Economics Questions – How does the fiscal balance vary with the business cycle?

| November 24, 2016

1.How does the fiscal balance vary with the business cycle?

2.Why is it difficult to ‘fine tune’ the economy?

3.Trace through the effects on output, inflation and unemployment of an increase in the official cash rate.

4.Why does Australia protect and subsidise the car industry?

What are the disadvantages of this protection?

5.What factors will determine whether a country’s joining of a customs union will lead to trade creation or trade diversion?

6.

Under what circumstances would the demand for imports be likely to be inelastic?

How would an inelastic demand for imports affect the magnitude of fluctuations in the exchange rate?

7. Explain how the balance of the current account of the balance of payments is likely to vary with the course of the business cycle.

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