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aos 1 Flashcards

1
Q

macroeconomics

A

consider performance of economy as a whole

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2
Q

economic activity

A

prod, income expenditure that takes place across whole economy

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3
Q

income

A

total incomes that have been earned by those who contribute to the production of G+S

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4
Q

expenditure

A

total spending on g+s

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5
Q

production

A

total value of g+s produced in eco

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6
Q

leakages
(STI)

A

removal of money from eco

Savings: money saved rather than spent
Taxes: money paid to gov in form of taxes
Imports: money spent on g+s that have been produced o/seas

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7
Q

injections

A

addition of money

investment demand: spending on capital items (machinery/factory)
govt spending: spending by govt on g+s
export demand: money spent on aust g+s by o/seas residents

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8
Q

leakage vs injection

A

leak > inject -> down eco act b/c high $ leaving than enter e.g c’er saving up b/c c’er predict difficult times -> less $ available to be spent on g+s -> less demand for g+s

inject > leak -> up eco act b/c more $ enter than leak out e.g high invest during mining boom -> more employ + consume

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9
Q

trade offs:

A

all possible things we give up when decisions made about scarce resources to gain s’thing else

arise b/c resources = insufficient ti allow us to have all
p’ing + c’ing more g+s -> high material L.S sometimes sacrificing/foregoing aspects to support NMLS

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10
Q

aggregate demand

A

total expenditure on g+s produced in the economy over a period of time
AD=C+I+G+(X-M)

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11
Q

consumption expenditure
(C)

A

60% of AD
total value of all expenditures on individuals + collective consumption by resident households + non-profit institutions serving households

> expenditure on c’er durable
expenditure on food
expenditure on white goods
expenditure on single use products
expenditure on services

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12
Q

factors impacting (C)

A

> disp y
c’er confidence
interest rates
rate of pop growth
budgetary policies affecting taxes + govt spending

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13
Q

Private Investment Expenditure (I)

A

15-20%
purchase of new equip + plant, buildings + vehicles -> expenditure on plant, buildings vehicles to expand productive capacity

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14
Q

factors impacting (I)

A

> bus conf
interest rates
company tax rates
global economic conditions

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15
Q

Government expenditure (G)

A

20%
includes all demand for g+s by federal state + legal govts

G1: govt current (consumption) expenditure -> spending on civilian g+s, military spending,health + edu, defence

G2: govt investment expenditure -> spending on capital goods like infrastructure + buildings

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16
Q

factors impacting (G)

A

> level of unemployment
level of inflation
speed of pop growth
economic cycle

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17
Q

Net Exports (X-M)

A

x= expenditure on domestically produced goods by foreigners
m=expenditure on foreign produced goods by members on an eco

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18
Q

factors impacting (X)

A

> o/seas conflict
exchange rates
o/seas eco conditions
natural disasters + severe weather conditions

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19
Q

factors impacting (M)

A

> trends in local eco conditions
our inflation rate
c’er + bus confidence levels
o/seas conflict
exchange rates

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20
Q

AD curve shift

A

left = ↓ conf/↓o/seas eco act/↓govt spending/↑ AUD/ ↑I.R/ ↑ tax

right = ↑ conf/↑ o/seas eco act/ ↑ govt spending/ ↓ AUD/↓ I.R/↓ tax

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21
Q

factors influencing AD
changes in general level of prices (inflation)

A

impacts purchasing power of eco agents -> ↑ inflation -> ↑$ -> less p.p ->↓ c
impacts international competitiveness = inflation -> ↓ aust international comp -> ↓ X ↑ I

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22
Q

factors influencing AD
disposable income (gross income - income tax)

A

impacts p.p of c’er -> ↑ in real disp y -> ↑ p.p -> ↑ C

23
Q

factors influencing AD
interest rates

A

impacts portion of disp y available for consumption (variable rate loans) -> ↓ I.R -> ↓ repayments on existing loans -> ↑ prop of disp y available -> ↑ C

impacts cash available to business-> cash flow effect (variable rat eloans0 -> ↑ cash available for I

low I.R -> ↑ attractive to borrow cash -> ↑ C+I

24
Q

factors influencing AD
Consumer confidence

A

general optimism/pessimism abt future state of eco + job prospects
↑conf -> ↑ C
c’er sentiment

25
factors influencing AD Business confidence
general optimism/pessimism abt future state of eco + ability to generate a profit ↑ conf -> ↑ I business sentiment
26
factors influencing AD exchange rates
impact int comp - depreciate AUD -> ↑ int comp -> ↑ X
27
Factors influencing AD levels of economic growth o/seas
↑ eco grow in major trading partners -> ↑ spend on X
28
Factors influencing AD
inflation interest rates disposable income consumer confidence business confidence exchange rates levels of economic growth o/seas
29
aggregate supply
represents total volume of g+s that all suppliers are willing + able to produce
30
factors that affect AS
inflation quality of factors of production quantity of factors of production cost of production technological change productivity growth exchange rates climatic conditions
31
economic growth
rate at which economic activity grows overtime determined by changes in real level of prodn from one year to another measured by GDP reported in quarterly series called national accounts using GDP as statistical measure of prodn
32
GDP + GDP per capita
final value of g+s produced during specific period of time gross domestic product Per capita = GDP divided by size of pop GDP = C+I+G+(X-M)
33
real value of production/Real GDP
quantities produced = valued @ prices in bade year rather than current prices ABS take into account + convert '$' figure into real figure
34
nominal GDP
measures country's gross domestic product using current prices, without adjusting for inflation
35
living standards + eco growth
↑ prod income + expenditure ↑ material l.s = ↑ access to g+s -> ↑ income to purchase (as long as wages grow faster than $ of g/s) + ↑ prod -> ↑ g+s ↑ n.m.l.s ↑ access to health care + edu/ ↑ quality of g+s? decrease rate of crime/ Decrease stress on money
36
limitations of GDP
1. excludes most non-marketed production (housework) 2. uses inaccurate 'guestimations' of some type of production 3. fails to take into account negative externalities that ↓ n.m.l.s 4. x measure changes in quality of g+s from 1 quarter to next 5. fails to take into account way g+s + income = distrib + shared
37
alternate measures of national growth / L.S
MAP -> focus on 3 general indicators: society, eco, enviro GPI -> use GDP as base + add or subtract from it HDI -> composite stat of life expect, edu + per capita income indicators -> used to rank countries into 4 tiers of human develop GNH -> composite index made of several objective + subjective indicators
38
Measures of Australia's Progress (MAP)
collection of measures published periodically by ABS 4 main categories = society, economy, governance, environment
39
Genuine Progress Indicator (GPI)
makes neg + pos adjust on GDP values to better reflect good/bad effects of some types of eco act on society's m+nm well being includes: > estimation of value of unprod community work/home duties + making deduction for income inequalities + reliance on debt to finance out consumption + way of life > making deductions for eniro destroy or some externalities inc loss of leisure time to work, increase crime rates, fam break-ups Problem: accurately estimating $ value for each adjust
40
Human Development Index (HDI)
combined range of eco + social indicators -> indicate eco develop + wellbeing h/w x incorp enviro considerations 1=high 0 = low >indicator of material L.S = GDP per capita/ h/w figure adjust to remove variation in actual p.p of $ in dif countries + adjust low for inequality in distrib of g+s >indicator of social/n.m.l.s = life expectancy (calc @birth + expressed in yrs)/ edu standard (literacy rates)
41
Gross National Happiness (GNH)
composites index -> several indicators: GDP per capita/ social support/health + life expectancy/ freedom to make life choices/ generosity/ trust >based of national national surveys > 2011 -> UN invite member nations to measure happiness >world happiness report
42
Budgetary policy
govt stimulate eco by spending -> jobs -> income -> ↑ AD -> ↑ GDP comes at cost of rising prices deficit (expend>receipt) -> ↑ eco grow (expand) surplus (expend↓ eco grow (contract) balance (expend=receipts)
43
monetary policy
↑ IR -> x expenditure + reward saving -> ↓ eco growth (contract) ↓ IR -> expenditure + discourage saving -> ↑ eco growth (expand) stimulate eco: gov low IR @ cost of ↑ prices
44
economic prosperity
having high incomes per person + being able to consumer/purchase more g+s now + into future also mean having job + avoiding inflation, since these affect our p.p + income poor countries/rich countries -> strong eco grow = usually seen as main way of improving eco prosperity if maximise current eco prosperity -> depletion for future gen
45
environmental sustainability
preservation of our natural enviro into future ensure practices x contrib to enviro harm + erosion of N resources way we pursued grow -> impact on enviro + jeapordise future grow
46
sustainable eco grow
gov + bus + indiv are now more understanding of need to pursue eco grow method of expanding eco prodn levels to meet needs for g+s of pop w/o undermining ability of future gen to meet own needs
47
enviro costs of eco growth
accelerate enviro probelms: CC deplete natural resources= non-renewable -> x replenished deterioration of common access to g+s = deprive others + w/o safeguards -> pollution
48
eco cost of eco growth
structural unemployment: fall in cyclical unemplo/ structural change -> firms change prodn methods around cutting costs b/c comp -> job loss accelerate inflation: ↑ grown -> ↑spending/AD + eco close to productive capacity -> ↑ prices b/c shortages limit future grow: ↓ resources -> ↓ capacity to enjoy prosperity
49
enviro policies + dif policy approaches
any govt policy that is designed to protect aust physical + natural enviro from damage/ depletion regulation + legislation Market based approaches direct action
50
Regulation + legislation
involves use of Environmental Protection and Biodiversity Conservation Act (1990) + laws to protect flora + fauna >provide guidelines to access eviro impact of develop >if impact found applications of approval must be made > prove benefits outweigh costs -> eviro impact statement > cost may need to be covered for in other ways
51
market based approaches
govts providing bus + c'ers w/ financial incentives to produce/purchase g+s which take into account enviro impact can also involve subsidies/rebates to support enviro sustainability or taxes/fines to penalise > enviro sust options get cheaper + ↓$ > use price mechanism + relative prices to encourage c'er + bus to choose options w/ better enviro outcomes
52
market based approaches impact on AS
goal = force firms + c'ers to internalise external costs stemming from burning fossil fuels for energy ST= supply can be hard to change + take take to develop + implement new tech t/f carbon $↓ rate of eco grow, up c.o.p, ↓AS + grow LT= mitigate neg effects of cc -> protect resource + infrastructure from cc -> maintain AS = aus = sseg
53
Direct Action
govts investing directly in projects to achieve specific enviro outcomes provide funding to speed up development of enviro friendly projects + sustainable prodn methods

economics unit 2 (3 decks)

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