NSW Education Standards Authority

2022 HIGHER SCHOOL CERTIFICATE EXAMINATION

Economics
General • Reading time – 5 minutes
Instructions • Working time – 3 hours
• Write using black pen
• Calculators approved by NESA may be used

Total marks: Section I – 20 marks (pages 2–8)

100 • Attempt Questions 1–20
• Allow about 35 minutes for this section

Section II – 40 marks (pages 9–20)

• Attempt Questions 21–24
• Allow about 1 hour and 15 minutes for this section

Section III – 20 marks (pages 21–23)

• Attempt either Question 25 or Question 26
• Allow about 35 minutes for this section

Section IV – 20 marks (page 24)

• Attempt either Question 27 or Question 28
• Allow about 35 minutes for this section

2060
Section I

20 marks
Attempt Questions 1–20
Allow about 35 minutes for this section

Use the multiple-choice answer sheet for Questions 1–20.

1 Which of the following is responsible for the promotion of global financial stability?

A. World Bank
B. United Nations
C. International Monetary Fund
D. Organisation for Economic Cooperation and Development

2 A jobless person has now stopped looking for work due to the lack of suitable job
vacancies.

Which row of the table shows how this person would now be counted in official labour
force data?

Unemployed In the labour force

A. No No
B. No Yes
C. Yes No
D. Yes Yes

3 Which of the following will NOT contribute to the process of globalisation?

A. Increase in international migration

B. Increase in international financial flows
C. Trade policies which are less protectionist
D. Decrease in significance of transnational corporations

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4 Full employment is said to occur when the unemployment rate is

A. equal to zero.
B. low and unemployment is only cyclical.
C. low and unemployment is only structural.
D. low and consistent with a non-accelerating rate of inflation.

5 Which of the following is most likely to result from a depreciation in a nation’s currency?

A. Its imports become cheaper and its inflation decreases.

B. Its imports become more expensive and its inflation increases.
C. Its exports become cheaper and its inflation decreases.
D. Its exports become more expensive and its inflation increases.

6 Farmers purchase and trade permits for water use along a river.

This is an example of environmental management through the use of

A. targets.
B. regulations.
C. market-based policies.
D. international agreements.

7 An Australian company buys shares in a European bank to the value of $1 million.

Where would this be recorded on the Capital and Financial Account?

A. Direct investment
B. Portfolio investment
C. Financial derivatives
D. Other investment

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8 The diagram shows a shift in aggregate demand for an economy.

Average
price AS
level

AD
AD1
Real GDP

All other things being equal, which of the following factors is NOT likely to have caused
this shift?

A. An increase in exports
B. An increase in imports
C. A decrease in business investment
D. A decrease in government expenditure

9 Why might a government look to end a short-term wage subsidy?

A. To expand the economy

B. To reduce the government budget deficit
C. To reduce the government budget surplus
D. To discourage employers from hiring new employees

10 A government denies a proposed merger between two airlines.

What is this an example of?

A. Regulation being used to enhance competition in a factor market

B. Regulation being used to enhance competition in a product market
C. Deregulation being used to enhance competition in a factor market
D. Deregulation being used to enhance competition in a product market

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11 The table shows selected information for the balance of payments for a country with a
floating exchange rate.

Component Amount
($ billion)
Net goods 80.5
Net services 10.2
Primary income −63.8
Secondary income −4.3
Capital account −13.2
Financial account −17.5
Net error and omissions 8.1

What is the balance on the Current Account?

A. $22.6 billion
B. −$22.6 billion
C. $30.7 billion
D. −$30.7 billion

12 What would be the likely impact of a change in a goods and services tax (GST) from 10%
to 15%?

A. Decreased Gini coefficient and greater income equality

B. Decreased Gini coefficient and greater income inequality
C. Increased Gini coefficient and greater income equality
D. Increased Gini coefficient and greater income inequality

13 Which of the following is most likely to increase the labour force participation rate?

A. A decrease in the tax-free threshold

B. An increase in the childcare subsidy
C. An increase in the highest marginal tax rate
D. An increase in the minimum school leaving age

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14 Which row of the table shows the combination of shifts in the aggregate demand (AD)
and aggregate supply (AS) curves that is most likely to lower gross domestic product
(GDP)?

Shift in aggregate Shift in aggregate

demand curve supply curve
A. Right Right
B. Right Left
C. Left Right
D. Left Left

15 Which of the following would most likely cause the non-accelerating inflation rate of
unemployment (NAIRU) to fall?

A. Increased interest rates

B. Increased company tax rate
C. Increased government spending on welfare payments
D. Increased government spending on vocational training

16 In Year 1, four countries each had real GDP of $20 billion.

The figures for Year 2 for each country are shown in the table.

Nominal GDP CPI

($ billion)
Country A 18 90
Country B 22 110
Country C 23 118
Country D 27 130

Which country experienced negative economic growth in real terms in Year 2?

A. Country A
B. Country B
C. Country C
D. Country D

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17 The table shows data for a three-sector economy.

Year Income (Y) Consumption (C)

($ million) ($ million)
1 2000 1600

2 2400 1920

What will be the level of income in Year 3 if investment falls by $30 million?

A. $1970 million
B. $2250 million
C. $2370 million
D. $2400 million

18 The table shows selected information for a hypothetical economy.

Year Export price index Import price index

1 100 100
2 115 105
3 110 85

Which row of the table below shows the change in terms of trade (ToT) from Year 2 to
Year 3 and a corresponding possible reason for this change?

ToT Reason
A. Improves Reduction in foreign labour costs
B. Improves Increase in global demand for exports
C. Deteriorates Decrease in global demand for exports
D. Deteriorates Increase in the supply of foreign raw materials

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Refer to the following diagram to answer Questions 19−20.

The diagram shows the market for a good in a particular economy.

S
18
16
14
12
Price
($) 10
8
6 D
4
2

10 20 30 40 50 60 70 80
Quantity (millions)

This economy initially had a tariff of $6 placed upon the world price of $8 for this good.

The government has now reduced the tariff from $6 to $4.

19 All else remaining unchanged, what is the impact of this change in tariff on government
revenue?

A. Increase of $80 million

B. Decrease of $80 million
C. Increase of $240 million
D. Decrease of $240 million

20 All else remaining unchanged, by how much does the revenue of foreign producers of
this good change as a result of this lower tariff?

A. $40 million
B. $80 million
C. $160 million
D. $240 million

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© 2022 NSW Education Standards Authority
 2022 HIGHER SCHOOL CERTIFICATE EXAMINATION

Centre Number

Economics
Student Number
Section II Answer Booklet

40 marks
Attempt Questions 21–24
Allow about 1 hour and 15 minutes for this section
Do NOT write in this area.

Instructions • Write your Centre Number and Student Number at the top of this
page.

• Answer the questions in the spaces provided. These spaces

provide guidance for the expected length of response.

• Extra writing space is provided at the back of this booklet.

If you use this space, clearly indicate which question you are
answering.

Please turn over

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2061 15110
Question 21 (10 marks)

(a) Define the term fiscal policy. 2

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(b) Explain a possible consequence of ONE method of financing a budget deficit. 3

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 Question 21 (continued)

(c) Explain the economic factors that have contributed to the Australian 5
Government’s current fiscal policy stance.

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Question 22 (10 marks)

(a) Using examples, distinguish between a public good and a private good. 2
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(b) Explain how the use of solar panels by households can create a positive 3
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 Question 22 (continued)

(c) Explain how a government’s objective of environmental sustainability may 5

conflict with its other economic objectives.
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Question 23 (10 marks)

(a) Outline how the value of a currency is determined under a floating exchange 2
rate system.

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(b) Explain the impact of an increase in a country’s cash rate on its exchange rate. 3
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 Question 23 (continued)

(c) Explain likely changes to the structure of industry in Australia as a result of 5

current trends in the global economy.

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Question 24 (10 marks)

(a) Consider an economy other than Australia.

Name of economy: ..........................................................................................

(i) Explain ONE positive impact that trade has had on this economy. 3
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(ii) Explain ONE negative impact that trade has had on this economy. 3
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 Question 24 (continued)

(b) A country has decided to increase its quota of imported beef. 4

Discuss the likely impact of this increase on this country’s economy.

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Section II extra writing space
If you use this space, clearly indicate which question you are answering.

Do NOT write in this area.

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 Section II extra writing space
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Do NOT write in this area.

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Section II extra writing space
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– 20 – © 2022 NSW Education Standards Authority

Office Use Only – Do NOT write anything, or make any marks below this line.
9410310299
 2022 HIGHER SCHOOL CERTIFICATE EXAMINATION

Economics

Section III

20 marks
Attempt either Question 25 or Question 26
Allow about 35 minutes for this section

Answer the question in the Sections III and IV Writing Booklet. Extra writing booklets are
available.

Your answer will be assessed on how well you:

● demonstrate knowledge and understanding relevant to the question
● use the information provided
● apply relevant economic terms, concepts, relationships and theory
● present a sustained, logical and cohesive response

Please turn over

2062 – 21 –
Question 25 (20 marks)

Analyse the impact of changes in the components of the balance of payments on the value of
the Australian dollar. In your answer, refer to the information provided.

The current account surplus reached another record high in the March quarter
2021, driven by a record $5.2 billion increase in the balance on goods and services
surplus. Exports of goods and services rose $7.8 billion (7 per cent), while imports
of goods and services rose $2.6 billion (3 per cent). The net primary income deficit
rose by $3.1 billion to $6.0 billion in the March quarter 2021.
Australian Bureau of Statistics, 2021
©Australian Bureau of Statistics

Australian dollar/US dollar exchange rate 2012–2022

1.1

1.0

0.9

0.8

0.7

0.6

2012 2014 2016 2018 2020 2022

Australian Bureau of Statistics, 2022

© Statista Pte Ltd

Current account as a % of GDP

4

–2

–4

–6
2012 2014 2016 2018 2020

Reserve Bank of Australia

©RBA
OR

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Question 26 (20 marks)

Analyse the impact of labour market policies on economic growth and the distribution of
income and wealth in Australia. In your answer, refer to the information provided.
Due to copyright restrictions, this material cannot be displayed until permission has been
obtained.

Productivity 2016–17 2017–18 2018–19 2019–20 2020–21

GDP per hour worked 0.8 0.2 –0.1 1.5 1.2
Gross value added per hour 1.4 0.3 0.0 1.8 1.2
worked market sector

Real unit labour costs –4.0 0.1 –0.7 –1.7 –2.9

Australian Bureau of Statistics, 2021

©Australian Bureau of Statistics

Wages and GDP growth rates, 2012–2022

4

–2

–4

–6
–8
2012 2014 2016 2018 2020 2022

KEY
Wages growth GDP growth

Adapted from Australian Bureau of Statistics, 2021

©Australian Bureau of Statistics

Please turn over

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Section IV

20 marks
Attempt either Question 27 or Question 28
Allow about 35 minutes for this section

Answer the question in the Sections III and IV Writing Booklet. Extra writing booklets are
available.

Your answer will be assessed on how well you:

● demonstrate knowledge and understanding relevant to the question
● apply relevant economic information, terms, concepts, relationships and theory
● present a sustained, logical and cohesive response

Question 27 (20 marks)

Compare how inflation affects individuals, firms and government in Australia.

OR

Question 28 (20 marks)

Analyse reasons for the differences that exist between nations in terms of economic growth
and development.

End of paper

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© 2022 NSW Education Standards Authority