Economics Flashcards
Describe the circular flow model
these sector make up our economy. Money moves around these sectors (represented by the blue lines) The more money there is flowing though the economy, the more economic growth, will occur.
Types of price discrimination
First degree- changing the maximum price consumers are willing to pay
Second degree- changing different prices depending on quantity or choices of the consumers E.G. bulk buy or premium options.
Third degree- charging different prices depending on the market segment e.g. age profile, income group, time of use.
Draw the circular flow model
<——- Income <——–
—–> Labour —–>
<—— Consumer Producers <—
supply (sell) goods
^——- and services
demand (buy)
------> consumption---------^
leakages Taxation ------->Government sector ------->--------^ injections
savings--------->Financial sector---------->-----------^
imports--------->international sector----->-----------^
Describe a leakages and list two real-world examples?
Leakages reduce flow of money. They do not directly help the economy grow.
——> Taxation
——> Savings
——> Imports
an individual decides to reduce their spending now to increase the amount of savings they have in the bank. As they reduce spending and move more of their income into savings, this represents money leaving the economy to sit in a bank account. Therefore, this represents a leakage.
Describe an injection and list two real-world examples?
injections increase the money flow. They directly help the economy grow
—–> consumption
—–> government spending
—–> exports
A business decides to borrow money from a bank to invest in new equipment that will increase its output
List the benefits and drawbacks of global trade for a nation
BENEFITS:
–> Availability of a wider range of goods and services
–> Access to cheaper of goods and services
–> Increased opportunities for education
–> Increased connection to the test of the world though the shaving of resources and
knowledge .
–> Access to cheaper raw materials and manufactured goods in the production process.
DRAWBACKS:
–> Difficult to maintain quality control in factors around the world.
–> Australians business can struggle to complete with companies who outsource Labour
and manufacturing costs to lower cost in countries.
–> Consumers are becoming increasingly aware of the condition in overseas factories, so
businesses can lose customers if they find products are made in poor or unsafe
conditions.
–> The benefits of cheaper manufacturing can be outweighed by increasing
transportation costs.
Define economics
economics is the study of how societies use scarce resource (money and time) to produce goods and services and distribute then among different people.
Define GDP
Gross domestics product (GDP) is the total value of finished goods and services produced by a country in a single year
Define Unemployment
the unemployment rate is a percentage of people that do not work out of the people that can work. if the unemployment rate is high this means many people do not have jobs.
Define inflation
inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
Explain why GDP per capita is a better than GDP when comparing the economic performance of several countries.
GDP per capita is like checking the average paycheck of a country’s people, considering the population size. It’s a better way to see if economic growth is actually improving individuals’ lives, as opposed to just measuring the total economic output. This metric gives a more realistic picture when comparing countries, showing how well-off people are on average.
Describe the concept of Demand-Pull inflation. Use the diagram above to support your answer.
Demand pull inflation is the increase in goods and services due to the increase in a consumer business, government, and foreign spending. if the economy is growing at a rapid pace (more jobs) this an cause inflation
Example ice cream during summer. As the weather warms, demand for ice Cream increases. As a result, the Price of ice cream also increases.
Explain Cost-Push inflation. Draw a supply-demand curve diagram in the space provided and use it to support your answer.
Cost Push inflation is the vise in cost of production, companies will Prices of goods due to the Push increase the increases in their costs to consumers. An increase to the price of the factors of production can be Onto consumers, Hese indude–> raw materials, electricity, Labour, oil.
Example if wages increase, companies To maintain te same profit, Levels. must pay prices! Heir workers move, so prices
Draw a supply-demand curve diagram
FIND IT
Draw and annotate the business cycle
FIND IT
Fiscal policy
Fiscal policy is the Manipulation of the budget Stabilise the economy.
There are three possible fiscal stances that can be implemented.
expansionary policy
contraction policy
neutral stance
- Expansionary policy (used to increase economic growth)
- contractionary policy (used to decrease economic growth)
- Neutral stance (used to maintain current growth)
three budget outcomes
The are three budget outcomes:
Surplus budget (government makes more money through taxes than they a spending)
Budget Delict (government spends more money than they are earning)
Balanced budget (when the governments revenue is equal toitsspending)
Define Macroeconomic Policy.
Macroeconomic policies are policies that affect the whole nation
Example. Fiscal Policy and monetary policy
Define Monetary Policy.
Monetary policy refers to manipulation cash rate by the reserve bank to influence to economy.
Complete the Transmission Mechanism diagram below:
changes in cash rate–> changes in interest rates–> changes in consumption—>
economic activity
- GDP
- Employment
- Inflation
Describe how the Reserve Bank might implement a contractionary policy.
The Reserve Bank will adopt a contractionary Stance when the economy is verheated’ and growing too fast cawing inflation pressures to rise. The hoeve bank Ell increase de cash rate in order to raise interest rastes in the economy iص des to decrease consumption thus decreasing economic growth (GDP). crease the cash rate to increase interest rates and lower consumer spending!
List the three main factors that influence consumers decisions when making major purchases.
- prices
- Marketing
- Popularity
