage change. Explain why a government should not use total GDP growth alone to judge living standards.
   Macroeconomic objectives and theory
10. Q44 · Original practice · 4 marks
    A workshop produces 6000 identical units using 2000 labour hours. After training, it produces 6600 units using 2200 hours. Calculate labour productivity before and after, and assess the claim that the training has demonstrated a productivity gain.
    Macroeconomic objectives and theory
11. Q45 · Original practice · 6 marks
    A cinema worker loses their job as local spending falls during a broad recession. A separate worker cannot find a job after firms adopt technology requiring different qualifications. Identify the unemployment type in each case and recommend a different policy mechanism for each.
    Macroeconomic objectives and theory
12. Q46 · Original practice · 4 marks
    After repeated unsuccessful applications, some willing workers stop actively searching. Explain how the measured unemployment rate could fall even though labour-market conditions have not improved. Name the relevant unemployment concept.
    Macroeconomic objectives and theory
13. Q47 · Original practice · 4 marks
    A business keeps every employee but reduces each person’s weekly hours from 38 to 24. All employees want and are available for their former hours. Explain why the unemployment rate may be unchanged and why labour underutilisation rises.
    Macroeconomic objectives and theory
14. Q48 · Original practice · 4 marks
    An economy has 950 000 employed people and 50 000 unemployed people. Then 20 000 previously inactive people begin actively looking for work; none finds a job immediately. Calculate the unemployment rate before and after, and explain why this change need not signal job destruction.
    Macroeconomic objectives and theory
15. Q49 · Original practice · 5 marks
    An estimated NAIRU falls after improved job matching. Explain how this could change the economy’s capacity to achieve full employment without accelerating inflation. Give one reason why the estimate should be treated cautiously.
    Macroeconomic objectives and theory
16. Q50 · Original practice · 5 marks
    A one-year loan has a nominal interest rate of 6%. Expected inflation at the start is 4%, but actual inflation over the year is 7%. Use the exact Fisher ratio, (1 + i)/(1 + inflation) − 1, to calculate expected and realised real interest rates. Explain who benefits from the unexpected inflation on a fixed nominal contract.
    Macroeconomic objectives and theory
17. Q51 · Original practice · 5 marks
    Tax rates and benefit eligibility rules are unchanged. Use the data to calculate the combined change in the budget balance. Explain how these changes act as automatic stabilisers.
    Economic management
18. Q52 · Original practice · 5 marks
    A government’s deficit rises from $20 billion to$30 billion. Its estimated cyclical deficit rises from $5 billion to$25 billion. Calculate the structural deficit in each period and assess the claim that the larger headline deficit proves discretionary fiscal policy became more expansionary.
    Economic management
19. Q53 · Original practice · 5 marks
    The second row removes estimated cyclical effects using unchanged policy settings. Calculate the headline deficit, structural deficit and cyclical contribution. Explain why recovery alone may not return the budget to balance.
    Economic management
20. Q54 · Original practice · 5 marks
    Using the supplied hypothetical schedule, calculate tax and average tax rates for incomes of $40 000 and$80 000. Ignore all deductions and other taxes. Explain whether the schedule is progressive.
    Economic management
21. Q55 · Original practice · 5 marks
    Two households buy identical tax-inclusive bundles containing $600 of indirect tax each year. Their disposable incomes are$30 000 and…
    Economic management
22. Q56 · Original practice · 5 marks
    A government pays an additional $10 billion of income-support transfers. Recipients initially spend 80$10 billion increase in G for the transfers?
    Economic management
23. Q57 · Original practice · 5 marks
    A proposed hospital budget contains a $900 million new building,$60 million annual cleaning contracts and…
    Economic management
24. Q58 · Original practice · 5 marks
    Public debt is $600 billion and nominal GDP is$2000 billion. One year later debt is $630 billion and nominal GDP is$2200 billion. Calculate the debt-to-GDP ratio in both years. Explain why its movement does not prove the debt burden is harmless.
    Economic management