Foreign equity is foreign investment in the form of:

ownership of an Australian business by another country

During the mining boom, which of the following sets of indicators would have most likely occurred? (60 secs)

TOT improved, NIIP decreased, CAB decreased, ER appreciated

Other than EG, Inf and UE, the two other gov't policy objectives are:

eq. distribution of income; efficient allocation resources

Global economies are increasingly linked through:

Trade, investment, tourism and immigration

Repayments on foreign debt is in the form of _________, while repayments on foreign equity are

interest; dividends and profit remittance

If real output exceeds expenditure:

Inventories will rise and production will slow

Which of the following statements is correct?

New Zealand has a comparative advantage in steel.

Which of the following Free Trade Agreements (FTAs) is Australia NOT a signatory to?

European Union Free Trade Agreement (EU FTA)

Repayments on an overseas loan made by an Australian company would be a:

Debit in the CA and would reduce overseas liabilities

The marginal propensity to consume (MPC) refers to the:

proportion of any change in income spent on consumption.

Which of the following factors is most likely to increase the size of a federal budget surplus? (60 secs)

A depreciation of the Australian dollar.

Which of the following statements is true?

Monetary policy is more effective in a boom than a recession

Australia's top 3 exports (by value) are:

Iron ore, coal and education-related travel services

The Trade-Weighted Index (TWI) shows the value of a countries currency relative to:

the exchange rates of their main trade partners

The movement of the aggregate production function (APF) from APF1 to APF2 is most likely to reflect:

Technical changes, innovations and/or reforms

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Yr12 ATAR Economics Unit 3-4 (2025)

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Questions 25

Answers

1
If autonomous investment were to rise by $50 the new level of Ye would be (60 secs)
$690
$675
$645
$600
2
Foreign equity is foreign investment in the form of:
an outstanding loan owed to Australia by another country
ownership of an Australian business by another country
an outstanding loan that one country owes to another
Australian ownership of a foreign business
3
During the mining boom, which of the following sets of indicators would have most likely occurred? (60 secs)
TOT improved, NIIP decreased, CAB decreased, ER appreciated
Economic growth, inflation and UE all increased
Foreign Debt increased, Agg. Demand increased, Agg. Expenditure decreased
Productivity increased, Agg. Exp increased, MP eased (IRs decreasing)
4
Other than EG, Inf and UE, the two other gov't policy objectives are:
Stabilise the business cycle; macroeconomic equilibrium
eq. distribution of income; efficient allocation resources
consumer confidence; business confidence
EG 3.5%, Inf 2.5%, UE 5%
5
The formula for calculating the spending multiplier is:
K = 1÷MPC
K = 1xMPS
K = 1÷MPS (-1)
K = 1÷MPS
6
Global economies are increasingly linked through:
Trade, investment, immigration and education
Free trade agreements and foreign investment
Specialisation and theories of comparative advantage
Trade, investment, tourism and immigration
7
Identify the following model:
Gains from exports model
Subsidy model
Gains for imports model
Tariff model
8
Repayments on foreign debt is in the form of _________, while repayments on foreign equity are
debt; equity
interest; dividends and profit remittance
wages and salaries; interest
liabilities; assets
9
Monetary policy affects which factors of AD?
C, G, Nx
C, I, Nx
C, I, G
I, NX
10
If MPC = 0.7 and gov't expenditure increases by $15bn, GDP will increase by? (60 secs)
$15 billion
$45 billion
$50 billion
$10.5 billion
11
If real output exceeds expenditure:
Inventories will fall and production will increase
Inventories will rise and production will slow
Aggregate expenditure will rise
Inventories will remain unchanged
12
Which of the following statements is correct?
New Zealand has a comparative advantage in steel.
Australia has a comparative advantage in both products.
It would be best for Australia to produce both products.
Producing one unit of butter in Aust costs 2 units of steel.
13
The least expansionary method of financing a budget deficit is?
Borrowing from overseas banks
borrowing from local banks
Borrowing from the RBA
to cut taxation rates
14
In which phase of the business cycle would expect this economy to be in?
Trough
Recession
Boom
Equilibrium
15
Which of the following Free Trade Agreements (FTAs) is Australia NOT a signatory to?
European Union Free Trade Agreement (EU FTA)
Australia-United Kingdom Free Trade Agreement (AUS-UK FTA)
Australia-United States Free Trade Agreement (AUSFTA)
Japan-Australia Economic Partnership Agreement (JAEPA)
16
Interpret the exchange rate movement of the USD from the following model (be careful! - 60 seconds)
Depreciation
Deterioration
Improvement
Appreciation
17
Repayments on an overseas loan made by an Australian company would be a:
Debit in the FA and would increase overseas assets.
Debit in the FA and would reduce overseas liabilities.
Debit in the CA and would reduce overseas liabilities
Debit in the FA and would increase overseas liabilities.
18
The marginal propensity to consume (MPC) refers to the:
level of consumption as a proportion of total income.
change in consumption as a result of higher interest rates.
proportion of any change in income spent on consumption.
multiplier effect
19
Which of the following factors is most likely to increase the size of a federal budget surplus? (60 secs)
A fall in iron ore and coal prices.
A depreciation of the Australian dollar.
A rise in the % of the population above the retirement age.
A slowdown in world economic growth.
20
The formula for calculating Terms of Trade is:
MPI x XPI ÷ 100
MPI ÷ XPI x 100
XPI ÷ MPI x 100
XPI x MPI ÷ 100
21
The formula for calculating Aggregate Expenditure (AE) is:
C+I+G+X+M
C+I+G+Mx
C+I+G+Nx (x-m)
C+L+G+Nx (x-m)
22
Which of the following statements is true?
Monetary policy is more effective in a boom than a recession
Expansionary FP involves reducing spending and raising taxes
The transmission mechanism is how MP affects the government
Taxation reform and trade lib are measures to improve equity
23
Australia's top 3 exports (by value) are:
Iron ore, coal and education-related travel services
Iron ore, natural gas and personal travel
Personal travel, passenger cars and petroleum products
Iron ore, gold and beef
24
The Trade-Weighted Index (TWI) shows the value of a countries currency relative to:
the exchange rates of the main countries they export to
the exchange rates of their main trade partners
export prices to import prices
the weighted average of a basket of currencies
25
The movement of the aggregate production function (APF) from APF1 to APF2 is most likely to reflect:
An increase in the number of workers employed.
An acceleration of the rate of economic growth
Diminishing marginal returns to labour.
Technical changes, innovations and/or reforms

Yr12 ATAR Economics Unit 3-4 (2025) Flashcards | StudBud