VCE EconomicsPractice Examination 7

This paper covers

• Drought as a microeconomic supply shock: demand and supply, price elasticity, and market failure in food and water markets (Unit 3 AOS 1)
• Supply-side (cost) inflation and the domestic macroeconomic goals — low inflation, strong and sustainable growth, full employment — and living standards (Unit 3 AOS 2)
• External effects of drought: the balance of payments, terms of trade, exchange rate movements and international competitiveness (Unit 3 AOS 3)
• Policy responses compared: monetary and budgetary (aggregate demand) policy versus aggregate supply policies for a recurring supply shock (Unit 4 AOS 1 and 2)

Students are permitted to bring into the examination the materials normally allowed for this subject. Answer all questions in the spaces provided.

This is an ATARMAxxing practice paper. It is not an official examination and is not affiliated with, endorsed by, or produced by the VCAA, NESA or the QCAA.