How many QCAA Economics questions cover Economic indicators and past budget stances?

AusGrader has 41 QCAA Economics questions on Economic indicators and past budget stances, all with instant AI grading and detailed marking feedback.

QCAA (QCE) Economics — Economic indicators and past budget stances Questions & Answers | AusGrader

Q10

2023

QCAA

1 mark

Q10

1 mark

The data shows an economic scenario over a three-year period.

	Year 1	Year 2	Year 3
Nominal GDP (＄ billion)	700	730	745
Budget surplus (＄ billion)	100	115	140

Which economic policies would improve this situation?

A

raising the age pension and increasing income taxes

B

selling government assets and reducing retirement age

C

increasing retirement age and decreasing health expenditure

D

increasing job seeker payments and decreasing income taxes

Q9

2022

QCAA

1 mark

Q9

1 mark

Which policy mix is the most appropriate in the following scenario?

Annual consumer price index movement: ( $Y_0$ ) 100 to ( $Y_1$ ) 102.
Nominal gross domestic product movement: ( $Y_0$ ) ＄9.3 billion to ( $Y_1$ ) ＄9.5 billion.
Non-accelerating inflationary rate of unemployment: ( $Y_0$ ) 4.5% to ( $Y_1$ ) 4.0%.
Dwelling approvals have fallen slightly from $Y_0$ to $Y_1$ .

A

expansionary monetary and fiscal policy

B

neutral monetary and fiscal policy stance

C

expansionary monetary policy and neutral fiscal policy stance

D

neutral monetary policy and fiscal policy that contracts the economy

Q13

2020

QCAA

9 marks

Q13

9 marks

An economic scenario is provided.

The 2021/22 federal budget is expected to deliver a deficit of ＄4.2b at the end of June 2022. A ＄7.1b surplus is anticipated the following year.
(Forecast released May 2022)

Export data shows coal exports are expected to fall from 2021 to 2022 by approximately ＄70 billion.
(Data released 10 July 2022)

CPI data shows that movements in the consumer price index (CPI) and the wage price index (WPI) were below 2% for the three years to June 2022.
(Data updated 31 July 2022)

Use the scenario to explain two relationships and their economic effects. Evaluate the merit of achieving a budget surplus in your answer.

The CPI data shows there are no inflation pressures from consumer prices or wages, indicating the economy has not experienced demand pressures for three years.
The export data demonstrates that Australia has some external stability pressures, because the export value of coal has fallen by ＄70 billion.
These two datasets, in the absence of further information, indicate that economic activity is weakening. They also provide evidence of negative forces acting within Australia’s economy that require stimulatory policies.
Proposals to achieve a federal budget surplus as expected cannot be justified at this time, because it would mean contracting the economy, which could result in inflation and wages falling further. The fall in wages would be expected to cause households to defer spending and save, causing a flow-on effect on business investment. This would result in several negative forces acting on aggregate demand and reducing economic growth. Consequently, the productive capacity of the economy should be increased.

Marking Criteria

Data Relationships

Marking Bands

Descriptor	Marks
Explains a relationship to – domestic aggregate demand pressures (inflation) – external stability pressures (exports)	2
Identifies a relationship linked to either the inflation data or the export data	1
Does not satisfy any of the descriptors below.	0

Economic Activity Deduction

Marking Bands

Descriptor	Marks
Deduces that economic activity is weak based on the 2 datasets, identifies ceteris paribus	3
Deduces that economic activity is weak based on the 2 datasets OR deduces that economic activity is weak based on 1 dataset, identifies ceteris paribus	2
Identifies that economic activity is weak	1
Does not satisfy any of the descriptors below.	0

Policy Conclusion

Marking Bands

Descriptor	Marks
Draws a conclusion that stimulus is required so there is no merit in a budget surplus, provides detailed reasoning using an economic criterion	4
Draws a conclusion that stimulus is required so there is no merit in a budget surplus, provides reasoning using an economic criterion OR draws a conclusion that stimulus is required, provides detailed reasoning referring to the sources	3
Draws a conclusion that stimulus is required, identifies a reason using an economic criterion	2
Identifies that contracting the economy is not warranted	1
Does not satisfy any of the descriptors below.	0

Q12

2022

QCAA

7 marks

Q12

7 marks

These measures are extracts from an Australian federal budget scenario.

Introduction of a temporary budget repair levy on incomes over ＄150 000 for three years.
Assistance for low-income single parents with a new allowance of ＄1000 per annum for each child aged 6 to 12.
Continuation of the move by the former government to increase the Age Pension age limit to 69 by 1 July 2023, and further increase the Age Pension age limit to 72 by 1 July 2035.
A temporary pause on CPI indexation of payments and programs including eligibility thresholds for Family Tax Benefit and JobSeeker; thresholds for the Medicare Levy Surcharge, Private Health Insurance Rebate and most Medicare Benefits Schedule fees; and Local Government Financial Assistance Grants.
A reduction in the growth of federal hospital and education funding to make the states more accountable for spending and delivery of services.

Based on the initiatives presented, explain the fiscal stance in this federal budget.

A temporary increase in taxation on higher income earners via the temporary budget repair levy is contractionary, as it raises government revenue. Other initiatives that reduce government expenditure include raising the pension age and reducing federal funding on hospitals and education. The pausing of indexation of various transfer payments and government programs have a neutral budget impact. There were smaller expansionary measures to assist low-income, single-parent households and to increase the older worker participation rate, however, when combining initiatives, it becomes apparent that the main budget priority is contractionary — to reduce spending to either reduce a budget deficit or stabilise a high rate of economic growth. This assumes the net change in other budget items are nil.

Marking Criteria

Descriptor	Marks
Classifies the temporary budget repair levy as $\uparrow$ government revenue (contractionary) and classifies the $\uparrow$ single parent allowance as $\uparrow$ government spending (expansionary)	1
Classifies the age pension $\uparrow$ as expansionary as participation rate is higher or contractionary as government expenditure falls	1
Classifies the pausing of indexation of transfer payments as not $\uparrow$ in government spending (neutral impact)	1
Classifies the $\downarrow$ of federal government expenditure on hospitals and education as contractionary	1
Explicitly identifies a fiscal stance	1
Provides accurate details to support the conclusion	1
Assumes ceteris paribus	1

Q31

2020

SCSA

20 marks

Q31a

12 marks

Explain why and how both monetary policy and fiscal policy have been used to influence the Australian economy in 2020. Use an aggregate expenditure (AE) model to support your answer.

Answer(s) could include:
Australian economy:

reference to severe contraction (recession) and nature of demand and supply shock from exogenous factors particularly the coronavirus
main economic indicators and how they have changed over the year: GDP growth, unemployment, inflation, investment, exchange rate, consumer spending etc.
reference to industries hardest hit by contraction
global financial crises and uncertainty
effect of slowdown of global economic growth on local economy.

Monetary policy:

reduction in cash rate by RBA and market interest rates - expansionary
intended effect on consumption, investment and exchange rate via transmission mechanism
aim to support aggregate spending and create employment
role of multiplier effect.

Fiscal policy:

range of significant stimulus payments to households and government policy support for businesses during time of collapsing consumer spending
reduction in government revenue and increase in expenditure
movement to a significant budget deficit from planned budget surplus
role of multiplier effect..

AE model:

45 degree line, AE on vertical axis, Real GDP on horizontal axis
parallel AE lines demonstrating impact of recession and policy effect
increase in equilibrium real GDP to reduce deflationary gap.

Marking Criteria

Australian economy in 2020

Marking Bands

Descriptor	Marks
Explanation of the state of the Australian economy in 2020	3
Description of the Australian economy in 2020	2
Some awareness of the Australian economy in 2020	1
None of the above	0

Monetary Policy

Marking Bands

Descriptor	Marks
Explanation of the use of monetary policy and its relevance to the economic circumstances	3
Description of monetary policy setting/changes connected to the economic circumstances	2
Some awareness of how monetary policy has been used this year	1
None of the above	0

Fiscal Policy

Marking Bands

Descriptor	Marks
Explanation of the use of fiscal policy and its relevance to the economic circumstances	3
Description of fiscal policy setting/changes connected to the economic circumstances	2
Some awareness of how fiscal policy has been used this year	1
None of the above	0

Economic model

Marking Bands

Descriptor	Marks
Fully labelled and correct AE model demonstrating a deflationary gap and impact of expansionary policy settings	3
Mostly correct model demonstrating impact of expansionary policy settings	2
Some aspects on an AE model	1
None of the above	0

Q31b

8 marks

Discuss the factors likely to influence the effectiveness of each of these policies.

Answer(s) could include:

Monetary policy:

overall effectiveness is likely to be poor; no guaranteed increase in aggregate spending such as, cost of borrowing and asset prices channels
interest rates were already very low, further reductions likely to have limited impact due to low consumer and business confidence
household debt is high making it more likely households will seek to retire debt rather than borrow
depreciation of Australian dollar will have increased net exports despite a significant fall in world growth
significant effect time lag.

Fiscal policy:

more effective because government spending can increase aggregate spending directly
government expenditure multiplier likely to be low because of low MPC
government reluctant to go into too much debt given experience post-GFC
other criticisms relevant to success of policies implemented in 2020.

A number of factors effect both policies, i.e. multiplier effect, expectation, and crowding out effects.

Marking Criteria

Descriptor	Marks
Discussion in detail several factors and reasons for their influence on effectiveness of policies	8
The student response meets all criteria of the 6-mark band, and additionally meets the majority of criteria in the 8-mark band.	7
Explanation of several factors and their influence on effectiveness of policies	6
The student response meets all criteria of the 4-mark band, and additionally meets the majority of criteria in the 6-mark band.	5
Description of a few factors and their link to effectiveness of policies	4
The student response meets all criteria of the 2-mark band, and additionally meets the majority of criteria in the 4-mark band.	3
Identification of a factor and its influence	2
The student response meets all criteria of the 0-mark band, and additionally meets the majority of criteria in the 2-mark band.	1
None of the above	0

QCAA Economics Economic indicators and past budget stances

Data Relationships

Economic Activity Deduction

Policy Conclusion

Australian economy in 2020

Monetary Policy

Fiscal Policy

Economic model

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