Economics

Question 1

Describe the circular flow model

Answer 1

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.

Question 2

Types of price discrimination

Answer 2

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.

Question 3

Draw the circular flow model

Answer 3

<——- Income <——–
—–> Labour —–>
<—— Consumer Producers <—
supply (sell) goods
^——- and services

                                                      demand (buy)
                                            ------> consumption---------^
                                                      
           leakages         Taxation ------->Government sector ------->--------^               injections 
                                    savings--------->Financial sector---------->-----------^
                                   imports--------->international sector----->-----------^

Question 4

Describe a leakages and list two real-world examples?

Answer 4

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.

Question 5

Describe an injection and list two real-world examples?

Answer 5

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

Question 6

List the benefits and drawbacks of global trade for a nation

Answer 6

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.

Question 7

Define economics

Answer 7

economics is the study of how societies use scarce resource (money and time) to produce goods and services and distribute then among different people.

Question 8

Define GDP

Answer 8

Gross domestics product (GDP) is the total value of finished goods and services produced by a country in a single year

Question 9

Define Unemployment

Answer 9

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.

Question 10

Define inflation

Answer 10

inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

Question 11

Explain why GDP per capita is a better than GDP when comparing the economic performance of several countries.

Answer 11

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.

Question 12

Describe the concept of Demand-Pull inflation. Use the diagram above to support your answer.

Answer 12

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.

Question 13

Explain Cost-Push inflation. Draw a supply-demand curve diagram in the space provided and use it to support your answer.

Answer 13

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

Question 14

Draw a supply-demand curve diagram

Answer 14

FIND IT

Question 15

Draw and annotate the business cycle

Answer 15

FIND IT

Question 16

Fiscal policy

Answer 16

Fiscal policy is the Manipulation of the budget Stabilise the economy.
There are three possible fiscal stances that can be implemented.

Question 17

expansionary policy
contraction policy
neutral stance

Answer 17

1. Expansionary policy (used to increase economic growth)
2. contractionary policy (used to decrease economic growth)
3. Neutral stance (used to maintain current growth)

Question 18

three budget outcomes

Answer 18

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)

Question 19

Define Macroeconomic Policy.

Answer 19

Macroeconomic policies are policies that affect the whole nation

Example. Fiscal Policy and monetary policy

Question 21

Define Monetary Policy.

Answer 21

Monetary policy refers to manipulation cash rate by the reserve bank to influence to economy.

Question 22

Complete the Transmission Mechanism diagram below:

Answer 22

changes in cash rate–> changes in interest rates–> changes in consumption—>
economic activity
- GDP
- Employment
- Inflation

Question 23

Describe how the Reserve Bank might implement a contractionary policy.

Answer 23

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!

Question 24

List the three main factors that influence consumers decisions when making major purchases.

Answer 24

1. prices
2. Marketing
3. Popularity

Question 24

Describe how the Reserve Bank might implement an expansionary policy.

Answer 24

Reserve bank will adopt an expansionary stance when economic activity slow, as indicated by low rates of growth, rising unemployment and lower inflation. The Reserve Bank will decrease the cash rate in order to stimulate the economy. lower the cash rate to lower interest rates and stimulate consumersspending.

Question 24

define the income effect

Answer 24

Refers to the change in demand for goods and Services caused by change in consumers purchasing Power resulting from a change in their income. This change can be the result of an Increase or decrease in an individual’s wage

Question 25

Define the Substitution Effect

Answer 25

Refers to the decrease in sales of a good or a service due to consumers switching to buy a cheaper alternative

Question 26

Complete the following table: Why is business productivity important for business and government?

Answer 26

GOVERNMENT:
higher productivity for business more goods and services being produced.
more goods and services being produce.
more goods and services being produced= economic being produced
businesses with higher productivity can pass on a portion of the profits to employees which: more income for employees and= more economic growth and increased living standards.

BUSINESS:
can become more competitive in the market as they can produce the goods or service at a lower price than their competitors.
business can become more competitive
providing more goods and services to consumer translates to higher profits. can lead to greater profits for business

Question 27

Define labour productivity and list 3-ways to improve it:

Answer 27

labour productivity measures the amount of goods and servivces that a worker produces in a given amount of tie. business can increase the productivity of theur employees

1. having good managers who motivate empolyees
2. training employees well
3. providing performance feedback to employees

Question 28

Define capital productivity and list 3-ways to improve it:

Answer 28

capital productivity measures the amount of goods and services that can be produce with a fixed amount of capital in a given amount of time

1. businesses can increase their productivity by using advanced technology.
2. improve processes how things are done such as using a tap screen instead waiter
3. using just-in- time inventory systems so materials arrive at the right time