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 8 of 8

1. Q83 · Original practice · 6 marks
   During a construction boom, the central bank raises the cash rate while the government begins a large untargeted building package. Explain why the policies may work against each other and why their effects will not necessarily cancel exactly.
   Economic management
2. Q84 · Original practice · 5 marks
   A model’s equilibrium price-level index falls from 120 to 116 after a positive supply shift. Explain what the model says about the price level. Does this single comparative-static diagram establish a continuing deflation rate? Justify your answer.
   Macroeconomic objectives and theory
3. Q85 · Original practice · 4 marks
   Real GDP grows by 0.5% in each of four consecutive quarters. Use (1 + quarterly growth)^4 − 1 to calculate the compounded annual increase. Explain why multiplying by four gives only an approximation.
   Macroeconomic objectives and theory
4. Q86 · Original practice · 5 marks
   Real GDP per capita rises 2%, but a supplied distributional study shows median real disposable income is unchanged and the lowest-income group’s income falls. Evaluate the claim that all households have become better off.
   Macroeconomic objectives and theory
5. Q87 · Original practice · 5 marks
   A non-refundable training tax credit is worth $2000. A worker with only$600 of tax liability can use $600; a worker with$5000 of liability can use the full credit. Explain one equity issue and evaluate making the credit refundable.
   Economic management
6. Q88 · Original practice · 6 marks
   A cyclone damages productive facilities. Government reconstruction spending then rises. Explain the potentially opposing AD/AS effects and why an increase in construction activity is not sufficient evidence that the economy has fully recovered.
   Economic management
7. Q89 · Original practice · 5 marks
   Both columns are estimates at normal economic activity with current policy settings. Calculate the change in the underlying deficit. Recommend a policy response and explain one equity or growth trade-off.
   Economic management
8. Q90 · Original practice · 6 marks
   In a hypothetical year nominal GDP grows 5%, the GDP deflator grows 4% and population grows 1.5%. Calculate real GDP growth and real GDP-per-capita growth using ratios. Evaluate a minister’s statement that 5% GDP growth demonstrates strong gains in average living standards.
   Macroeconomic objectives and theory
9. Q91 · Original practice · 20 marks
   A drought disrupts food production and freight. Use all four sources to evaluate a broad cash rebate against targeted freight repair. Recommend a response using price stability and full employment. Explain how monetary policy could complement the chosen response.
   Economic management
10. Q92 · Original practice · 20 marks
    A government is choosing a response to an ageing population. Use all four sources to evaluate a savings incentive and work/training support. Recommend the more effective option using sustainable economic growth and equity.
    Economic management
11. Q93 · Original practice · 20 marks
    Use all four sources to evaluate two ways to reduce the structural deficit: an equal percentage cut to every spending program or a revenue-base reform with protected low-income transfers. Recommend a strategy using fiscal sustainability and equity.
    Economic management
12. Q94 · Original practice · 20 marks
    A tourism region has lost international visitors. Use all sources to evaluate a temporary festival rebate and an airport/skills upgrade. Recommend a policy mix using regional employment and sustainable economic growth.
    Economic management
13. Q95 · Original practice · 20 marks
    Use all sources to decide whether a government should prioritise household purchase subsidies or network investment for electricity storage. Evaluate using price stability and sustainable development, and address short- and long-run effects.
    Economic management
14. Q96 · Original practice · 20 marks
    Use all sources to evaluate an automation grant alone against an automation grant combined with worker retraining. Recommend a package using productivity and full employment.
    Economic management
15. Q97 · Original practice · 20 marks
    A central bank is considering another cash-rate increase after several recent increases. Use all sources to evaluate further tightening against holding the current rate. Recommend a stance using price stability and full employment.
    Economic management
16. Q98 · Original practice · 20 marks
    Use all sources to evaluate immediate against staged construction of a commuter rail project. Recommend a schedule using economic efficiency and price stability. Include the opportunity cost of delay.
    Economic management
17. Q99 · Original practice · 20 marks
    Use all sources to assess a claim that a tax-funded education package is economically neutral because government purchases and tax receipts are equal. Evaluate the package using sustainable growth and equity.
    Economic management
18. Q100 · Original practice · 20 marks
    Use all sources to recommend a national policy mix for the two regions. Evaluate using price stability, full employment and equity. Explain why neither one national cash-rate change nor identical fiscal spending in both regions is sufficient by itself.
    Economic management