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Year 10 Term 1 > Commerce > Flashcards

Commerce Flashcards

1
Q

what are the four basic economic questions?

A

1- What to produce?
2- How much to produce?
3- How to produce?
4- How to allocate production or output amongst people of an economy?

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2
Q

What is Land

A

Resources that occur naturally

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3
Q

What is Labour

A

Physical and mental effort of people who are working

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4
Q

What is Capital

A

Goods to make other goods

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5
Q

What is enterprise

A

ability to combine other resources to earn a profit

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6
Q

What is a centrally planned government?

A

Government commands how resources are used and allocated.

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7
Q

What is an example of a centrally planned government?

A

North Korea

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8
Q

What are some pros of a centrally planned government?

A

Greater equality, can respond to a crisis quickly

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9
Q

What are some cons of a centrally planned government?

A

No incentive to take risks with ideas and products

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10
Q

What is a mixed market?

A

What to produce, how to produce and who gets products are mainly answered by firms. The government only interferes with public goods to help merit goods.

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11
Q

What is an example of a mixed market?

A

Australia

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12
Q

What are some pros of a mixed market?

A

there is incentive to take risks and work hard, and there is protection for those who cannot work.

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13
Q

What are some cons of a mixed market?

A

Tax paid to fund public goods and services.

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14
Q

What is a pure market?

A

What/how to produce and who receives all determined by price in the market and an individual’s income

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15
Q

What is an example of a pure market?

A

United states

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16
Q

What are some pros of a pure market?

A

More efficient of allocation of resources. Whoever wants it more, produces more, prices rise and businesses produce.

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17
Q

What are some cons of a pure market?

A

Inequality, labour and environment exploitation, needs for individuals are prioritised.

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18
Q

what are the five sectors in the circular flow model?

A

Household, firms, government, financial, overseas.

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19
Q

What does S stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Savings, financial sector, leakage.

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20
Q

What does I stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Investment, financial sector, injection

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21
Q

What does T stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Taxation, government sector, leakage.

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22
Q

What does G stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Government expenditure, government sector, injection.

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23
Q

What does M stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Imports, overseas sector, leakage.

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24
Q

What does X stand for in the circular flow model and what sector does it relate to, and is it a leakage or injection?

A

Exports, overseas sector, injection.

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25
Q

What is the role of the household sector?

A

Households exchange income for goods and services.

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26
Q

What is the role of the firms sector?

A

Firms exchange goods and services for income.

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27
Q

What is the role of the financial sector?

A

Create money through lending to businesses.

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28
Q

What is the role of the government sector?

A

injects money into the circle through government spending and causes a leakage by taxation.

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29
Q

What is the role of the overseas sector?

A

The overseas sector turns a closed economy into an open economy.

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30
Q

what is the equilibrium equation?

A

S+T+M=I+G+X

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31
Q

what will happen when leakages are bigger then injections?

A

the economy will contract.

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32
Q

what will happen when injections are bigger then leakages?

A

the economy will expand.

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33
Q

what happens when governments tax more then they spend?

A

Budget deficit.

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34
Q

what happens when governments spend more then they tax?

A

Budget surplus.

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35
Q

what happens when imports exceed exports?

A

Trade deficit.

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36
Q

what happens when exports exceed imports?

A

Trade surplus.

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37
Q

what can cause a economic contraction?

A
  • decrease in production
  • increase in unemployment
  • decrease in wages
  • decrease in consumer spending
38
Q

what can cause an economic expansion?

A
  • increase in production
  • decrease in unemployment
  • increase in wages
  • increase in consumer spending
39
Q

What is economic growth?

A

when an economy increases the amount of output of goods and services over a period of time

40
Q

what is the measurement of the growth of the economy?

A

Rate of growth pf Australia’s GDP

41
Q

how do you calculate the GDP?

A

C+I+G+(X-M)

42
Q

how do you calculate the percentage of economic growth?

A

GDP2 – GDP1 x 100
GDP1 1

43
Q

What is Australia’s recent economic growth performance?

A

Fairly strong, 28 consecutive years of economic growth until 2020. Since 2020, we have have a sharp spike in economic growth, which led to inflation.

44
Q

Compare Australia’s economy to an emerging economy.

A

Similar economic growth trends throughout covid, however were amplified on a greater scale as the government had less to spend to support the economy. Overall, those economies have achieved higher economic growth then Australia as they are industrialising and expanding at a rapid rate.

45
Q

Compare Australia’s economy to an advanced economy?

A

Unlike other advanced economies, Australia did not experience a severe recession in 2008 because of expansionary government policy. However, we all went into recession during covid. Australia’s economic growth is currently positive.

46
Q

How does the economy stabilise the economy?

A

By implementing macroeconomic policies to generate economic stability.

47
Q

What is a budget expansionary stance?

A

Where government aims to increase economic growth

48
Q

What is a budget contractionary stance?

A

where the government aims to reduce economic growth

49
Q

What was Australia’s Fiscal Policy response to Covid?

A
  • Expansionary stance to boost economic growth during Covid.
  • Australia’s fiscal response was the largest deficit since WW2 and pushed us towards 1 trillion dollars in debt by 2023-24,
  • However the increased injections through a range of stimulus packages and policies such as Jobseeker and Jobkeeper helped us avoid a prolonged recession.
50
Q

What is a monetary expansionary stance?

A

involves a reduction in interest rates to increase economic activity in the economy.

51
Q

What is a monetary contractionary stance?

A

involves an increase in interest rates to decrease economic activity in the economy.

52
Q

What was Australia’s monetary policy response to covid?

A
  • RBA cut interest rates from 0.5% to 0.1% in 2020, which was a historic low greatly reducing borrowing costs and mortgage repayments.
    -They also provided easy access to funding to banks to allow them to keep lending to customers.
53
Q

What is unemployment?

A

An economy is not maximising its use of resources to satisfy needs and needs.

54
Q

Define the working age population

A

People aged 15 and over who are employed and unemployed.

55
Q

Define the labour force

A

People aged 15 and over who are employed and unemployed, and one must be undertaking paid work for 1 hour or more per week, and unemployed people must be seeking work.

56
Q

How do you calculate the unemployment rate?

A

Unemployment x100
Labour force

56
Q

How do you calculate the participation rate?

A

Labour Force x100
working age population

56
Q

What is cyclical unemployment?

A

Caused by a contraction in the economy
e.g. -> cyclical unemployment rose by 7.4% in 2020 due to Covid and the recession.

57
Q

What is structural unemployment?

A

cause by a mismatch of available and required skills, often cause by new technology or changes in the patterns of consumer demand.
e.g. -> car manufacturing closed in 2017, 40,000 people became unemployed.

58
Q

What is frictional unemployment?

A

people who are between jobs, changing jobs voluntarily or from ongoing creation/destruction of jobs.

58
Q

What is seasonal unemployment?

A

Seasonal patterns of high and low activity in some industries.
e.g. ->Christmas casuals, fruit pickers.

59
Q

What is hardcore unemployment?

A

Some members in society who have a disability.
e.g. -> health issues, behavioural issues.

60
Q

What is hidden unemployment?

A

People who wish to work but are discouraged from looking for work due to lack of job opportunities.

61
Q

What is long term unemployment?

A

People who have been unemployed for more than 52 weeks.

62
Q

What is inflation?

A

the sustained increase in the general level of consumer prices over time.

63
Q

How do you measure inflation?

A

The Consumer Price Index

64
Q

How is Australia’s recent inflation performance?

A
  • Since 1991 RBA has targeted inflation to 2-3%, which was mostly successful.
  • COVID lockdown, people couldn’t spend so there was 0% inflation (demand pull).
  • 2021-2023 there was high inflation, peaking at 7% due to supply issues (cost-push inflation) and more consumer spending (demand pull).
  • Late 2023-2024 inflation starting to fall to 4.2% in December 2023 due to high interest rates making people spend less and save more.
65
Q

What is demand-pull factors of inflation?

A

More goods and services are being demanded than the economy can supply.
e.g. -> masks/hand sanitizer’s during covid 19.

66
Q

What is cost-push factors of inflation?

A

An increase in the cost of raw materials and labour.
e.g. -> Ukraine Russia wars pushed up energy and food price

67
Q

What is inflationary expectations?

A

People bring up their consumption/demand higher wages to avoid/compensate for anticipated price increases, which pushes inflation anyways.
e.g. -> house prices go up, buy houses earlier.

68
Q

What are overseas factors of inflation?

A

Increased prices of imports or a depreciation of our currency against trading partners that make all imports seem expensive in AUD.
e.g. -> Ukraine Russia war, oil supply shortages.

69
Q

what are government policies of inflation?

A

An increase in tax on certain goods or services or a decision to borrow more money from the public to finance spending (increasing supply of money in the economy)
e.g. -> cigarettes and alcohol have extra tax

70
Q

What is excessive increase in supply inflation?

A

When the rate of increase outstrips the growth rate of the economy. There will be an increased volume of money chasing the same amount of goods.

71
Q

What is a market?

A

A situation whereby buyers and sellers of goods and services interact for the purposes of exchange

72
Q

what is the law of demand?

A

As prices rise, quantity demanded falls.

73
Q

What is the law of supply?

A

As prices rise, quantity supplied rises

74
Q

What is the market equilibrium?

A

Price at which quantity supplied = quantity demanded

75
Q

What does an expansion/contraction along the demand curve mean?

A

A change in price.

76
Q

What does an expansion/contraction along the supply curve mean?

A

A change in price.

77
Q

How is an increase demand illustrated?

A

A shift to the right.

78
Q

How is a decrease in demand illustrated?

A

A shift to the left.

79
Q

How is an increase in supply illustrated?

A

A shift to the right.

80
Q

How is a decrease is supply illustrated?

A

A shift to the left.

81
Q

What is a product market?

A

What does an expansion/contraction along the demand curve mean?

82
Q

What is a factor market?

A

the market for land, labour and capital needed for the production of goods and services.

83
Q

How does the government intervene for the government?

A

by imposing band, taxes or fines.
e.g. -> Ban of manufacture and importing of CFCs (aerosols) in 1995 which were commonly used in fridges.

84
Q

How does the government intervene for low prices for essentials.

A

by imposing a price celling or a maximum price on a market.
e.g. -> price cap on Taylor Swift tickets.

85
Q

How does the government intervene for industries survive in difficult times?

A

imposing a price floor or minimum price for the good or service.
e.g. -> 1880’s min price for wool to protect farmers. The overproduction of wool led to 4.6 million bales of wool worth 2.7 billion dollars.

86
Q

How does the government intervene for discouraging use of certain products?

A

imposing a tax on the production or sale of the good
e.g. -> cigarette tax, worth 65% of the sale price. Goes up 6% per year.

87
Q

How does the government intervene for ensuring socially benefited goods and services are being produced?

A

by providing grants or subsidies to assist producers or by the government producing the good or service.
e.g. -> Active kids vouchers and creative kids vouchers. $50 twice per year towards sports and the arts.

88
Q

How does the government intervene for producing goods and services that business has no incentive to produce?

A

by providing them themselves. If a business made these they couldn’t stop free riders from benefiting from the increased safety and security.
e.g. -> street lights, ADF.

Year 10 Term 1 (3 decks)

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