Units 3 & 4 Economics

TERTIARY & CAREER PATHWAYS:

Accountant, Actuary, Auditor, Banking, Business Management, Economist, Financial Planner/Risk Analyst, Insurance, Price Analyst, Public sector Roles, Retail Merchandiser, Stockbroker

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UNIT 3 - Australia’s living standards

The Australian economy is constantly evolving. The main instrument for allocating resources is the market but the Australian Government also plays a significant role in this regard. In this unit students investigate the role of the market in allocating resources and examine the factors that are likely to affect the price and quantity traded for a range of goods and services. They develop an understanding of the key measures of efficiency and how market systems can result in efficient outcomes. Students consider contemporary issues to explain the need for government intervention in markets and why markets might fail to maximise society’s living standards. As part of a balanced examination, students also consider unintended consequences of government intervention in the market. In this unit students develop an understanding of the macroeconomy. They investigate the factors that influence the level of aggregate demand and aggregate supply in the economy and use models and theories to explain how changes in these variables might influence the achievement of the Australian Government’s domestic macroeconomic goals and affect living standards. Australia’s economic prosperity depends, in part, on strong economic relationships with its major trading partners. Students investigate the importance of international economic relationships in terms of their influence on Australia’s living standards. They analyse how international transactions are recorded, predict how economic events might affect the value of the exchange rate and evaluate the effect of trade liberalisation.

Assessment:

• School Assessed Coursework: 25% of Study Score
  
  

UNIT 4 - Managing the Economy

The ability of the Australian Government to achieve its domestic macroeconomic goals has a significant effect on living standards in Australia. The Australian Government can utilise a wide range of policy instruments to influence these goals and to positively affect living standards. Students develop an understanding of how the Australian Government can alter the composition and level of government outlays and receipts to directly and indirectly influence the level of aggregate demand and the achievement of domestic macroeconomic goals.

• Area of Study 1 - focuses on the role of aggregate demand policies in stabilising the business cycle to achieve the Australian Government’s domestic macroeconomic goals. Students examine the role of the Reserve Bank of Australia (RBA) with a focus on its responsibility to alter the cost and availability of credit in the economy. Students consider each of the transmission mechanisms through which changes to interest rates can affect the level of aggregate demand in the economy and how these changes might affect the achievement of the Australian Government’s domestic macroeconomic goals. Students examine and analyse the effects of the last two Australian Government budgets, and how particular initiatives have helped to stabilise the level of aggregate demand and influenced the achievement of domestic macroeconomic goals.
• Area of Study 2 - students consider how the Australian Government utilises aggregate supply policies to manage the Australian economy. If the productive capacity of the economy is expanding, growth in aggregate demand can be met and economic growth can be maintained both now and into the future. Students investigate the role of both market-based and interventionist approaches to managing the supply side of the economy. They evaluate these policy responses in terms of their effect on incentives and consider how they increase competition and efficiency in the economy. Students assess the role of microeconomic reform in terms of its effect on economic prosperity and the achievement of the Australian Government’s domestic macroeconomic goals.

Assessment:

• School Assessed Coursework: 25% of Study Score
• External Assessment (Exam): 50% of Study Score

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Prerequisites:

N/A

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Recommendations:

It is recommended that the student have satisfactory completion of Unit 1 and 2 of Economics and have a average score of 65% in any English.

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