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77 Cards in this Set
- Front
- Back
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What Is a GDP? |
Gross domestic product: the monetary value of all finished goods and services produced within a countries borders in a specific time period (usually a years time but it can vary) AUS: $1.7 trillion AUD |
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What are Economic Indicators? |
Statistics or Data giving Information about the Past, Present or Future of the Economy They can be put into one of two Classifications: Formal Economic Indicators Informal Economic Indicators |
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What are Formal Economic Indicators? |
They are economic indicators that are obtained by government agencies and departments, they use statistics and facts to show the state of the economy e.g. Unemployment Rate and the Exchange Rate |
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How are Formal Economic Indicators Obtained? |
They are obtained by Government Agencies and Departments e.g. The Australian Bureau of Statistics, The Reserve Bank of Australia and the Federal, State and Territory Treasuries |
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What are Informal Economic Indicators? |
They are economic indicators that are obtained by Non-Government agencies, they use informal means of showing the state of the past present and future of the economy |
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How are Informal Economic Indicators Obtained? |
They are economic indicators that are obtained by Non-Government agencies e.g. Banks, Universities, Private Businesses and Research groups |
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What are some Informal Economic Indicators? |
The Big Mac Index (the cost of big macs across the world), The Mens Underwear Index (the colour underwear that men buy) and the Lipstick Index (how much lipstick is bought) |
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What are Leading Indicators? |
These indicators are a part of Informal and Formal, they change before we observe changes in the general level of economic activity e.g. Stare Prices and Building Loan Approval |
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What are Coincident Indicators? |
These indicators are a part of Informal and Formal, they change at the same time as the general level of economic activity e.g. Retail sales and New Car Registrations |
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What are Lagging Indicators? |
These indicators are a part of Informal and Formal, they are changes that are observed after a drastic change in economic activity e.g. Unemployment Rate and The Inflation Rate |
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What are Microeconomics? |
The Study of Individual Sectors or Participants in the Economy |
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What are Macroeconomics? |
The study of the economy as a whole |
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What is the Unemployment Rate? |
The proportion of people who don't work but are actively seeking employment |
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Why is the Unemployment Rate Important? |
High emolument had significant economic costs associated with lower output and deskilling. Also Additional Social Consequences such as: stress on relationships and intergenerational employment |
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What is the Participation Rate? |
Proportion of People of Working Age who are Willing and Able to Work
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What is the Inflation Rate? |
A Sustained Rise in the General Price Level |
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Why is Inflation rate important? |
High Inflation Rate reduces Purchasing Power and Towers consumers and business confidence BUT A Low Inflation Rate reduces incentive to engage in Product Economic Activity |
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Human Development Index |
The Extent of Human wellbeing around the world (more than just the economic wellbeing) e.g. life expectancy, schooling, environmental sustainability, etc. |
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Why is The Human Development Index Important? |
The Human Development Index is important because it seeks to measure the standards of living in the broadest possible sense |
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What is the Better Life Index? |
Similar to the Human Development Index, it measures Organisation for Economic Co-operation and Development (OECD) member countries; based on more detailed data |
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What is The Business Cycle? |
The Business Cycle is the fluctuation in economic activity that an economy experiences over a period time |
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What is the OECD? |
The Organisation for Economic Co-operation and Development (OECD), is made up of 35 member countries who are dedicated to democracy and the market economy. most of its members are high income countries |
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What are the 4 Phases of the Business Cycle? |
1. Expansion/Recovery 2. Peak/Boom 3. Contraction/Recession 4. Trough/Slump |
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What is the Expansion Phase of the Business Cycle? |
The Expansion/Recovery Phase of the Business Cycle begins when certain economic indicators begin to rise after hitting their lowest points in the preceding cycles Trough. |
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What happens during the Expansion Phase of the Business Cycle? |
Since more money is available during an expansion compared to a trough, businesses can afford to increase their production of goods and services, hire additional employees and initiate new construction products which, in turn, cause an economy's unemployment rate to fall, as unemployment drops, the population has more money available to purchase things |
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What happens during the Peak Phase of the Business Cycle? |
An Economy's Gross Domestic Product is normally high during a cycles expansion and peak, wich indicated that the economy is operating efficiently |
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What happens during the Contraction Phase of the Business Cycle? |
it is the opposite of the expansion phase, this means that the economic indicators that during a cycles expansion period when up will drop, and those that were low will generally increase |
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What happens during the Trough Phase of the Business Cycle? |
The Trough Phase is when all the economic indicators that had fallen in the contraction phase will rise again |
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What is the Peak Phase of the Business Cycle? |
The Highest level of the Expansion Phase of the Business Cycle |
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What is the Contraction Phase of the Business Cycle? |
The phase after the peak, the economic indicators will decline showing that the economy is in a steady downfall |
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What is the Trough Phase of the Business Cycle? |
It is the opposite of the peak phase, it is the last month before the expansion phase, it happens in the last month of the contraction and is only recognised afterwards, it is te lowest point in a cycle. |
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When does the Peak Phase of The Business cycle begin? |
it usually occurs during the final month of the expansion phase, however, it occurs before the economic indicators show any signs of improvement. |
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What is the Economic Growth Rate? |
The Economic Growth Rate is the annual rate at which a country or an industry's income increases. The value of final goods and services. |
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Why is Economic Growth Rate important? |
Economic Growth Rate is important because it shows how the general economy is faring, higher growth rate means higher standards of living and employment, it also creates new opportunities |
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What is the target of the Economic Growth Rate? |
3% |
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What is the target of the Inflation Rate? |
2% - 3% on average |
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What is the target Participation Rate? |
The Higher the Percentage the Better |
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What is the target Unemployment Rate? |
5% unemployed is considered full employment |
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What are the four main ways that the government helps improve living standards? |
1. Regulating Business Activity 2. Providing Goods and Services 3. Macroeconomic Manegment 4. Redistributing Income |
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What is meant by Regulating Business Activity? |
Legislation imposed by a government on individuals and private sector firms in order to regulate and modify economic behaviors. Mangement of negative externaltities, which adverse effects of the economic activity that are experienced by people who are not direcly involved in production or consumtion of the goods/services involved |
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What factors of the private sector are regulated by the govenment? |
The econmoic, enviromental and social |
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What is Income? |
The flow of Money paid by firms to households in compensation for the use of resources and welfare |
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What is Wealth? |
the market value of all the physical and intangible assets owned by a person or household or firm, minus all debts |
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What does Income Include? |
Wages or sallaries profits, intrest and dividends rent welfare benifits |
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What does Wealth include? |
Savings held in bank accounts shares and bonds property other investments |
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What is the Lorenz Curve? |
a graph on which the cumulative percentage of total national income (or some other variable) is plotted against the cumulative percentage of the corresponding population (ranked in increasing size of a share) |
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What is the Gini coefficient? |
the Gini coefficient measures the inequality of income distribution in a country |
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What does Surplus Budget mean? |
a budget in which injections are more than withdrawals |
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What does Deficit Budget mean? |
a budget in which withdrawals are more than injections |
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What does Balanced Budget mean? |
a budget in which injections are equal to withdrawal rates |
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What is Monetary Policy? |
the process by wich the monetary authority controls the supply of money |
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What is the fiscal policy? |
How a government adjusts is spending and tax to accommodate to the economy of a nation |
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How is the Gini coefficient measured? |
The area between the line of inequality divided by the total area under the line of inequality |
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what does monetary mean? |
a term that relates to money or currency |
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What is the Monetary Authority? |
the entity which controls the money supply of a given currency e.g bank |
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What is the Gini Coefficient expressed as? |
a number between 0 - 1, the closer to one the more unequal income is in a country |
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What is Absolute Poverty? |
when a person/household cannot afford the basic human necessities |
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What is Relative Poverty? |
When a person earns bellow the poverty line, but is still able to afford basic necessities |
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How is Income Redistributed? |
tax-transfer system, Medicare, Welfare |
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what is the tax-transfer system? |
it is a system that redistributes income from high-income earners to low-income earners through progressive taxation, and tax expenditures |
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What are the forms of taxation? |
Capital Gains Tax, Fringe Benefits Tax, Goods and Services Tax |
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What is the Goods and Services tax? |
The value-added tax on most goods and services sales |
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What is the Australian Goods and Services tax? |
10% |
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What are Quintiles? |
they are equally sized groups, each of which contains one-fifth of households e.g. the lowest quintile is the lowest 20% of income earners |
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How does the government provide Goods and Services? |
by providing goods and services that are essential to a nation's living that the private sector cannot provide |
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What are some examples of how the government provides Goods and Services? |
Lighthouses, Public Schools, Public Health Care |
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How does the government regulate business activity? |
By providing restrictions on businesses that have a large impact on citizens |
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How does the government help through the redistribution of income? |
by redistributing income through welfare, taxes to people with limited ability to get income |
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How does the government help through macroeconomic management? |
by adjusting the economic activity according to what phase of the business cycle the economy is in; using taxes and spending |
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What is the counter-cycle policy? |
the government controls the economy by adjusting things like tax and spending to help either change the phase of the business cycle that the economy is in, or try to keep it the same |
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What is the Productivity Policy? |
productivity refers to the amount of output produced by each input into the production process, the government can raise or lower this to help control the economy |
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What is the training and workplace development policy? |
the government develops policies to support the education of al resident, from early childcare through to vocational and higher education and training |
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What is the Migration Policy? |
this is a policy that encourages workers with the appropriate skills and experience overseas to migrate to a country |
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What is Cash Rate? |
The intrest rate that is set by the Reserve Bank of Australia in response to general conditions in the economy |
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What is Intrest Rate? |
the amount charged or paid for the use of money, expressed as a % of the loan amount |
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What is an example of Cash Rate? |
the RBA will lower the chash rate in a reccession, and vice versa |
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what is the current cash rate? |
1.5% |
