Economics

Just another WordPress.com site

  • Visitors

Archive for October, 2011

In 10 years time…

Posted by shartley13 on October 3, 2011

Discuss how inflationary pressures and increased interest rates will affect you in 10 years’ time

 

Increased interest rates, as an effect of inflationary pressures will have many effects on me in ten years’ time. In ten years’ time I will be twenty eight, and part of the labour force, earning an income. If interest rates were to increase in ten years’ time, I will have a greater incentive to save a greater proportion of my income, as I get more in return. This means that I will be spending less of my income.

In ten years’ time, I will probably have a house, which I will either be renting or buying. An increase in interest rates will be bad news regardless – if I own my house, I will have to pay more in servicing my mortgage; if I am renting, the landowners will pass on the increase in their mortgage servicing to me, in the form of increased rent. This increase in the cost of housing – whether through an increase in mortgage or increase in rent, will mean that a greater proportion of money will be spent on this area.

This will affect my lifestyle to different degrees; depending on my level of income. If I am a higher income earner, which I no doubt will be, this increase in interest rates will present fewer ramifications to my lifestyle. They will mean that I will have to cut out my luxury consumption and my travelling overseas will be limited to two trips, rather than three, as I have to spend that money on servicing debts. However, I guess, if I earn enough money, an increase in interest rates won’t affect me at all as I can buy a house outright and thus not have to have a mortgage.

However, if, in ten years, I am a lower income earner, the increase in interest rates will have larger impacts on my lifestyle. As a lower income earner, I will probably be borrowing more money, than if I had a higher income, to finance my day-to-day spending and, if I bought a house, a greater mortgage which has to serviced.  This means that a rise on my income will mean that I have more debts to service and a greater proportion of my income will be debt servicing. If I were a lower income earner, the money which I would be spending on entertainment goods will be utilised in my debt servicing. This means that I get a lower utility, with fewer of my wants being satisfied.

If I am lower income earner, an increase in interest rates may lead to me being in a ‘debt trap’ scenario. This means that to finance my debt servicing, I will take out another debt, whether through the form of a credit card or short term loan. This may lead to a debt cycle, which leads to multiple unsustainable loans being procured.

 

Posted in Inflation | Leave a Comment »

Everyone should know

Posted by shartley13 on October 3, 2011

Fiscal policy is something which everyone should know,

It keeps fluctuations in the business cycle, down to a low

There is more than the Budget to macro policy,

It is a fundamental component of our economy

Automatic stabilisers, discretionary changes,

The effects of this policy has extensive ranges

It keeps unemployment low and economic growth high,

It makes income spread equal between you and I

Fiscal policy is something which everyone should know,

It’s a macroeconomic policy which helps the economy go.

Posted in Fiscal Policy | Leave a Comment »

Why Economics?

Posted by shartley13 on October 3, 2011

Before I started Economics as an HSC course, I hadn’t really heard of studying it. I didn’t have much knowledge of what it included, but everyone I spoke to said they thought I would enjoy it. I started Preliminary Economics in Year 10 after I was no longer able to do the Stage 5 course Commerce. I enjoyed Commerce immensely and was excited to extend myself through studying Economics.

I now study Economics because I find it incredibly interesting and because it gives me a deeper understanding of what is happening in the world. I can watch the news and listen to them talk about exchange rates, actually understanding what they are talking about! I think that having knowledge about Economics will help me in decision making in the future, in regards to investments and finances, and if I end up in a career path involving Economics.

Economics is a subject that you can clearly see affecting the world around you and how it impacts you. It isn’t a subject that you would say “when am I going to need this?” you can clearly see that the information you learn will be useful later on.

Thus, I am studying Economics for the HSC because I enjoy it, because it allows me to understand things that are happening in the world around me and because I also think that it will be useful later on in life.

-ES

Posted in Why choose Economics? | Leave a Comment »

Why am I doing Economics for the HSC?

Posted by shartley13 on October 3, 2011

Why am I doing Economics for the HSC?

Initially, I chose economics as the online work side of it was attractive. I didn’t really think about what the subject actually taught and just went along with it. However, as the course progressed in year 11 I began to like it more and decided that I was going to carry it through to the HSC. I am doing Economics as it gives me the appropriate information to be able to win arguments with friends and family on issues such as overseas economies and Government policies. The course also gives me the knowledge to be able to better understand current issues in the news such as Government policies and have a better knowledge on how it will affect me immediately and in the future.

-DL

Posted in Why choose Economics? | Leave a Comment »

In 10 years…

Posted by shartley13 on October 3, 2011

Discuss how inflationary pressures and increased interest rates will affect you in 10 years’ time

Increased interest rates whether it is now or in the future will have detrimental effects on young people such as myself in relation to purchasing a first home/taking out a mortgage. As the RBA tightens monetary policy through selling securities, it will have the effect of raising interest rates throughout domestic banks. As a result of this, taking out an initial loan will become more expensive and thus discourage me to take out a home loan. If however, I already had a mortgage, increased interest rates would raise the cost of interest on the loan and therefore leave me with less income to spend on other options. However, these high interest rates would encourage me to save and therefore give me a better return on my money. In this case, I would have additional spending money to invest in opportunities such as holidays and recreational activities.

Inflationary pressures in 10 years’ time would have a similar effect of interest rates in relation to causing me to have less disposable income. As the prices for household goods and services rises such as food, it would make me, and my family of 7, have less money to spend on this such as the cinemas. Consequently, my life would become more stressful and boring as there is more pressure to pay for goods and services and I would have less money to pay for this to entertain myself with.

-DL

Posted in Inflation | Leave a Comment »

Oh fiscal you macro policy (poem)

Posted by shartley13 on October 3, 2011

Oh fiscal you macro policy

How you strive to drag us out of the sea

We are happy here surfing all day

Contributing to that high unemployment rate

Yes we may be in a fiscal deficit

And you may be the main instrumentalist

In pushing us towards a budget surplus

But your policy is delivered with such sternness

That our inclination to join the workforce

Is diminished to your remorse

But hear us out dear fiscal policy

With your struggle to reach equality

The progressive tax helped a little

But don’t reduce the Dole unless you want to cause a ripple.

-AB

Posted in Fiscal Policy | Leave a Comment »

I am studying economics for the HSC because…

Posted by shartley13 on October 3, 2011

I am studying economics for the HSC because I want to have that little bit of extra knowledge when it comes to the economy. I have always been interested in money so I want to know the role it has in an economy and how it flows. I also did it to coincide with business studies because they are similar in certain areas of the way in which an economy runs.

-WB

Posted in Why choose Economics? | Leave a Comment »

Fiscal Policy Poem

Posted by shartley13 on October 3, 2011

Fiscal policy is a government tool,

We learn about it in our school.

It’s used to influence the economy,

Watch the news, and you will see.

It involves taxation and government spending,

Happening every year, never ending.

We will soon be returning to a surplus,

It is making some people nervous.

Fiscal policy affects supply and demand,

Working with other policies, hand-in-hand.

-GA

Posted in Uncategorized | Leave a Comment »