§-Module

Macroeconomics

13 dot points across 13 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

What determines the overall level of output, prices and employment in the economy?

Use the aggregate demand and aggregate supply model to explain how the equilibrium level of real output and the price level are determined and how they change.

The components of aggregate demand, the shape of aggregate supply, macroeconomic equilibrium, and how demand and supply shocks change real output and the price level in Australia.

9 min answer →

What does the balance of payments record and why does Australia run a current account deficit?

Explain the structure of the balance of payments and evaluate the causes and significance of Australia's current account deficit.

The structure of the current account and the capital and financial account, the causes of Australia's current account deficit, and how the two accounts balance, with ABS context.

9 min answer →

What drives economic growth and does it always raise living standards?

Explain the causes and measurement of economic growth and evaluate its effect on material and non-material living standards in Australia.

How real GDP measures growth, the sources of growth, and the difference between material and non-material living standards, including the costs of growth, with Australian data.

8 min answer →

How do we measure the health of the economy?

Explain the main macroeconomic objectives and the indicators used to measure economic performance in Australia.

Growth, low unemployment, price stability and other goals, plus the ABS and RBA indicators such as GDP, the CPI and the unemployment rate.

8 min answer →

How does the federal budget steer the economy?

Explain how the Australian Government uses fiscal policy to influence economic activity and evaluate its strengths and limitations.

How the federal budget, taxation and spending influence aggregate demand, including the multiplier, budget outcomes and automatic stabilisers.

8 min answer →

Should Australia trade freely or protect its industries?

Evaluate the case for free trade and the methods and effects of protection on the Australian economy.

The methods of protection, who gains and loses from a tariff, the case for and against free trade, and Australia's shift to trade liberalisation and free trade agreements.

9 min answer →

How is income distributed in Australia and should government reduce inequality?

Explain how the distribution of income and wealth is measured and evaluate the role of government in reducing inequality in Australia.

Measuring income and wealth distribution with the Lorenz curve and Gini coefficient, the causes of inequality, and the equity-efficiency trade-off, with Australian policy examples.

8 min answer →

What causes inflation and why does it matter?

Explain how inflation is measured, distinguish between demand-pull and cost-push inflation, and evaluate the costs of inflation for the Australian economy.

How the CPI measures inflation, the difference between demand-pull and cost-push inflation, underlying inflation, and the costs of inflation, with RBA and ABS context.

8 min answer →

Why do nations trade and how does globalisation affect Australia?

Explain the basis for international trade and evaluate the effects of globalisation, protection and exchange rates on the Australian economy.

Comparative advantage, gains from trade, protection, the balance of payments and exchange rates, and how globalisation shapes the Australian economy.

9 min answer →

How can supply-side reform lift the economy's long-run capacity?

Explain how microeconomic and supply-side reforms raise productivity and aggregate supply, and evaluate their effects on the Australian economy.

How supply-side reforms such as deregulation, competition policy, tax reform and labour-market change raise productivity and aggregate supply, with Australian examples and trade-offs.

8 min answer →

How does the RBA use interest rates to manage the economy?

Explain how the Reserve Bank of Australia conducts monetary policy and assess its effectiveness.

How the RBA sets the cash rate to influence borrowing, spending and inflation, the transmission mechanism, and the strengths and limits of monetary policy.

8 min answer →

Why does economic activity rise and fall over time?

Describe the phases of the business cycle and explain how fluctuations in economic activity affect growth, unemployment and inflation in Australia.

The phases of the business cycle, the difference between the cycle and the long-term growth trend, and how booms and recessions affect Australian unemployment and inflation.

7 min answer →

How is unemployment measured and what are its causes and costs?

Explain how unemployment is measured, distinguish between the types of unemployment, and evaluate the economic and social costs of unemployment in Australia.

How the ABS measures the unemployment rate and participation rate, the types of unemployment, the NAIRU, and the costs of unemployment, with Australian context.

8 min answer →