10 Content: Economics HSC Course

10.1 HSC Topic One – The Global Economy

25% of indicative time

The focus of this study is the operation of the global economy and the impact of
globalisation on individual economies.

Outcomes

A student:
H1 demonstrates understanding of economic terms, concepts and relationships
H2 analyses the economic role of individuals, firms, institutions and governments
H3 explains the role of markets within the global economy
H4 analyses the impact of global markets on the Australian and global economies
H5 discusses policy options for dealing with problems and issues in contemporary and
hypothetical contexts
H6 analyses the impact of economic policies in theoretical and contemporary Australian
contexts
H7 evaluates the consequences of contemporary economic problems and issues on
individuals, firms and governments
H8 applies appropriate terminology, concepts and theories in contemporary and
hypothetical economic contexts
H9 selects and organises information from a variety of sources for relevance and
reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.

Content

Students learn to:

Examine economic issues

• examine the effects of globalisation on economic growth and the quality of life, levels
of unemployment, rates of inflation and external stability
• assess the potential impact on the environment of continuing world economic
development
• investigate the global distribution of income and wealth
• assess the consequences of an unequal distribution of global income and wealth
• discuss the effects of protectionist policies on the global economy

Apply economic skills

• analyse statistics on trade and financial flows to determine the nature and extent of
global interdependence
• assess the impact on the global economy of international organisations and
contemporary trading bloc agreements
• evaluate the impact of development strategies used in a range of contemporary and
hypothetical situations.

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Students learn about:

International economic integration

• the global economy
• Gross World Product
• globalisation
– trade in goods and services
– financial flows
– investment and transnational corporations
– technology, transport and communication
– international division of labour, migration
• the international and regional business cycles

Trade, financial flows and foreign investment

• the basis of free trade – its advantages and disadvantages
• role of international organisations – WTO, IMF, World Bank, United Nations, OECD
• influence of government economic forums – G20, G7/8
• trading blocs, monetary unions and free trade agreements
– advantages and disadvantages of multilateral (EU, APEC, NAFTA, ASEAN) and
bilateral agreements

Protection
• reasons for protection – infant industry argument, domestic employment, dumping,
defence
• methods of protection and the effects of protectionist policies on the domestic and
global economy – tariffs, subsidies, quotas, local content rules, export incentives

Globalisation and economic development

• differences between economic growth and economic development
• distribution of income and wealth
• income and quality of life indicators
• developing economies, emerging economies, advanced economies
• reasons for differences between nations
• effects of globalisation
• trade, investment and transnational corporations
• environmental sustainability
• the international business cycle.

Case study

Undertake a case study of the influence of globalisation on an economy other than

Australia, including an evaluation of the strategies used to promote economic growth and
development in this economy.

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10.2 HSC Topic Two – Australia’s Place in the Global Economy

25% of indicative time

The focus of this topic is an examination of Australia’s place in the global economy and the
effect of changes in the global economy on Australia.

Outcomes

A student:
H1 demonstrates understanding of economic terms, concepts and relationships
H2 analyses the economic role of individuals, firms, institutions and governments
H4 analyses the impact of global markets on the Australian and global economies
H5 discusses policy options for dealing with problems and issues in contemporary and
hypothetical contexts
H7 evaluates the consequences of contemporary economic problems and issues on
individuals, firms and governments
H8 applies appropriate terminology, concepts and theories in contemporary and
hypothetical economic contexts
H9 selects and organises information from a variety of sources for relevance and
reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.

Content

Students learn to:

Examine economic issues

• assess the impact of recent changes in the global economy on Australia’s trade and
financial flows
• examine the effects of changes in trade and financial flows on Australia’s economic
performance
• analyse the effects of changes in the value of the Australian dollar on the Australian
economy
• discuss the impact of free trade and protection policies on the quality of life in Australia
• propose likely changes to the structure of industry within Australia as a result of
current trends in the global economy

Apply economic skills

• calculate the main components of Australia’s balance of payments
• analyse the relationship between the balance of the capital and financial account and
the net income balance
● explain the relationship between the current account balance and the balance of the
capital and financial account
● use supply and demand diagrams to explain how the value of a currency is
determined under different exchange rate systems

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● analyse the impact of changes in the components of the balance of payments on the
value of the Australian dollar

Students learn about:

Australia’s trade and financial flows

Value, composition and direction of Australia’s trade and financial flows

• trends in Australia’s trade pattern
• trends in financial flows – debt and equity

Australia’s Balance of Payments

• structure
– Current Account, debits and credits
– Capital and Financial Account
• links between key Balance of Payments categories
• trends in the size and composition of Australia’s Balance of Payments
– international competitiveness, terms of trade, international borrowing, foreign
investment
– effects of these trends on Australia’s Balance of Payments

Exchange rates
• measurement of relative exchange rates
– to other individual currencies
– Trade Weighted Index
• factors affecting the demand for and supply of Australian dollars
• changes in exchange rates – appreciation/depreciation
• determination of exchange rates including fixed, flexible and managed rates
• the influence of the Reserve Bank of Australia on exchange rates
• the effects of fluctuations in exchange rates on the Australian economy

Free trade and protection

• Australia’s policies regarding free trade and protection
• Australia’s multilateral and bilateral free trade agreements – (overview of two
examples of each type of agreement)
• the implications of Australia’s policies for individuals, firms and governments
• implications for Australia of protectionist policies of other countries and trading blocs.

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10.3 HSC Topic Three – Economic Issues

25% of indicative time

The focus of this topic is the nature, causes and consequences of the economic issues
and problems that can confront contemporary economies.

Outcomes

A student:
H1 demonstrates understanding of economic terms, concepts and relationships
H2 analyses the economic role of individuals, firms, institutions and governments
H4 analyses the impact of global markets on the Australian and global economies
H7 evaluates the consequences of contemporary economic problems and issues on
individuals, firms and governments
H9 selects and organises information from a variety of sources for relevance and
reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.

Content

Students learn to:

Examine economic issues

• examine the arguments for and against increasing economic growth rates
• investigate the economic and social problems created by unemployment
• analyse the effects of inflation on an economy
• discuss the effect of a continued current account deficit on an economy
• investigate recent trends in the distribution of income in Australia and identify the
impact of specific economic policies on this distribution
• analyse the economic and social costs of inequality in the distribution of income
• examine the economic issues associated with the goal of ecologically sustainable
development

Apply economic skills

• identify and analyse problems facing contemporary and hypothetical economies
• calculate an equilibrium position for an economy using leakages and injections
• determine the impact of the (simple) multiplier effect on national income
• explain the implications of the multiplier for fluctuations in the level of economic activity
in an economy
• calculate the unemployment rate and the participation rate using labour force statistics
• interpret a Lorenz curve and a Gini coefficient for the distribution of income in an
economy
• use economic concepts to analyse a contemporary environmental issue
• assess the key problems and issues facing the Australian economy.

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Students learn about:

Economic issues in the Australian economy

Economic growth
• aggregate demand and its components: Y = C+I+G+X–M
• injections and withdrawals (I+G+X; S+T+M)
• the simple multiplier: k = 1/(1–MPC)
• measurement of growth through changes in real Gross Domestic Product
• sources and effects of economic growth in Australia
• increases in aggregate supply – improvements in efficiency and technology
• trends in business cycle

Unemployment
• measurement
– labour force
– participation rate
– unemployment rate
• trends
• types and causes
– cyclical
– structural
– frictional
– seasonal
– underemployment
– hidden
– long term
• non-accelerating inflation rate of unemployment (NAIRU)
• main groups affected by unemployment
• effects of unemployment – economic and social costs

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Inflation
• measurement – headline and underlying
• trends
• causes
– demand inflation
– cost inflation
– imported inflation
– inflationary expectations
• positive and negative effects

External stability
• measurement
– Current Account Deficit (CAD) as a percentage of Gross Domestic Product
– net foreign debt as a percentage of Gross Domestic Product
– net foreign liabilities as a percentage of Gross Domestic Product
– terms of trade
– exchange rate
– international competitiveness
• trends
• positive and negative causes and effects

Distribution of income and wealth

• measurement – Lorenz curve and Gini coefficient
• sources of income as a percentage of household income
• taxation, transfer payments and other assistance
• sources of wealth
• dimensions and trends, according to gender, age, occupation, ethnic background and
family structure
• economic and social costs and benefits of inequality

Environmental sustainability
• ecologically sustainable development
• private and social costs and benefits – externalities, market failure
• public and private goods – free riders
• environmental issues:
– preservation of natural environments
– pollution, climate change
– depletion of renewable and non-renewable resources.

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10.4 HSC Topic Four – Economic Policies and Management

25% of indicative time

This topic focuses on the aims and operation of economic policies in the Australian
economy and hypothetical situations.

Outcomes

A student:
H1 demonstrates understanding of economic terms, concepts and relationships
H2 analyses the economic role of individuals, firms, institutions and governments
H5 discusses alternative policy options for dealing with problems and issues in
contemporary and hypothetical contexts
H6 analyses the impact of economic policies in theoretical and contemporary Australian
contexts
H7 evaluates the consequences of contemporary economic problems and issues on
individuals, firms and governments
H9 selects and organises information from a variety of sources for relevance and
reliability
H10 communicates economic information, ideas and issues in appropriate forms
H11 applies mathematical concepts in economic contexts
H12 works independently and in groups to achieve appropriate goals in set timelines.

Content

Students learn to:

Examine economic issues

• analyse the opportunity cost of government decisions in addressing specific economic
problems or issues
• investigate structural changes in the Australian economy resulting from
microeconomic policies
• apply economic theory to explain how a government could address an economic
problem or issue in hypothetical situations
• analyse alternative ways to finance a budget deficit

Apply economic skills

• explain how governments are restricted in their ability to simultaneously achieve
economic objectives
• use (simple) multiplier analysis to explain how governments can solve economic
problems
• identify limitations of the effectiveness of economic policies
• explain the impact of key economic policies on an economy
• propose and evaluate alternative policies to address an economic problem in
hypothetical and the contemporary Australian contexts
• explain, using economic theory, the general effects of macroeconomic and
microeconomic policies on an economy
• select an appropriate policy mix to address a specific economic problem.

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Students learn about:

Economic objectives in relation to:

• economic growth and quality of life
• full employment
• price stability
• external stability
• environmental sustainability
• distribution of income

Potential conflicts among objectives

Macroeconomic policies
• rationale for macroeconomic policies – stabilisation and shifts in aggregate demand

Fiscal policy
• Federal Government budgets and budget outcomes
• effects of budgetary changes on resource use, income distribution and economic
activity
• methods of financing deficits
• use of a surplus

Monetary policy
• purpose of monetary policy
• implementation of monetary policy by the Reserve Bank of Australia
• impact of changes in interest rates on economic activity and the exchange rate

Microeconomic policies
• rationale for microeconomic policies including shifts in aggregate supply, efficiency
• effects of microeconomic policies on individual product and factor markets, individual
industries and the economy
• regulation and deregulation – competition policy

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Labour market policies
• role of national and state systems
• the national system for determining
– minimum employment standards
– minimum wages
– awards
– enterprise agreements
– employment contracts for high income earners
• dispute resolution
• arguments for and against the use of centralised, decentralised and individualised
methods of determining employment contracts
• education, training and employment programs

National and global context for environmental management

• regulations
• market-based policies
• targets
• international agreements

Limitations of economic policies

• time lags
• global influences
• political constraints

Policy responses and their effects in dealing with the economic objectives
• economic growth and quality of life
• full employment
• price stability
• external stability
• distribution of income
• environmental sustainability.

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