1: Economic Activity and Australia's Goals Flashcards
What are living standards?
The overall wellbeing of a nation.
What are material living standards?
The economic wellbeing of individuals, depending on income and consumption levels.
What are non-material living standards?
Depend on the quality of life for all people. Relate to intangible aspects of life.
What factors influence material living standards?
DIE Hard (to increase national production)
Distribution of goods, services and incomes
Inflation rates
Employment rates
Growing national production and income per person
How does growing national production and income per person influence material living standards?
- improved efficiency in use or in availability of resources = national production and incomes grow at a faster rate than population = rise in GDP per capita = each person can consume more goods and services.
Also, higher employment, incomes per capita.
How does the distribution of goods, services and incomes affect material living standards?
Uneven patterns of distribution = small minority of people (richest20% of population) consume majority of goods, services and incomes = most people in poverty
Even patterns of distribution = the benefits of having a bigger economy are shared or spread around so most people can enjoy better material wellbeing
How does the inflation rate influence material living standards?
High inflation = lower purchasing power = lower consumption levels = lower material living standards
Low inflation = higher purchasing power = higher consumption levels = higher material living standards
How does employment rate influence material living standards?
High unemployment rates = lower average incomes = lower consumption levels = lower material living standards
Low unemployment rates = higher average incomes = higher consumption levels = higher material living standards
What factors influence non-material living standards?
happiness
physical and mental health and the absence of stress
positive relationships with others and family cohesion
the absence of persecution, corruption, war, crime and violence
a fair, just, tolerant, compassionate and moral society
social, economic and political freedom
a healthy natural environment both now and into the future
a lack of urban congestion and overcrowding
a long life expectancy
equality of opportunity and the absence of discrimination
considerable leisure time as opposed to hours of work
rich cultural experiences
high literacy rates.
What types of relationships exist between material and non-material living standards? Define each.
Conflicting relationships: where there is a trade-off, and progress in one area of wellbeing undermines the other
Compatible relationships: where progress in one area of wellbeing helps to promote the other area.
Can material and non-material living standards be looked at in isolation?
No. Both interact with and impact each other.
In what ways can non-material living standards and material living standards have a compatible relationship?
Cultural enrichment — Higher incomes can allow for more international travel and cultural enrichment.
Longer life expectancy — Higher incomes can be used to extend life expectancy and reduce daily suffering from pain and curable ailments.
Possibility of reduced environmental damage — Higher incomes can be directed to combating environmental damage and reducing pollution.
More leisure time — Higher incomes enable individuals to reduce their working hours and stress, and increase their leisure time.
Identify one attempt to determine whether life is progressing or regressing
Measuring Australia’s Progress (MAP)
Identify one attempt to determine whether life is progressing or regressing
Measuring Australia’s Progress (MAP)
What is ‘Measuring Australia’s Progress’ (MAP)?
A set of statistical measures broken into four main categories (including the economy, society, governance, and the environment) to evaluate Australia’s living standards.
Define ‘level of economic activity’
Refers to pace at which economic activity occurs nationally.
Note: typically, activity levels change from a peak through a contraction to a trough and then a recovery.
What is economic activity?
A process which occurs when resources are used to produce goods and services by an economy. This also affects inflation and unemployment rates in an economy.
In what ways does the level of economic activity influence CURRENT material living standards?
It affects the quantity and quality of goods and services produced and available to the population in order to help satisfy its needs and wants.
It influences employment opportunities, the number of jobs and the unemployment rate.
It determines our average incomes, prices, purchasing power and consumption levels per person.
How does the level of economic activity influence FUTURE material and non-material living standards?
High levels of economic activity exhaust non-renewable, natural resources. This deprives their access by future generations = hindered future production = limiting future non-material and material living standards.
e.g. negative externalities like climate change, urban congestion, reduced leisure time and family tensions
How is economic activity measured?
Gross domestic product (GDP)
What is Gross Domestic Product (GDP)?
The total market value of all finished goods and services produced within a country’s borders in one year.
What is chain volume GDP?
The total market value of all finished goods and services produced within a country’s borders in one year, adjusted for inflation and deflation so one year’s production is comparable to that of another.
For what reasons may chain volume GDP be inaccurate?
- excluded production
- guesstimates and imputed values
- adjustments made to remove the effects of price changes
Explain how chain volume GDP may be inaccurate due to excluded production
- fails to include value of all goods and services
- ignores non-market activity (e.g. black market and cash market)
- these things too difficult to calculate accurately
Fun Fact: Some estimates suggest that the actual value of non-market production may amount to a staggering 10–20 per cent of current GDP or economic activity! If true, this means that GDP seriously underestimates national production levels.