Student Number

2022
TRIAL HIGHER SCHOOL CERTIFICATE
EXAMINATION

Economics
Total marks – 100

General Instructions Section I Pages 3-8

20 marks
• Reading time – 5 minutes • Attempt Questions 1-20
• Allow about 35 minutes for this part
• Working time – 3 hours
• Write using black pen Section II Pages 9-16
40 marks
• Write your Student Number at the • Attempt Questions 21-24
top of this page, the Multiple- • Allow about 1 hour and 15 minutes for this section
Choice Answer sheet, page 9, and
the Answer Booklets provided.
Section III Page 17-18
• Complete Sections III and IV in 20 marks
separate booklets • Attempt either Question 25 OR Question 26
• Allow about 35 minutes for this section

Section IV Page 19
20 marks
• Attempt either Question 27 OR Question 28
• Allow about 35 minutes for this section

1
BLANK PAGE

2
Section I
20 marks
Attempt Questions 1-20
Allow about 35 minutes for this section

Use the Multiple Choice Answer Sheet provided.

Select the alternative A, B, C, or D that best answers the question. Fill in the response oval
completely.

Sample 2 + 4 = (A) 2 (B) 6 (C) 8 (D) 9

A B C D
If you think you have made a mistake, put a cross through the incorrect answer and fill in the
new answer.
A B C D
If you have changed your mind and have crossed out what you consider to be the correct
answer, then indicate this by writing the word correct and drawing an arrow as follows:
correct

A B C D

1 Which of the following is an example of a regional trade agreement?

A) EU
B) G20
C) ANZCERTA
D) JAEPA

2 Which of the following is a characteristic of a developing economy?

A) High levels of literacy

B) High levels of capital accumulation
C) High levels of labour-intensive industries
D) High levels of foreign portfolio investment

3 Which of the following would most likely result in an increase in the budget surplus?

A) A decrease in government spending and an increase in taxation

B) An increase in government spending and a decrease in taxation
C) A decrease in government spending and a decrease in taxation
D) An increase in government spending and an increase in taxation

3
4 Other things being equal what would be the impact on Australia of interest rates
decreasing overseas?

A) Decreased capital inflow and a depreciation of the Australian dollar

B) Decreased capital inflow and an appreciation of the Australian dollar
C) Increased capital inflow and a depreciation of the Australian dollar
D) Increased capital inflow and an appreciation of the Australian dollar

5 Which of the following are negative impacts of globalisation for an advanced

economy?

C) Increased trade flows and increased gross domestic product

D) Decreased gross national income and increased financial flows
C) Increased levels of foreign direct investment and decreased labour mobility between
economies
D) Decreased environmental sustainability and increased movement of domestic
production offshore

6. The following information refers to a nation’s terms of trade:

Year Import Price Index Export Price Index

2020 98 100
2021 106 105

What was the most likely effect of the change in this nation’s terms of trade over this
period?

A) A fall in the financial account surplus

B) Less imports can be purchased with the given levels of exports
C) The country is highly inefficient in export industries
D) More imports can be purchased with the given levels of exports

7. The central bank of a hypothetical economy increases the cash rate. All other things being
equal, what is the likely effect of this action.

A) A decrease in consumer expenditure

B) A decrease in the rate of unemployment
C) A depreciation of the economy’s exchange rate
D) An increase in investments in the property market

4
Question 8 refers to the following table for the economy.

S G M T I X
200 500 400 300 250 600

8. Which row of the table is correct for this economy?

Trade balance Economic growth

A) Surplus Positive
B) Surplus Negative
C) Deficit Positive
D) Deficit Negative

9. Which of the following is an example of a fiscal policy that is both expansionary and
discretionary?

A) Decreased spending due to higher forecasted growth rates

B) Decreased unemployment benefits due to an upswing
C) Increased tax free threshold
D) Decreased taxation revenue due to slower economic growth rates

10. The table shows the data for national income (Y) and savings (S) in $billions for a
hypothetical economy

Year Y S C I

1 400 80 320 100

2 500 100 400 100

All other things being equal what is the new equilibrium level of Income (Y) in year 3 if
investment increase by $35 billion?

A) $675 billion
B) $175 billion
C) $635 billion
D) $543 billion

11. What would be the effect on the Gini coefficient in an economy where public hospitals
were privatised, and there was a cut to the highest marginal tax rate?

A) Increase
B) Decrease
C) Remain unchanged
D) Reduced spending

5
12. The table below shows selected data for an economy:

Year Nominal GDP($bn) Consumer Price index

1 $1600 100
2 $1800 110

What is the value of real GDP for year 2?

A) $1920 bn
B) $1653 bn
C) $1890 bn
D) $1636 bn

13. The following diagram shows the imposition of a subsidy in a market.

P($) D S1

S2
500

S1
450

300
D
S2

1000 2000 Q

As a result of the subsidy, what is the difference in price to consumers in this market?

A) $200
B) $1000
C) $300
D) $50

14. Which of the following actions are most likely to be implemented during a boom?

A) Buy Commonwealth government securities Increase government spending

B) Buy Commonwealth government securities Increase taxation rates

C) Sell Commonwealth government securities Decrease government spending

D) Sell Commonwealth government securities Decrease taxation rates

6
15. An Australian business sells the rights for an Australian-designed product to be sold
overseas. How will this transaction be recorded in Australia’s Balance of Payments?

A) Debit in the capital account

B) Credit in the capital account
C) Debit in the financial account
D) Credit in the financial account

16. The diagram shows the impact of a tariff on imported fridges. The world price is $500.

What is the effect of implementing a tariff on fridges?

A) $600m is redistributed from foreign producers to the government

B) $1200m is redistributed from foreign producers to the government
C) $3000m is redistributed from foreign producers to the government
D) $3600m is redistributed from foreign producers to the government

17. Why might a country remove subsidies?

A) To increase the cost of imports

B) To increase domestic employment
C) To discourage trade negotiations
D) To lower barriers to trade

7
18. Which of the following would lead to a decrease in protectionism?

A) Decrease in export incentives and an increase in subsidies

B) Increase in export incentives and a decrease in tariffs
C) A decrease in tariffs and an increase in the size of existing quotas
D) An increase in export restraints and a decrease in size of existing quotas

19. The following information refers to a hypothetical economy

Balance of payments items $bn

Net goods 15
Net services -10
Net primary Income -45
Capital account 6
Financial account 20

What is the value of the secondary income account?

A) -$14bn
B) $40bn
C) -$26bn
D) $14bn

20. The table below refers to hypothetical data for two countries, Country A and Country B.

Country Nominal GDP Consumer Price Index Human Development Index

($bn) (CPI) (HDI)
A 400 115 0.95
B 420 120 0.72

A) Country A has a higher real GDP and is experiencing lower levels of economic
development than Country B

B) Country A has a higher real GDP and is experiencing higher levels of economic
development than Country B

C) Country B has a higher real GDP and is experiencing lower levels of economic
development than Country A

D) Country B has a higher real GDP and is experiencing higher levels of economic
development than Country A

END OF SECTION 1

8
Section II Student Number

40 marks
Attempt all questions
Allow about 1 hour and 15 minutes for this section

Question 21 (10 marks)

A) Define “Gross World Product” 1

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B) Using recent examples, explain how two international organisations have impacted 4
the global economy

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 Question 21 (continued)

C) Evaluate three factors that have impacted China’s recent economic growth 5

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End of question 21

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Question 22 (10 marks)

A) Distinguish between debt and equity financial flows 2

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B) Explain the effects of rising global interest rates on the two accounts of the Balance 3
of Payments

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 Question 22 (continued)

C) Including a relevant diagram, explain the role of the central bank in a hypothetical 5
economy that operates a fixed exchange rate

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End of question 22

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Question 23 (10 marks)
A) Define the term “negative externality” 1

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B) Explain why (positive) externalities represent market failure 2

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C) Assess Australia’s involvement in two international policy responses to 3

environmental issues

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Question 23 continues over the page

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 Question 23 (continued)

D) Explain one short-run and one long-run effect of market-based responses to 4

environmental issues

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End of question 23

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Question 24 (10 marks)

A) Identify, in descending order, the two main sources of wealth in Australia 2

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B) Describe two groups who experience a high level of disadvantage in terms of income 4
distribution

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 Question 24 (continued)

C) Analyse two current policy initiatives targeting a more equitable distribution of 4

income

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End of question 24

END OF SECTION II

16
Section III
Economics
20 marks
Attempt either Question 25 OR Question 26
Allow about 35 minutes for this section

Answer the question in a writing booklet. Extra writing booklets are available.

In your answer you will be assessed on how well you:

▆ demonstrate knowledge and understanding relevant to the question
▆ use the information provided
▆ apply relevant economic terms, concepts, relationships and theory
▆ present a sustained, logical and cohesive response

Question 25 (20 marks)

Analyse the impact of changes in the global economy for Australia’s macroeconomic
policies. In your response, refer to the economic information provided.

The ongoing rollout of vaccinations and significant policy stimulus has laid the groundwork for a
sustained economic recovery. GDP is forecast to return to its pre-pandemic trend in many advanced
economies over the next year. China's economy has already returned to its pre-pandemic path,
though the outlook has become more uncertain. In several countries, consumer price inflation has
increased to its highest rate in years and inflation expectations have picked up. The increase in
global inflation has continued for longer than initially anticipated, and it is possible that inflationary
pressures persist for some time yet due to strong global demand and ongoing capacity constraints.
Source – Statement on Monetary Policy, November 2021

17
 OR

Question 26 (20 marks)

Evaluate the effectiveness of Australia’s fiscal policy in managing economic growth and
income distribution.

This Budget is the next stage of the Government’s economic plan to secure Australia’s recovery. It
creates jobs, guarantees essential services and builds a more resilient and secure Australia. It does this
with:

• Personal income tax cuts;

• Business tax incentives;
• New apprenticeships and training places;
• More infrastructure; and
• Record funding for schools, hospitals, aged care, mental health and the NDIS.

https://budget.gov.au/2022-23/content/overview.htm

END OF SECTION III

18
Section IV
Economics

20 marks
Attempt either Question 27 OR Question 28
Allow about 35 minutes for this section

Answer the question in a SEPARATE writing booklet. Extra writing booklets are available.

In your answer you will be assessed on how well you:

▆ demonstrate knowledge and understanding relevant to the question
▆ apply relevant economic information, terms, concepts, relationships and theory
▆ present a sustained, logical and cohesive response

Question 27 (20 marks)

Analyse how changes in the demand for the Australian dollar affects trade and financial
flows in the Australian economy.

OR

Question 28 (20 marks)

Evaluate the effectiveness of recent macroeconomic policy in addressing inflation and

unemployment in Australia.

END OF PAPER

19
 2022 Year 12 Pymble Trial
Marking Criteria, Marker Feedback and Sample Answers

Questions 1-20 : Multiple Choice

1 Which of the following is an example of a regional trade agreement? 54% correct

A) EU
B) G20
C) ANZCERTA [Note: this is a bilateral FTA]
D) JAEPA

2 Which of the following is a characteristic of a developing economy? 92% correct

A) High levels of literacy

B) High levels of capital accumulation
C) High levels of labour-intensive industries
D) High levels of foreign portfolio investment

3 Which of the following would most likely result in an increase in the budget surplus?
88% correct

A) A decrease in government spending and an increase in taxation

B) An increase in government spending and a decrease in taxation
C) A decrease in government spending and a decrease in taxation
D) An increase in government spending and an increase in taxation

4 Other things being equal what would be the impact on Australia of interest rates
decreasing overseas? 77% correct

A) Decreased capital inflow and a depreciation of the Australian dollar

B) Decreased capital inflow and an appreciation of the Australian dollar
C) Increased capital inflow and a depreciation of the Australian dollar
D) Increased capital inflow and an appreciation of the Australian dollar

5 Which of the following are negative impacts of globalisation for an advanced

economy? 96% correct

A) Increased trade flows and increased gross domestic product

B) Decreased gross national income and increased financial flows
C) Increased levels of foreign direct investment and decreased labour mobility between
economies
D) Decreased environmental sustainability and increased movement of domestic
production offshore

1
6. The following information refers to a nation’s terms of trade:

Year Import Price Index Export Price Index

2020 98 100
2021 106 105

What was the most likely effect of the change in this nation’s terms of trade over this
period? 54% correct

A) A fall in the financial account surplus

B) Less imports can be purchased with the given levels of exports
C) The country is highly inefficient in export industries
D) More imports can be purchased with the given levels of exports

Note: shows a deterioration in the Terms of Trade

7. The central bank of a hypothetical economy increases the cash rate. All other things being
equal, what is the likely effect of this action. 81% correct

A) A decrease in consumer expenditure

B) A decrease in the rate of unemployment
C) A depreciation of the economy’s exchange rate
D) An increase in investments in the property market

Question 8 refers to the following table for the economy.

S G M T I X
200 500 400 300 250 600

8. Which row of the table is correct for this economy? 85% correct

Trade balance Economic growth

A) Surplus Positive
B) Surplus Negative
C) Deficit Positive
D) Deficit Negative

Note: X > M [surplus]; S + T + M > G + I + X [growth]

9. Which of the following is an example of a fiscal policy that is both expansionary and
discretionary? 88% correct

A) Decreased spending due to higher forecasted growth rates

B) Decreased unemployment benefits due to an upswing
C) Increased tax free threshold
D) Decreased taxation revenue due to slower economic growth rates

2
10. The table shows the data for national income (Y) and savings (S) in $billions for a
hypothetical economy

Year Y S C I
1 400 80 320 100
2 500 100 400 100

All other things being equal what is the new equilibrium level of Income (Y) in year 3 if
investment increase by $35 billion? 54% correct

A) $675 billion
B) $175 billion
C) $635 billion
D) $543 billion

MPC = 0.8; MPS = 0.2,

therefore k=5,
therefore 35bn → 175 bn, [NOTE: This was not the end of the question!]
ie. from 500bn to 675bn from Year 2 to Year 3

11. What would be the effect on the Gini coefficient in an economy where public hospitals
were privatised, and there was a cut to the highest marginal tax rate? 73% correct

A) Increase
B) Decrease
C) Remain unchanged
D) Reduced spending

The above represents greater inequality which means a higher Gini coefficient.

12. The table below shows selected data for an economy:

Year Nominal GDP($bn) Consumer Price index

1 $1600 100
2 $1800 110

What is the value of real GDP for year 2? 85% correct

A) $1920 bn
B) $1653 bn
C) $1890 bn
D) $1636 bn

Real = adjusted for inflation

1,800/110 x 100/1 = 1,636

3
13. The following diagram shows the imposition of a subsidy in a market.

P($) D S1

S2
500

S1
450

300
D
S2

1000 2000 Q

As a result of the subsidy, what is the difference in price to consumers in this market?

A) $200
B) $1000
C) $300
D) $50

This was not a trick question! 65% correct

14. Which of the following actions are most likely to be implemented during a boom?

62% correct

A) Buy Commonwealth government securities Increase government spending

B) Buy Commonwealth government securities Increase taxation rates

C) Sell Commonwealth government securities Decrease government spending

D) Sell Commonwealth government securities Decrease taxation rates

Sell CGS to  interest rates;

Decrease Gov’t spending to  AD /  unemployment (wages)

4
15. An Australian business sells the rights for an Australian-designed product to be sold
overseas. How will this transaction be recorded in Australia’s Balance of Payments?

73% correct

A) Debit in the capital account

B) Credit in the capital account
C) Debit in the financial account
D) Credit in the financial account

16. The diagram shows the impact of a tariff on imported fridges. The world price is $500.

77% correct

What is the effect of implementing a tariff on fridges?

A) $600m is redistributed from foreign producers to the government

B) $1200m is redistributed from foreign producers to the government
C) $3000m is redistributed from foreign producers to the government
D) $3600m is redistributed from foreign producers to the government

Before: at $500, $12m made locally, 12m made overseas and imported
After: at $600, 15m made locally, 6m made overseas and imported
Therefore, foreign dropped from 12m to 6m (as tariff now imposed).
$100 x 6m = $600 million

5
17. Why might a country remove subsidies? 92% correct

A) To increase the cost of imports

B) To increase domestic employment
C) To discourage trade negotiations
D) To lower barriers to trade

18. Which of the following would lead to a decrease in protectionism? 42% correct

A) Decrease in export incentives and an increase in subsidies

B) Increase in export incentives and a decrease in tariffs
C) A decrease in tariffs and an increase in the size of existing quotas
D) An increase in export restraints and a decrease in size of existing quotas

This was the only question where the most popular answer (B) was incorrect.
Note: an increase in export incentives = more protectionism (so not B)
An increase in the quota = less protectionism (as more imports are allowed in) so
answer is (C)

19. The following information refers to a hypothetical economy

Balance of payments items $bn

Net goods 15
Net services -10
Net primary Income -45
Capital account 6
Financial account 20

What is the value of the secondary income account? 92% correct

A) -$14bn
B) $40bn
C) -$26bn
D) $14bn

Net G&S and NPY = -40 [secondary income is missing amount on CA]
KAFA = 26
So as BoP = CA + KAFA = 0, secondary income = 14

6
20. The table below refers to hypothetical data for two countries, Country A and Country B.

85% correct

Country Nominal GDP Consumer Price Index Human Development Index

($bn) (CPI) (HDI)
A 400 115 0.95
B 420 120 0.72

A) Country A has a higher real GDP and is experiencing lower levels of economic
development than Country B

B) Country A has a higher real GDP and is experiencing higher levels of economic
development than Country B

C) Country B has a higher real GDP and is experiencing lower levels of economic
development than Country A

D) Country B has a higher real GDP and is experiencing higher levels of economic
development than Country A

Note:
Real GDP (adjusted for CPI) for Country A is 400/115 = 347
Real GDP (adjusted for CPI) for Country B is 420/120 = 350

HDI is higher for Country A than Country B

END OF SECTION 1

7
Short Answer Questions
21a. Define “Gross World Product”

State meaning and identify essential qualities

Clearly states all aspects of the meaning of gross world product 1

Marker Feedback: See page 6 Riley, p5 Dixon. GNP refers to the sum [market value] of the
total output [production] of goods and services by all economies in the world over a period of
time. May have also included a reference to PPP.

Many responses included some of these elements – it was critical that the answer referred to
the value of G&S produced.

21b. Using recent examples, explain how two international organisations have impacted
the global economy

Relate cause and effect; make the relationships between things evident; provide why and/or
how

Concisely and accurately relates how two different international organisations (cause) have impacted the 4
global economy (effect) through the application of recent examples
Concisely and accurately relates how two different international organisations (cause) have impacted the 3
global economy (effect) through the application of theoretical examples
Describes the features of two international organisations and how they impact the global economy, drawing 2
on recent examples
Describes one international organisation and its impact on the global economy 1

Marker Feedback: See pages 39-43 Dixon, pp 44-49 Riley. Acceptable responses include
the WTO, IMF, World Bank, UN, OECD. Note that EU, RCEP are trading blocs and that
G7, G8, G20 are forums.

This response was done quite well.

TIP: No need to repeat the question in SA responses, for example, no need to start “Two
international organisations that have impacted the global economy are…”.

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21c. Evaluate three factors that have impacted China’s recent economic growth

Make a judgement based on criteria; determine the value of

Concisely determines a judgement based on criteria of three factors that have impacted 5
China’s recent (10 years) growth, drawing on comprehensive data/examples

Concisely determines a judgement based on criteria of two/three factors that have impacted 4
China’s recent (10 years) growth, drawing on data/examples

Assesses two/three factors that have impacted China’s recently, drawing on some 3
data/examples

Describes two/three factors that have impacted China’s economic growth 2

States two/three factors that have impacted China’s economic growth 1

Marker Feedback: See pages 84-95 Riley

Answers could have included reference to US/China trade war; increased protectionism and
focus on domestic economies (particularly imposition of tariffs); Covid-19 impacts; ageing
population; income-wealth inequality; environmental sustainability.

Note that specific examples really help demonstrate your understanding.

Many responses focussed on historical elements rather than recent ones. Needed to
demonstrate that these had an impact on recent economic growth, which was difficult to do if
you were considering SEZs, ODP, etc.

The main place where students did not fulfil the criteria was the absence of an evaluation –
use evaluative language such as: effective; significant; meaningful; moderate; substantial;
minor; negligible; profound; hindered to connect the factor with its impact on economic
growth.

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22a. Distinguish between debt and equity financial flows

Recognise or note/indicate as being distinct or different from; to note differences between

Clearly notes the difference between the meaning of debt and equity financial flows 2
Provides definitions of debt and equity flows only 1

Marker Feedback: Few students got full marks for this one. Many responses only
considered one of the initial investment (ie. Loaned funds as a capital inflow/outflow and
ownership as a FDI/portfolio investment) but not the return, being interest, dividend or profit.

Some responses said that debt was funds going out of Australia and that equity is funds
coming into Australia (or vice versa). This is not correct – debt and equity are fundamentally
different, as are their returns.

22b. Explain the effects of rising global interest rates on the two accounts of the Balance
of Payments

Relate cause and effect; make the relationships between things evident; provide why and/or
how

Concisely demonstrates how changes in global interest rates impact both the CA 3
and the KAFA using current data/examples
Concisely demonstrates how changes in global interest rates impact both the CA 2
and the KAFA
Describes in general terms how global interest rates impact the CA and KAFA 1

Marker Feedback: Almost all students were able to identify the CA and KAFA and make
some attempt at making a connection with interest rates.

In basic terms, increase in interest rates:

→  interest repayments on debt →  NPY debit →  worsening CA
→  borrowing as return is higher →  NFL ( on KAFA; cycle of debt) →  KAFA
Also may have noted →  international borrowing →  NFL

In relation to pre-existing debt:

→  disposable income
→  demand for G&S
→  BoGS

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22c. Including a relevant diagram, explain the role of the central bank in a hypothetical
economy that operates a fixed exchange rate – with graph
Relate cause and effect; make the relationships between things evident; provide why and/or
how

Clearly demonstrates graphically and in writing the required actions of a central 5

bank in managing a fixed exchange rate- showing accurate graph work
Clearly demonstrates graphically and in writing most of the required actions of a 4
central bank in managing a fixed exchange rate- showing accurate graph work
Demonstrates graphically and in writing some of the required actions (sound 3
understanding) of a central bank in managing a fixed exchange rate – some graph
errors may be evident
Describes graphically and in writing some actions of the central bank in managing a 2
fixed exchange rate – some graph errors may be evident
Describes graphically or in writing some actions of the central bank in managing a 1
fixed exchange rate

Marker Feedback: See pages 134-135 Riley; p 142 Dixon

Very few students nailed the graph – see p 142 Dixon, reproduced below

Better responses included the buying or selling of foreign currency (to accommodate for the
excess supply/demand); need for foreign reserves, incorporated references to the graph.

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23a. Define the term “negative externality”
State meaning and identify essential qualities

Clearly and accurately states the meaning of all aspects of “negative externality” 1

23b. Explain why positive externalities represent market failure

Relate cause and effect; make the relationships between things evident; provide why and/or
how

Clearly relates how unintended benefits of economic activity are not captured by the price 2
mechanism – understating the value to society/ impacting demand
States the meaning of positive externality 1

23c. Assess Australia’s involvement in two international policy responses to

environmental issues
Make a judgement of value, quality, outcomes, results or size

Makes a judgement of value concerning Australia’s involvement in two international policy 3

responses to environmental issues, using examples/data
Makes a judgement of value concerning Australia’s involvement in one international policy 2
responses to environmental issues, using examples/data
Describes Australia’s involvement in two/one international policies to environmental issues 1

23d. Explain one short-run and one long-run effect of market-based responses to
environmental issues
Relate cause and effect; make the relationships between things evident; provide why and/or
how

Concisely shows, using real or theoretical examples, one short run and one long run effect resulting 4
from market-based responses to environmental issues
Concisely shows, using a real or theoretical example, one short run and one long run effect resulting 3
from market-based responses to environmental issues
Describes one short run and one long run effect of market-based responses to environmental issues 2
Describes one short run or one long run effect of market-based responses to environmental issues 1

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24a. Identify, in descending order, the two main sources of wealth in Australia

Recognise and name

Accurately lists from largest to second largest the two main sources of wealth in Australia 2
Lists the two main sources of wealth in the incorrect order 1

24b. Describe two groups who experience a high level of disadvantage in terms of
income distribution

Provide characteristics and features

Concisely demonstrates the main characteristics and features of two groups who experience a high 4
level of income distribution disadvantage, drawing on data/examples
Concisely demonstrates the main characteristics and features of two groups who experience a high 3
level of income distribution disadvantage
Identifies two groups who experience a high level of income distribution disadvantage or 2
demonstrates the main characteristics and features of one group who experiences a high level of
income distribution disadvantage
Identifies one group who experiences a high level of income distribution disadvantage 1

24c. Analyse two current policy initiatives targeting a more equitable distribution of
income

Identify components and the relationship between them; draw out and relate implications

Concisely demonstrates the components and implications of two current income redistribution 4
policies, integrating current evidence
Concisely demonstrates the components of two current income redistribution policies, integrating 3
current evidence
Provides characteristics and features of two current policies to redistribute income 2
Provides characteristics and features of one current policy to redistribute income 1

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Question 25 (20 marks)
Outcomes Assessed: H1, H2, H4, H7, H8, H10

In your answer you will be assessed on how well you:

• demonstrate knowledge and understanding relevant to the question
• use the information provided
• apply relevant economic terms, concepts, relationships and theory
• present a sustained, logical and cohesive response

Analyse the impact of changes in the global economy for Australia’s macroeconomic
policies. In your response, refer to the economic information provided.

The ongoing rollout of vaccinations and significant policy stimulus has laid the groundwork for a
sustained economic recovery. GDP is forecast to return to its pre-pandemic trend in many advanced
economies over the next year. China's economy has already returned to its pre-pandemic path,
though the outlook has become more uncertain. In several countries, consumer price inflation has
increased to its highest rate in years and inflation expectations have picked up. The increase in
global inflation has continued for longer than initially anticipated, and it is possible that inflationary
pressures persist for some time yet due to strong global demand and ongoing capacity constraints.
Source – Statement on Monetary Policy, November 2021

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 Criteria Marks
• Integrates an extensive and appropriate range of economic terms with relevant
concepts, relationships and theory
• Synthesises the economic data provided and other information to develop a 17-20
sustained, logical and well-structured response
• Demonstrates a comprehensive analysis of the impact of changes in the global
economy on Australia’s macroeconomic policies.
• Consistently applies a range of economic terms with relevant concepts,
relationships and theory
• Uses the economic data provided and other information to develop a logical and 13-16
well-structured response
• Demonstrates a detailed and accurate understanding of the impact of changes in
the global economy on Australia’s macroeconomic policies.
• Applies economic terms, concepts, relationships and theory
• Uses some economic data provided and other information to develop a coherent
response 9-12
• Demonstrates an understanding of the impact of changes in the global economy
on Australia’s macroeconomic policies
• Uses some economic terms, concepts, relationships or theory
• Uses some economic data provided or other information
• Demonstrates some understanding of changes in the global economy on 5-8
Australia’s macroeconomic policies
• Uses some economic terms
• Presents a limited response
• Sketches in general some aspects of the global economy and its impact on the 1-4
Australia’s macroeconomic policies

Answers may include:

• Changes in the global economy:
o Trade, trade agreements, WTO.
o Investment flows, financial markets, IMF
o Technology, labour movements and transport and communications.
o Co-vid effects
• NEED TO LINK THE CHANGES TO RELEVANT ECONOMIC POLICIES\
• Policy Responses:
o Macroeconomic policies – link to Aggregate Demand.
o Fiscal policy – 2021/22 budget, 22/23 budget.
o Monetary policy – DMO, changes to the cash rate and quantitative easing

General feedback re stimulus questions:

• For Q25, very few responses defined economic growth – do not assume it is self-
evident. Doing so also provides a good link to GDP in the rest of your response.
• Need to better integrate stimulus material; it’s there for a reason and the question
requires references to it.
• Many responses were unbalanced as between fiscal policy and monetary policy, over-
emphasising one at the expense of the other.
• Look to integrate appropriate graphs into responses as they provide a strong link
between theory and its application. Do not just “stick” graphs in your responses
without proper reference to them in the written section. Make them BIG.
• Also use recent and relevant statistics to support your writing – these help prevent
responses becoming overly descriptive

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Sample Answer:

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Question 26 (20 marks)
Evaluate the effectiveness of Australia’s fiscal policy in managing economic growth and
income distribution.

This Budget is the next stage of the Government’s economic plan to secure Australia’s recovery. It
creates jobs, guarantees essential services and builds a more resilient and secure Australia. It does this
with:

• Personal income tax cuts;

• Business tax incentives;
• New apprenticeships and training places;
• More infrastructure; and
• Record funding for schools, hospitals, aged care, mental health and the NDIS.

https://budget.gov.au/2022-23/content/overview.htm

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Outcomes Assessed: H1, H2, H4, H7, H8, H10

Criteria Marks
• Integrates an extensive and appropriate range of economic terms with relevant
concepts, relationships and theory
• Synthesises the economic data provided and other information to develop a 17-20
sustained, logical and well-structured response
• Demonstrates a comprehensive and analytical understanding of the effectiveness
of Australia’s fiscal policy in managing economic growth and income
distribution.

• Consistently applies a range of economic terms with relevant concepts,

relationships and theory
• Uses the economic data provided and other information to develop a logical and 13-16
well-structured response
• Demonstrates a detailed and accurate understanding of the effectiveness of
Australia’s fiscal policy in managing economic growth and income distribution.

• Applies economic terms, concepts, relationships and theory

• Uses some economic data provided and other information to develop a coherent
response 9-12
• Demonstrates an understanding of the effectiveness of Australia’s fiscal policy in
managing economic growth and income distribution.

• Uses some economic terms, concepts, relationships or theory

• Uses some economic data provided or other information
• Demonstrates some understanding of Australia’s fiscal policy in managing 5-8
economic growth and income distribution.

• Uses some economic terms

• Presents a limited response
• Sketches in general some aspects of Australia’s fiscal policy in some of the 1-4
economic objectives.

Answers could include:

• Fiscal policy
• Taxation revenue – changes to taxation, MITO, concessions.
• Spending measures – health, infrastructure, education and training,
regional spending, environment
• Regulatory reforms and market-based schemes could to be discussed
• Reference to the 21/22 and 22/23 budget
• Economic growth – Agg Demand (diagram) and multiplier effects - linkage needs to be
shown
• Income distribution - taxation impacts and spending measures – impact on different
levels of income
• Conflict between the 2 issues could also be shown throughout the essay.
• Limitations of Fiscal policy could also be discussed.

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Sample Answer:

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END OF SECTION III

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Section IV
In your answer you will be assessed on how well you:
• demonstrate knowledge and understanding relevant to the question
• apply relevant economic information, terms, concepts, relationships and theory
• present a sustained, logical and cohesive response

Question 27 (20 marks)

Analyse how changes in the demand for the Australian dollar affects trade and financial
flows in the Australian economy.

Outcomes Assessed: H1, H2, H4, H7, H8, H10

Criteria Marks
• Extensive integration of relevant terms, concepts, relationships and theories 17-20
• Provides comprehensive economic information in a sustained, logical and
cohesive response
• Demonstrates a clear and comprehensive analysis of how changes in the demand
for the Australian dollar affects trade and financial flows in the Australian
economy.

• Integrates relevant terms, concepts, relationships and theories 13-16

• Provides sound economic information in a sustained, logical and cohesive
response
• Demonstrates a clear understanding of how changes in the demand for the
Australian dollar affects trade and financial flows in the Australian economy.

• Applies relevant terms, concepts, relationships and theories 9-12

• Develops a coherent response
• Demonstrates some understanding of how changes in the demand for the
Australian dollar affects trade and financial flows in the Australian economy.

• Uses some appropriate economic terms, concepts and relationships 5-8

• Develops a generalised response
• States some aspects of how changes in the demand for the Australian dollar
affects trade and financial flows in the Australian economy.

• Uses few economic terms, concepts and relationships 1-4

• Presents a limited response
• Uses some economic terms and/or concepts that relate to the demand for the
Australian dollar.

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Sample Answer:

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Question 28 (20 marks)
Evaluate the effectiveness of recent macroeconomic policy in addressing inflation and
unemployment in Australia.

Outcomes Assessed: H1, H2, H4, H7, H8, H10

Criteria Marks
• Extensive integration of relevant terms, concepts, relationships and 17-20
theories
• Provides comprehensive economic information in a sustained, logical and
cohesive response.
• Provides clear and comprehensive evaluation on the effectiveness of
recent macroeconomic policy in addressing inflation and unemployment
in Australia

• Integrates relevant terms, concepts, relationships and theories 13-16

• Provides sound economic information in a sustained, logical and cohesive
response
• Provides a clear evaluation on the effectiveness of recent macroeconomic
policy in addressing inflation and unemployment in Australia

• Applies relevant terms, concepts, relationships and theories 9-12

• Develops a coherent response
• Provides a general evaluation on the effectiveness of recent
macroeconomic policy in addressing inflation and unemployment in
Australia

• Uses some appropriate economic terms, concepts and relationships 5-8

• Develops a generalised response
• States some aspects on the effectiveness of recent macroeconomic policy
in addressing inflation and unemployment in Australia

• Uses few economic terms, concepts and relationships 1-4

• Presents a limited response
• Uses some economic terms and/or concepts that relate to macroeconomic
policy and inflation and unemployment in Australia.

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Sample Answer:

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