Unit 4 §

The Business Cycle §

• the concept of the business cycle
• characteristics of the phases, and causes, of the business cycle
• the relationship between the business cycle and economic indicators

Task 6: Extended Answer - Business Cycle

The aggregate expenditure model §

• the components of aggregate expenditure (AE)
  • consumption
  •  investment
  •  government spending
  •  net exports
• factors affecting each of the components of aggregate expenditure
• the relationship between the consumption function, the marginal propensity to consume and the marginal propensity to save
• the concept of macroeconomic equilibrium
• the impact of changes in aggregate expenditure on the equilibrium level of income/output using the AE model
• the impact of changes in each of the components of aggregate expenditure i.e. the multiplier process using the AE model

The aggregate demand and aggregate supply model §

• the aggregate demand (AD) curve and factors that can cause movements along and shifts of the AD curve
• the aggregate supply (AS) curve and factors that can cause movements along and shifts of the AS curve
• macroeconomic equilibrium using the AD/AS model
• the impact of changes in aggregate demand and aggregate supply on the equilibrium level of income/output using the AD/AS model
• the use of the AD/AS model to explain the business cycle

Task 6: Extended answer – AE & Multiplier (7.5%)

Economic policy objectives §

• the economic objectives of the Australian Government
• sustainable economic growth
• low inflation (price stability)
• low unemployment (full employment)
• a more equitable distribution of income
• the efficient allocation of resources
• the economic policy objectives of the Reserve Bank of Australia (RBA)
• the extent to which the economic objectives of the Australian Government may conflict and complement each other
• the time lags which occur in the use of economic policies i.e. recognition, decision (implementation) and effect (impact) lags

Fiscal policy §

• the concept of fiscal policy
• the components of government revenue and expenditure in the budget
• the different budget outcomes i.e. balanced, surplus and deficit budgets
• reasons that account for differences between planned and actual budget outcomes
• methods of financing a budget deficit and the uses of a budget surplus
• the distinction between automatic fiscal stabilisers and discretionary fiscal policy
• the distinction between budget outcomes associated with automatic fiscal stabilisers and budget outcomes associated with discretionary fiscal policy
• the concepts of expansionary, contractionary and neutral fiscal policy stances
• the impact of different fiscal policy stances on the level of economic activity
• strengths and weaknesses of fiscal policy
• contemporary (the last three years) fiscal policy stances in Australia
• the impact of different monetary policy stances on the level of economic activity
• strengths and weaknesses of monetary policy
• contemporary (the last three years) monetary policy stances in Australia

Task 7: Short answer/Data interpretation – Economic policy objectives & fiscal policy (7.5%)

Monetary policy §

• the concepts of monetary policy and the cash rate
• circumstances under which the RBA may change the cash rate
• how monetary policy affects the level of economic activity i.e. the transmission mechanism
• the concepts of expansionary, contractionary and neutral monetary policy stances
• the impact of different monetary policy stances on the level of economic activity
• strengths and weaknesses of monetary policy
• contemporary (the last three years) monetary policy stances in Australia

Task 8: Extended answer – Economic policy objectives & fiscal policy (7.5%)

Structural change §

• the concept, and main causes, of structural change
• the effects of structural change
• the relationship between economic growth and structural change

Measures to improve productivity §

• the concept of productivity
• the distinction between labour productivity and multifactor productivity
• the relationship between productivity and economic growth
• recent (the last ten years) government policies that promote productivity and economic growth, such as labour market reform, taxation reform, trade liberalisation, deregulation and competition policy, investment in infrastructure, education and training, research and innovation
• the impact of productivity on the achievement of macroeconomic objectives

Task 9: Short answer/Data interpretation – Structural reform & productivity (7.5%)

Task 10: Semester 2 Mock Exams – All of Unit 3&4 (25%)

Syllabus Dot points that dont matter.

Economic skills §

Economic research §

• identify research questions to investigate
• select appropriate print and electronic media sources of economic information and data on Australia’s economic policy and management
• apply appropriate methods of recording and organising macroeconomic information, including spreadsheets, graphs and tables
• apply problem-solving, critical thinking and decision-making strategies to achieve outcomes which may be predictable and contestable by nature

Reasoning, interpretation and analysis §

• identify and organise relevant information within sources
• identify trends and relationships in economic information and data regarding Australia’s economic policy and management
• use economic information and data to make predictions on Australia’s economic policy and management
• interpret changes in economic data, including prices, unemployment, economic growth, the labour force and productivity
• apply mathematical techniques relevant to macroeconomic analysis, including: calculating the value of the marginal propensity to consume, the marginal propensity to save, and the multiplier; determining the budget outcome; interpreting changes in economic indicators, such as the CPI, GDP and labour force data; calculating a percentage rate of change
• use macroeconomic models to analyse Australia’s policy stance, including the Keynesian aggregate expenditure model and the aggregate demand and aggregate supply model
• apply economic reasoning to Australia’s economic position and policy mix
• use evidence found in economic information and data to justify a conclusion Communication
• select and use appropriate terminology
• select and use appropriate formats when communicating economic understandings
• use economic models to convey economic theory and reasoning about Australia’s policy mix
• reflect on the investigation process used