Microeconomics
The opportunity cost of building a new road network could be:
A. increased noise pollution.
B. a reduction in public transport usage.
C. the inability to adequately fund education.
D. the road levy charged to all users of the road.
C. the inability to adequately fund education.
Which of the following is most likely to be classified as structural unemployment?
A. Mr Harvey who loses his job as a coal miner whilst being transferred to a new job in renewable energy
B. Mr Bui who loses his job as an Accounting teacher due to a decline in students studying Accounting
C. Ms Fumera who loses her job because she stole from the school he works at
D. Mr Grossman who loses his job as a builder as there is a reduction in housing construction
B. Mr Bui who loses his job as an Accounting teacher due to a decline in students studying Accounting
An increase in productivity is likely to:
A. worsen Australia’s international competitiveness and increase inflation.
B. worsen Australia’s international competitiveness and decrease inflation.
C. improve Australia’s international competitiveness and increase inflation.
D. improve Australia’s international competitiveness and decrease inflation.
D. improve Australia’s international competitiveness and decrease inflation.
Which of the following is an example of government current expenditure?
A. Payment of wages to Joel working as a swimming instructor at Apollo Bay surf beach.
B. Payment of interest to Noemi who holds $5m worth of Australian Government Securities.
C. Payment for the construction of the new Parkdale Railway Station by the Victorian State Government.
D. Payment of an electricity bill by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Aspendale, Melbourne.
D. Payment of an electricity bill by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Aspendale, Melbourne.
Which budgetary policy directly affects the quality of human capital, thereby potentially improving productivity and aggregate supply in the long run?
A. Infrastructure
B. Tax reform
C. Research and development
D. Training and education
D. Training and education
Which of the following is least likely to contribute to a rise in the price of home swimming pools?
A. Increased global warming leading to hotter summer temperatures.
B. Lower entry fees for public pools.
C. Lower interest rates.
D. A fall in the per litre cost of water.
B. Lower entry fees for public pools.
Which of the following events will most likely contribute to an increase in real GDP at the same time as a decrease in the rate of inflation?
A. weaker rates of economic growth in China
B. an improvement in productivity growth rates
C. an appreciation of the Australian dollar (AUD)
D. relatively high levels of consumer confidence
B. an improvement in productivity growth rates
The value of the Australian dollar is likely to increase if:
A. Australia’s credit rating decreases.
B. the price of commodity exports falls.
C. there is an increase in primary income debits.
D. speculators believe that the currency will appreciate.
D. speculators believe that the currency will appreciate.
In recent budgets, the government has increased the rate of JobSeeker payments (unemployment benefits). This will tend to stimulate aggregate demand via a rise in:
A. Government current expenditure (G1)
B. Consumption (C)
C. Government capital expenditure (G2)
D. Investment (I)
B. Consumption (C)
Which of the following best describes the term "intertemporal efficiency" in the context of a market-based environmental policy?
A. The immediate benefits of a policy outweighing its costs.
B. An improved balance between present consumption and future consumption.
C. The rapid adjustment of market prices in response to an environmental policy.
D. An immediate decrease in production due to an environmental policy.
B. An improved balance between present consumption and future consumption.
One reason for the demand curve sloping downwards is the
A. Substitution effect, because as the price of a product decreases, consumers may look for alternatives in the market
B. Income effect, because as the price of a product decreases, some consumers may no longer be able to afford the product
C. Diminishing marginal utility in consumption, whereby consumers gain increased marginal benefit from each unit of a product they consume
D. Income effect, because as the price of a product increases, some consumers may no longer be able to afford the product.
D. Income effect, because as the price of a product increases, some consumers may no longer be able to afford the product.
Hidden unemployment is likely to increase when:
A. the participation rate increases.
B. the number of job vacancies decreases.
C. it is harder to access unemployment benefits.
D. there is an increase in the number of people working part-time.
B. the number of job vacancies decreases.
A hypothetical economy recorded a balance of payments on current account of
–$12075 million in the September 2018 quarter and then –$3510 million in the December 2018 quarter. What could be a likely cause of this change?
A. a decline in foreign investment
B. an improvement in the terms of trade
C. a slowdown in world economic growth
D. an appreciation of the hypothetical economy’s exchange rate
B. an improvement in the terms of trade
Which of the following is not a weakness or constraint of budgetary policy in the context of the 2024-25 Budget?
A. Limits placed by the RBA on the amount that the government can borrow in financial markets
B. The fact that a federal election is approximately 12-18 months away
C. The possibility that some initiatives will be blocked in the Senate
D. The lack of control over State Government spending during a time when spending restraint is required to fight inflation
A. Limits placed by the RBA on the amount that the government can borrow in financial markets
In Australia, subsidies are generally no longer used to:
A. promote inter-temporal efficiency by incentivising investment in ‘green’ or renewable forms of energy.
B. incentivise businesses to hire young unemployed people and the long-term unemployed.
C. protect domestic producers from international competition.
D. address supply-side shocks such as droughts.
C. protect domestic producers from international competition.
Which one of the following goods is not likely to be considered a public good?
A. a fireworks display
B street lighting
C. healthcare services
D. free-to-air TV broadcasts
C. healthcare services
Healthcare services are technically not a public good because non-payers can be excluded from enjoying (some of) the benefits and one person's consumption typically prevents another person from enjoying 'all' of those benefits.
Which one of the following components of aggregate demand is the most unstable?
A. private investment expenditure
B. private consumption expenditure
C. government investment expenditure
D. government consumption expenditure
A. private investment expenditure
If Australia’s foreign equity assets exceed its foreign equity liabilities, this means that
A. Australia has invested less overseas than foreigners have invested in Australia.
B. Australia has invested more overseas than foreigners have invested in Australia.
C. the Australian Government has increased its borrowings from overseas to fund budget deficits.
D. the Australian Government has decreased its borrowings from overseas to fund budget deficits.
B. Australia has invested more overseas than foreigners have invested in Australia.
Question 4 (1 mark) A reduction in the cash rate is likely to result in
A. an increase in the value of the Australian dollar and a lower inflation rate.
B. a decrease in the value of the Australian dollar and a higher inflation rate.
C. a decrease in the value of the Australian dollar and a higher unemployment rate.
D. an increase in the value of the Australian dollar and a lower unemployment rate.
B. a decrease in the value of the Australian dollar and a higher inflation rate.
Which one of the following is least likely to be a reason why Aggregate Supply policies support Aggregate Demand policies in promoting non-inflationary economic growth?
A) It further supports the disinflationary effect of current Monetary Policy settings
B) It further supports the economic boost provided by current budgetary policy settings
C) It is more targeted in nature compared to budgetary AD policies
D) It counteracts the undesired effects on the economic goals from the current aggregate demand settings
C) It is more targeted in nature compared to budgetary AD policies
In late 2023 the Australian government introduced a ban on the sale of engineered (artificially created) stone in Australia. How is this likely to impact the market for natural stone?
A) A rise in the price elasticity of demand.
B) A fall in the price elasticity of demand.
C) A rise in the price elasticity of supply
D) A fall in the price elasticity of supply.
B. a fall in the price elasticity of demand.
(Availability of substitutes)
Consider the following Consumer Price Index (CPI) data for a hypothetical economy:
2019 = 100; 2020 = 103; 2021 = 105; 2022 = 104
Based on the information above, which one of the following statements is false?
A. The country experienced deflation in 2022.
B. The country experienced deflation in 2021 and 2022.
C. The country experienced disinflation in 2021.
D. On balance, over the four-year period, the general level of prices rose.
B. The country experienced deflation in 2021 and 2022.
Credits in the financial account are likely to increase if:
A. Australia’s saving rate increases.
B. the Australian Government runs a large budget deficit.
C. the cost of production for Australian producers decreases.
D. the prices of Australia’s commodity exports increase in world markets
B. the Australian Government runs a large budget deficit.
Which one of these is least likely to be a reason for the RBA to maintain a contractionary Monetary Policy stance?
A) Lower relative interest rates in Australia compared to the US supports the reduction in inflation in Australia
B) It reduces domestic inflationary pressures from adverse supply side conditions
C) It ensures consumption spending is lowered in Australia
D) It supports our Current Account Balance
D) It supports increased export spending into Australia
Which of the following recent policy announcements is least likely to be regarded as an aggregate supply policy action?
A. lowering the cash rate to 0.10%
B. extending the low- and middle-income tax offset to decrease the burden of personal income tax
C. lowering the rate of company tax to 25% for businesses with an annual turnover of up to $50 million
D. permitting businesses with an annual turnover up to $5 billion to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use
A. lowering the cash rate to 0.10%