HSC Economics Exam Questions With
Answers
Value of subsidy=
=vertical distance between two supply curves
Terms of trade=
=Export price index
➗
Import price index
X 100
Income output/ AD=
=C+I+G+(X-M)
Multiplier
K=
=1
➗
1-MPC
MPC=
=
🔼Consumption
➗
🔼Income (Y)
🔼GDP/Y=
=k x 🔼AD
Globalisation
The integration btwn diff. countries & economies that leads to the increased impact of int. influences
on all aspects of life and ec activity
The global economy
Term used to describe the activities of all economies, reflecting that they are now increasingly linked
tgthr into 1 ec unit
Gross World Product
The sum of total output of g&s produced by all economies in the world as a whole.
Migration
The measurement of people btwn countries on a permanrnt/ longterm basis, 12 months+
International Division of labour
The means by which tasks in the prodn process are allocated to diff ppl in diff countries around the
world
,Foreign Direct investment (FDI)
The movement of funds btwn economies for the purpose of est. a new company / buying a
substantial proportion of shares in an existing one. (10% +)
TNC's
Glbl companies that dominate glbl product and factor markets. They have prodn facilities in 2+
countries & owned by residents of 2+ countries
FOREX
foreign exchange mrkts for the buying & selling of currencies as a means of facilitating finance flows
btwn countries
Speculators
Investors who buy/sell financial assets w/ the aim of making profits from ST price movements. They
are often criticised for creating volatility.
International Monetary Fund (IMF)
International agency that consists of 188 members and o/s the stability of the glbl financial system.
Major functions: stability of exchange rates& their adjustments & convertibility
World trade Organisation (WTO)
An organisation of 155 member countries that implements & advances GTA's & resolves trade
disputes btwn nations
Comparative advantage
Ec principle: nations should specialise in the areas of prodn theyre most efficient in (lowest op. cost) &
trade w/ nations to max both nations SOL
International Business Cycle
The fluctuations in the lvl of ec activity in the glbl economy over time
Regional Business Cycle
The fluctuations in the lvl of ec activity in a geo region of the glbl ec over time
Free trade
Situation where there r no artificial barriers to trade imposed by gov that restrict the free exchange of
g&s
Opportunity cost/ real cost/ ec cost
A representation of the alt use of resources. Represents the cost of satisfying 1 want over an alt want.
Tariffs
Taxes imposed on Imp goods for the purpose of protecting domestic industries
, Subsidies
$ payments from gov to bus to encourage prodn of a g/s & influence the allocn of resources in an ec.
Often granted to bus to help them compete w/ o/s prodn of g&s
Quotas
Restrictions on the amounts/ values of various kinds of goods that may be imported
World Bank
Financial inst owned by 188 countries that assist poorer nations w/ ec development through loans
(often w/ little/no interest) to fund investment and reduce pov
Group of 8 nations (G8)
Over the past 1/2 century most important gov ec forum. Consists of 8 largest industrialised nations
inc. US, UK, France, Germany, Canada,Japan, Italy, Russia
Group of 20 nations
Worlds largest ec group. Formed in 1990 & increasingly important role in adressing refo in glbl
financial system and macroec. coordinatn
Purchasing power parity (PPP)
A theory that exchange rates should adjust to equalise the price of identical g&s in diff nations'
economies
Economic development
Broad measure of welfare in a nation that incl. indicators of health, edu, env management, material
living standards
Human development index (HDI)
A measure of ec development devised by the UN development program. Takes into account life
expectancy @birth, lvl edu attainment, material living standard (measured by GNI)
Advanced economies
High income, industrialised or developed economies. Incl. 34 economies in North America, EU, Asia-
Pacific
Developing economies
Experience low SOL, low edu lvls & generally have agri based economies w/ poor infrastructure &
ec/political institutions
Emerging economies
In the process of industrialisation & experiencing high lvls of ec growth
Portfolio investment
The ST movements of funds btwn economies for loans/ the purchase of small shareholdings (<10%)
Answers
Value of subsidy=
=vertical distance between two supply curves
Terms of trade=
=Export price index
➗
Import price index
X 100
Income output/ AD=
=C+I+G+(X-M)
Multiplier
K=
=1
➗
1-MPC
MPC=
=
🔼Consumption
➗
🔼Income (Y)
🔼GDP/Y=
=k x 🔼AD
Globalisation
The integration btwn diff. countries & economies that leads to the increased impact of int. influences
on all aspects of life and ec activity
The global economy
Term used to describe the activities of all economies, reflecting that they are now increasingly linked
tgthr into 1 ec unit
Gross World Product
The sum of total output of g&s produced by all economies in the world as a whole.
Migration
The measurement of people btwn countries on a permanrnt/ longterm basis, 12 months+
International Division of labour
The means by which tasks in the prodn process are allocated to diff ppl in diff countries around the
world
,Foreign Direct investment (FDI)
The movement of funds btwn economies for the purpose of est. a new company / buying a
substantial proportion of shares in an existing one. (10% +)
TNC's
Glbl companies that dominate glbl product and factor markets. They have prodn facilities in 2+
countries & owned by residents of 2+ countries
FOREX
foreign exchange mrkts for the buying & selling of currencies as a means of facilitating finance flows
btwn countries
Speculators
Investors who buy/sell financial assets w/ the aim of making profits from ST price movements. They
are often criticised for creating volatility.
International Monetary Fund (IMF)
International agency that consists of 188 members and o/s the stability of the glbl financial system.
Major functions: stability of exchange rates& their adjustments & convertibility
World trade Organisation (WTO)
An organisation of 155 member countries that implements & advances GTA's & resolves trade
disputes btwn nations
Comparative advantage
Ec principle: nations should specialise in the areas of prodn theyre most efficient in (lowest op. cost) &
trade w/ nations to max both nations SOL
International Business Cycle
The fluctuations in the lvl of ec activity in the glbl economy over time
Regional Business Cycle
The fluctuations in the lvl of ec activity in a geo region of the glbl ec over time
Free trade
Situation where there r no artificial barriers to trade imposed by gov that restrict the free exchange of
g&s
Opportunity cost/ real cost/ ec cost
A representation of the alt use of resources. Represents the cost of satisfying 1 want over an alt want.
Tariffs
Taxes imposed on Imp goods for the purpose of protecting domestic industries
, Subsidies
$ payments from gov to bus to encourage prodn of a g/s & influence the allocn of resources in an ec.
Often granted to bus to help them compete w/ o/s prodn of g&s
Quotas
Restrictions on the amounts/ values of various kinds of goods that may be imported
World Bank
Financial inst owned by 188 countries that assist poorer nations w/ ec development through loans
(often w/ little/no interest) to fund investment and reduce pov
Group of 8 nations (G8)
Over the past 1/2 century most important gov ec forum. Consists of 8 largest industrialised nations
inc. US, UK, France, Germany, Canada,Japan, Italy, Russia
Group of 20 nations
Worlds largest ec group. Formed in 1990 & increasingly important role in adressing refo in glbl
financial system and macroec. coordinatn
Purchasing power parity (PPP)
A theory that exchange rates should adjust to equalise the price of identical g&s in diff nations'
economies
Economic development
Broad measure of welfare in a nation that incl. indicators of health, edu, env management, material
living standards
Human development index (HDI)
A measure of ec development devised by the UN development program. Takes into account life
expectancy @birth, lvl edu attainment, material living standard (measured by GNI)
Advanced economies
High income, industrialised or developed economies. Incl. 34 economies in North America, EU, Asia-
Pacific
Developing economies
Experience low SOL, low edu lvls & generally have agri based economies w/ poor infrastructure &
ec/political institutions
Emerging economies
In the process of industrialisation & experiencing high lvls of ec growth
Portfolio investment
The ST movements of funds btwn economies for loans/ the purchase of small shareholdings (<10%)
