recipes for a prank

8/18/2019 Recipes For a Prank

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Preliminary Topic 1 - An Introduction to Economics

You have not studied economics before but when you open a newspaper or turn on thetelevision to watch the news you are confronted with economic terms and issues.

• Inflation has risen.

• Unemployment is up.

• The value of the Australian dollar rose overnight against the greenback.

• The size of the budget deficit has been reduced.

• The Government wants a arbon Ta!.

• The "eserve #ank has announced a decrease in the cash rate.

• The All $rds inde! has risen on good profit forecasts.

%conomics is about all of these things and many more. &hen you discuss with your friends

the price of an ipod going up or your parents complain about the price of petrol' you arediscussing economics. &hen you decide to continue on to study economics in year (( insteadof going out to work or attending TA)%' you are making an economic decision. *ow youhave the opportunity to understand what makes these things happen and why they areimportant.

%conomics is about making decisions. In this introductory topic you will discover why youhave to make decisions and why businesses and governments also have to make decisions.You will look at some of the ma+or decisions these groups make and e!amine the implicationsof some of these decisions.

Activity 1.1 - The opportunity cost of being an economics student

(. ,ake a list of - alternative things you could be doing with your time in the ne!t yearsinstead of studying economics. *ow rank them in order as to what you would most prefer to do during the ne!t two years.


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(. &hat is your opportunity cost of studying economics/0000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000

. &hy don1t economists include all the alternatives when measuring opportunity cost/ 00000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000000000

2. 3id you consider long4term future income' employment' and university entry in thisdecision/ 5ow about interest and en+oyment/ 0000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000

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6. 7ist in rank order the factors that are the most important in making your decision to stay at

school and study economics instead of your other opportunities. 0000000000

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Activity 1.2 – What is the opportunity cost for a farmer?

Agriculture is an important sector for the Australian economy. In 8(8 the value of farm production was over 96( billion. In addition' the value of farm e!ports is forecast to increase by close to : per cent in 8((4( to 926.( billion' following an estimated rise of ( per centto 92 billion in 8(84((.

)arms in Australia have traditionally been family businesses' passed on from generation togeneration. 5owever' since the (;ictoria' &esternAustralia and ?ueensland. Australian farmers therefore have to make choices about theamount of their land that they will use for grazing and the amount that will be used for growing crops. In addition they need to decide the type of livestock they will have and the

type of crops that they will grow.

7et us consider the decisions that face farmer @o. @o has decided to graze sheep and growwheat. @o now has to consider in what proportions the farms limited resources will beallocated between sheep and wheat. onsider the following production possibilities schedulefor @o.

=heep B888C (8 D - 6 8

&heat BtnsC 8 6


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. &hat factors influence these choices/ 0000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000

2. &hat is the opportunity cost of producing the first 888 sheep/ 00000000000000

6. &hat is the opportunity cost of grazing another 888 sheep/ 00000000000000000


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;. &hat do you notice about the shape of the curve/ 3o you know why it is this shape/ 0000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000000000000000000

(8. The farmer wants to produce more sheep and wheat' so he asks you what he should do todo achieve this. &hat alternatives would you suggest to him/

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((. The farmer follows your recommendations. 3raw in a new BhypotheticalC curve showingwhere the production possibilities function would now be.


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Activity 1.3 – What is the opportunity cost for a car manufacturer?

A car manufacturer has the raw materials' machinery and a factory that allows them to produce two models of cars. $ne is a small 64cylinder car the other is a larger -4cylinder car.&ith these resources the car manufacturer can produce all 64cylinder cars or all -4cylinder cars or a combination of each. The car manufacturer will want to vary production from timeto time depending on changes in consumer demand. The manufacturer can use all theresources to produce


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Activity 1.4 – What are the impications of choices by the government for the

nation?

Cartoon by Nicholson from The Australian www.nicholsoncartoons.com.au

The government can influence the level and types of production in the economy by their policies and levels and direction of spending. If there is greater spending on consumer goodsthen there tends to be higher living standards in the present' but if there is greater spending oncapital goods' this allows for higher levels of production and subseFuently living standards inthe future. The Government in Australia is also responsible for providing public goods suchas education and health care along with social welfare for the needy. It is important to get the

right balance.

(. %ducation and health are sometimes seen as an investment. 5ow could increasedfunding on education or health be an investment/ 00000000000000000000000000

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. &hat issues associated with government decision making and limited resources aredemonstrated in the cartoon/00000000000000000000000000000000000000

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2. =uggest some other areas of government spending that could be considered as creatingcapital goods. 00000000000000000000000000000000000000000000000

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6. &ould a cut in income ta! lead to increased consumption e!penditure or capitale!penditure/ 0000000000000000000000000000000000000000000000000000000

onsider the following production possibilities frontier for a nation.


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((. ould any of your recommendations be politically undesirable/ &hy/ 00000000 00000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000

(. 3raw on the graph the likely effect of technological advancement. &hat other factorscould have similar effects/ 0000000000000000000000000000000000000

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Activity 1.! - Austraia"s business cyce

onsider the following statistics on Australia1s Gross 3omestic Eroduct' rates of growthBpercentage changeC.

Year 1990

/91

1992

/93

1994

/95

1996

/97

1998

/99

2000

/01

2002

/03

2004

/05

2006

/07

2008

/09

2010

/11GDP

growth

%

-0.2 3.7 4.2 3.7 5.3 1.9 2.0 2.6 4.3 0.6 1.8

=ource Australian #ureau of =tatistics

(. $n the graph below' plot Australia1s G3E growth rates from (;;8H;( to 8(8H((. ,ark onthe graph the stages of the business cycle during this period.

. &hen was Australia in a recession/ 00000000000000000000000000000000000000

2. &hen do you think unemployment would have been at its highest level/ 000000000

6. &hen do you think unemployment would have started to decline/ 0000000000000000000000000000000000000000000000000000000000000000000


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Activity 1.# – The $ircuar %o& of 'ncome

On the diagra a!o"e #a!e# the $i"e e&tor o$ the e&ono' and the $#ow o$ one' andgood and er"i&e !etween the e&tor.

(i## in the iing word $ro the )aage !e#ow e*)#aining the ro#e o$ the &ir&+#ar $#ow

o$ in&oe.

The five main sectors of the economy' 00000000000000000' 0000000000000000000' 0000000000000000000' 000000000000000000000000000' 00000000000000000000'transfer funds between each other in e!change for 000000000000000000 and

0000000000000000 . In a simple model' firms pay money to households in the form of 0000000000000000000000000000000000000000000000000000. These payments are madein return for the services of the factors of production' 000000000000000000'


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000000000000000 and 0000000000000000000000000 . The households use this money to purchase 000000000000000000 produced goods and services.

*ot all of the income in the economy is spent on domestically produced goods and services.=ome is withdrawn from the 0000000000000000 flow. The main withdrawals or

0000000000000000 are 000000000000000000' 00000000000000000' and 00000000000000000. The economic symbols for these are =' T and ,.

3emand in the economy does not only come from spending on domestically produced goods but also through the in+ection of funds. The three main types of in+ections are 00000000000000000000' 0000000000000000000000000000000 and 000000000000.The economic symbols for these are 00000' 00000 and 000000.

If in+ections are greater than withdrawals' more income will enter the circular flow and theeconomy will 000000000000 and economic growth will occur. If in+ections are less thanwithdrawals' the economy will 0000000000000 and economic growth will 00000000000000

and unemployment will 00000000000000000000000. If in+ections eFual withdrawals' theeconomy will be 0000000000000000000.

onsider the following statistics for a hypothetical economy. All amounts are in billions of dollars.

, 80 80 60 90 G 90 50

The budget result would be a 000000000000000000 of 900000000000000000000000.

*et e!ports would be a 00000000000000000of 90000000000000000000000000000.

The circular flow would 000000000000000 as in+ections are 00000000000000 thanwithdrawals by an amount of 90000000000000000000000000.

If there was a slowdown in the world economy and e!ports fell to 28' net e!ports would be a 00000000000000000of 90000000000000000000000000000. The circular flow would 000000000000000 as in+ections are 00000000000000 than withdrawals by an amount of 900000000000000000000000000.


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Activity 1.( – What is ife i)e in our neighbouring countries in Asia?

The Fuality of life for the ma+ority of Australians is Fuite high compared to other economies.The 8(( 5uman 3evelopment "eport B53"C Bbased on 88; dataC ranks Australias Fuality

of life as the second highest in the world' after *orway. The main factors that give Australiasuch a high ranking are our high life e!pectancy of D years and the amount of education wereceive' where Australia is ranked first in the world. Australias economic growth asmeasured by Gross *ational Income BG*IC per capita BEEEC is ranked (Dth in the world. Thesethree criteria are used to measure Fuality of life as it is believed that they will reflect acountrys overall standard of living. %ducation is seen as a source of productivity and growthand a high Fuantity of education ranking is considered as an indicator of opportunity for the

people in a country. In some countries in the world such as *iger' in Africa' less than 28 percent of children finish primary school and the rate for female completions is below (< percent. 7ife e!pectancy also reflects your living standards. ountries with low livingstandards tend to have short life e!pectancies. )or e!ample the life e!pectancy in ongo and=ierra 7eone is only 6D years. A long life e!pectancy usually reflects good Fuantities andFuality of food' health and general living standards. The G*I per capita is measured in termsof purchasing power parity BEEEC. This tells you how much people living in a country can

buy with their money compared to someone in a different country. =o a high G*I per capitaBEEEC means that the average persons ability to buy goods and services is high compared tothe average person in a country with a low G*I per capita BEEEC. )or e!ample AustraliasG*I per capita BEEEC was 92


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Indias population live on less than 9(.< U= a day. The level of G*I per capita BEEEC is926-D U= and 2:J of the adult population of India are illiterate. ,alnourishment is a serious

problem. 6DJ of the children in India are below the weight that they should be for their age.This contributes to the average life e!pectancy of only -< years. &omen are even further disadvantaged with only :J of females having attended secondary school compared to


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=ource httpHHwww.plan4ed.orgHlearningcentreHchildlabourH

(. &hat are some of the main measurements mentioned here as impacting on KFuality of life in a nation/0000000000000000000000000000000000000000000000000000

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. &hy do you think Australia is classified as having a high Fuality of life/ 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000

2. 5ow do the poorer nations in Africa and Asia compare to Australia in these areas/ 0000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 00000000000000000000000000000000000000000000000

6. 3o you think India has high living standards/ %!plain your answer. 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000


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:. &hat is the official minimum working age in Australia and India/ 3iscuss how effectivethis is in each country. 00000000000000000000000000000000000000000

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D. onsider the story of Yerammas life in India. &hat is meant by Kbonded/ &hy did

Yerammas parents Kbond him/ 00000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000

;. 5ow does Yerammas life compare to an average (( year old in Australia/ In what waysare they different/ &hich life would you prefer to live/ &hy/

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(8. 5ow would you compare the Fuality of life in Australia compared to that in India/ 00000000000000000000000000000000000000000000000000000000000000

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D(O

$pportunity ost The cost of the best alternative forgone or sacrificed.

EroductionEossibilities )rontier

A curve showing the ma!imum production that can beachieved at a particular time given the e!isting resources and

technology.?uality of 7ife The overall standard of living and wellbeing of the people.

"esources Anything that can be used to produce goods and services.%conomic resources are made up of land Bnatural resourcesC'labour' capital and enterprise

=avings The part of personal disposable income that is not used for thecurrent purchase of consumption goods and services. It is awithdrawal from the circular flow and has an economicsymbol of =.

=carcity A shortage of something in relation to what is wanted.

Ta!ation The main source of government revenue and an instrument ofeconomic policy .The main functions of ta!ation are to releaseresources from the private sector and make these available tothe public sector. It is a withdrawal from the circular flow andhas an economic symbol of T.

Technologicalhange

The introduction of new or improved products' new ormodified production processes or improvements in the

productivity of resources.

&ants Eeoples1 desires for those goods and services which give themsatisfaction.

&elfare A government payment to the needy or worthy without them

providing anything in return' such as pensions' Austudy.&ithdrawals 3eductions or leakages from the circular flow. They include

savings' net ta!es' and imports.


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BaC ABbC #BcC d: 3

-. &hat is the economic return to the entrepreneur known as/

BaC &agesBbC "entBcC InterestBdC Erofit

:. &hat is the labour market/

BaC A market for goodsBbC A market for servicesBcC A factor marketBdC A financial market

D. &hat is the difference between consumer goods and capital goods/

BaC onsumer goods are produced by the private sector and capital goods by the public sector.

BbC onsumer goods can only be used once and capital goods can be used multipletimes.

BcC onsumer goods satisfy wants in the present time and capital goods satisfyfuture wants.

BdC onsumer goods have increasing costs of production and capital goods havedecreasing costs of production.

;. &hich of the following are the best indicators of the Fuality of life in a nation/

BaC The average hours of work and wages paid per hour

BbC The level of government spending on defence and education and theunemployment rate

BcC 7and ownership' profits and the amount of savingsBdC G*I' life e!pectancy and literacy rate

(8. &hat effect will a rise in real G3E have on the rate of unemployment/

BaC It is generally associated with a decline in the employment rate.


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BbC It is generally associated with an increase in the unemployment rate.BcC It is generally associated with a decline in the unemployment rate.BdC It is not related to the unemployment rate.

((. &hich of the following is an e!ample of an in+ection into the circular flow of income/

BaC Ta!ationBbC Government %!penditureBcC =avingsBdC Imports

(. At which stage of the business cycle are employment and the Fuality of life likely to be improving for the ma+ority of people in a country/

BaC #oomBbC 3ownswingBcC ontractionBdC "ecession

(2. &hich of the following are the most important factors businesses consider whenmaking decisions/

BaC osts' revenue' and production alternativesBbC Industrial relations' participation in the political process and voting

BcC =pending' saving' and work BdC %ducation' retirement and saving

(6. &hich group is likely to spend the lowest percentage of their income on lu!urygoods/

BaC =ocial welfare recipientsBbC %mployersBcC ErofessionalsBdC Average wage earners

(


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BbC A market for servicesBcC A factor marketBdC A financial market

"efer to the production possibility frontier below for a clothing manufacturer for Fuestion (:and (D.


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(;. In which phase of the business cycle would this economy be/

BaC %!pandingBbC ontracting

BcC %FuilibriumBdC "ecession

8. &hat would be the budget outcome in this economy/

BaC A surplus of (8BbC A balance budgetBcC A deficit of (8BdC A deficit of (

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