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2026 VCE Economics exam: What to learn from last year's mistakes
Hi all, in preparation for the upcoming exam, here's what to learn from last year's mistakes.
These are the 2025 questions I would redo first.
Section B, Q6c: average 2.3/6; scored zero 29%; full marks 6%.
Section B, Q2b: average 1.3/3; scored zero 32%; full marks 23%.
Section B, Q4c: average 1.3/3; scored zero 35%; full marks 24%.
Section B, Q6a: average 0.9/2; scored zero 46%; full marks 36%.
Section B, Q1b: average 1.4/3; scored zero 33%; full marks 26%.
VCAA's figures are rounded. These are question averages, not study scores.
1. Q6c: Evaluate both policies
Where students went wrong
Students described how monetary or budgetary policy operates without evaluating its strengths and weaknesses in global uncertainty. Some covered only one policy.
What they should have done
For monetary policy, weigh the ability to adjust the stance against transmission lags and the limits of using aggregate demand to address a supply disruption. For budgetary policy, weigh targeted support against implementation delays or the risk that extra demand worsens inflation. Tie each judgement to the uncertainty in the question. Knowing what a cash-rate cut does is only the starting point.
2. Q2b: This was elasticity of supply
Where students went wrong
Responses discussed demand for coffee, shifts in supply, or why production changes without explaining responsiveness to a price change over time.
What they should have done
Price elasticity of supply concerns the percentage change in quantity supplied relative to a percentage change in price. For coffee beans, improved storage technology can let producers hold more usable stock and release it when prices rise. Shorter growing or production times can also make quantity supplied more responsive. Identify how the relevant constraint changes over time and explain why that increases PES. A rise in supply is not automatically evidence of more elastic supply.
3. Q4c: A terms-of-trade rise has more than one possible source
Where students went wrong
Students treated the terms of trade as the exchange rate or assumed an improvement always raises inflation.
What they should have done
Terms of trade = export price index ÷ import price index × 100. Higher export prices can increase export income and spending, adding demand pressure. Lower import prices can instead reduce the prices of imported consumer goods or business inputs, easing price pressure. Identify which change is driving the improvement before explaining its inflation effect.
4. Q6a: Explain a smaller-than-forecast budget deficit
Where students went wrong
Answers confused the budget with the current account or failed to connect economic conditions to government receipts and payments.
What they should have done
If unemployment is lower than forecast, employment income and tax receipts may be higher while unemployment-related payments are lower. Those automatic stabiliser effects can make the actual deficit smaller than forecast without a new discretionary policy. State what changes on each side of the budget.
5. Q1b: Direct provision means government supplies the service
Where students went wrong
Students substituted a subsidy or regulation for direct provision, or described a service without explaining the market failure.
What they should have done
Identify the government-produced service and the allocation problem it addresses. Public schooling is an example: benefits extend beyond the student, so reliance on private purchasing can leave education underconsumed relative to the socially desirable level. Government provision increases access and consumption. A payment to a private producer is a different intervention and needs its own explanation.
Source: VCAA 2025 Economics examination report: source. Averages and percentages above are VCAA's published, rounded figures; the explanations are my paraphrases.
Use the VCE Economics hub and past papers and examiner reports alongside this.
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