Economics

The study of economics examines the role of consumers, businesses, governments and other organisations in decision-making about the allocation of resources, the production and distribution of goods and services and the effect that these decisions may have on material and non-material living standards. Developing students’ understanding of economics will enable them to appreciate the reasons behind these decisions as well as the intended and unintended consequences of economic decision-making. Acquisition of economics knowledge and skills assists students to make more informed and responsible economic decisions and contribute to public discourse as informed citizens.

Through studying economics, students develop a range of skills, including an ability to gather, organise, analyse and synthesise a wide selection of economics information. They undertake independent inquiry, think critically and work collaboratively with their peers to develop viable solutions to contemporary economic issues. They consider the way in which economic agents respond to incentives, disincentives, make trade-offs, weigh up costs and benefits and make judgments about what is efficient and what is fair. They utilise economic models and the tools of economists effectively to analyse and evaluate the decisions made by key economic agents. In the process students appreciate the different viewpoints about issues that may affect the modern economy and broader society.

Over time, the changing nature of work will require students to be equipped with the kinds of transferrable, problem-solving, communication, evaluation and critical analysis skills developed through the study of economics. These skills can be used across many employment fields, including foreign affairs, banking, finance, health, environment and education. Economics leads to a broad range of career options such as economist, journalist, public policy advisor, political consultant, media commentator, entrepreneur, business owner, environmental manager, investment banker, investment analyst, management consultant, business analyst, actuary, accountant, academic, teacher, stockbroker, banker, town planner and many more.

There are no prerequisites for entry to Units 1, 2 and 3. Students must undertake Unit 3 prior to undertaking Unit 4. Units 1 to 4 are designed to a standard equivalent to the final two years of secondary education. All VCE studies are benchmarked against comparable national and international curriculum.

A core principle of economics is maximising the living standards of society. This is done through economic decisions that optimise the use of resources to produce goods and services that satisfy human needs and wants. Economic activity is therefore a key consideration for economics. Students consider the link between economic activity and economic growth and investigate the importance of economic growth in raising living standards. They evaluate the benefits and costs of continued economic growth and consider the extent to which our current measurements of living standards are adequate.

Economics provides useful tools for investigating contemporary issues that inspire debate and wide differences in opinion. Students undertake an applied economic analysis of two contemporary economics issues from a local, national and international perspective. They use the tools of data collection, analysis, synthesis and evaluation to examine the issue through an economics lens. They do this through investigation of the economic factors influencing the issue and via examination of its economic importance at a local, national and international level. Students consider the perspectives of relevant economic agents and evaluate the validity and effectiveness of individual and collective responses to the issue.

The ability of the Australian economy to achieve its domestic macroeconomic goals has a significant effect on living standards in Australia. Policymakers, including the Australian Government and the Reserve Bank of Australia (RBA), can utilise a wide range of policy instruments to affect these goals and to affect living standards.

This unit focuses on the role of aggregate demand policies in stabilising the business cycle to achieve the domestic macroeconomic goals. Students develop an understanding of how the Australian Government can alter the composition of budgetary outlays and receipts to directly and indirectly affect the level of aggregate demand, the achievement of domestic macroeconomic goals and living standards.

Students also examine the role of the RBA with a focus on its responsibility to conduct monetary policy. Students consider how the tools of monetary policy can affect interest rates, the transmission mechanism of monetary policy to the economy and how this contributes towards the achievement of the domestic macroeconomic goals and living standards.

Students consider and evaluate the strengths and weaknesses of the aggregate demand policies in achieving the domestic macroeconomic goals and living standards.

Expanding the productive capacity of the economy and improving Australia’s international competitiveness is critical to ensuring that economic growth, low inflation and employment opportunities can be maintained both now and into the future. Students consider how the Australian Government utilises selected aggregate supply policies to pursue the achievement of the domestic macroeconomic goals and living standards over the long term.