Economics

Question 1

What is GDP?

Answer 1

Gross Domestic Product - total G&S within a country measured per year.

Question 2

What as some limitations of GDP as a measure of economic performance?

Answer 2

Doesn’t measure social or environmental issues associated with producing more, leisure time, health of people and animals, etc.

Question 3

What is an economic recession?

Answer 3

When economic growth falls for two or more quarters.

Question 4

What is an economic depression?

Answer 4

When economic growth declines for two or more years.

Question 5

What is inflation?

Answer 5

An increase in the general level of prices paid for goods and services.

Question 6

How often is inflation measured?

Answer 6

Each year.

Question 7

What are some reasons for inflation?

Answer 7

Consumer confidence, business confidence, trading partners having good performance (more likely to buy from us), low interest rates (encouraging spending), and lower taxes (increased demand for things). All of these things increase spending, which increases inflation.

Question 8

Who are the inflation winners?

Answer 8

High-income earners, bank borrowers, importers.

Question 9

Who are the inflation losers?

Answer 9

Low-middle income earners, bank savers, exporters.

Question 10

How is inflation measured?

Answer 10

CPI- consumer price index. Measured 100 000 typical household FINAL PRODUCTS each year and compares them to past years.

Question 11

What is unemployment?

Answer 11

The state of actively looking for a job but being unable to find one.

Question 12

What are some causes of unemployment?

Answer 12

Low GDP, low spending, increased overseas competition, labour-saving technology (ROBOTS 🤖).

Question 13

Why is there so much youth unemployment?

Answer 13

More people are going to university and there aren’t enough jobs; people hiring want those with more experience; many jobs are being replaced by labour-saving technology.

Question 14

How is Australia’s economy doing compared to other nations?

Answer 14

Well. Low unemployment rate, uninterrupted economic growth, high living standard, high satisfaction of life.

Question 15

What is labour productivity?

Answer 15

The amount of goods and services that a worker produces in a given amount of time.

Question 16

What can managers do to increase labour productivity?

Answer 16

Treat employees well, pay attention to their people, reward employees who perform well.

Question 17

How can training people increase productivity?

Answer 17

They have more skills and so find it easier to complete tasks, leading to higher efficiency. Makes people more equipped for a job and therefore more willing to do it.

Question 18

How does workplace culture and flexibility increase productivity?

Answer 18

Having shared visions, beliefs, and values makes people work together better, leading to higher job satisfaction and therefore productivity. Giving employees more flexibility in terms of working hours and where they work means that there is a higher chance of them functioning well as they work.

Question 19

How does performance appraisal and feedback increase productivity?

Answer 19

Assists in improving the way someone works from s constructive POV, and gives people a goal to work towards, making them desire to work and therefore be more productive.

Question 20

How is employee incentive (e.g bonus monthly pay) linked to productivity?

Answer 20

If people perform well they are rewarded. Makes people want to work well.

Question 21

What is capital productivity?

Answer 21

A measurement of the amount if G&S produced using a fixed amount of capital in a given amount of time.

Question 22

What are some examples of capital productivity?

Answer 22

Technology - saves time & cost.

Improving processes - e.g booking online instead of making phone calls. Saves time and labour.

Question 23

What are the two ways that a country’s living standards are measured by?

Answer 23

Material living standards and non-material living standards.

Question 24

What are material living standards and how are they measured?

Answer 24

Access to physical goods and services - like cars and running water. Measured by GDP (Gross Domestic Product).

Question 25

What are non-material living standards and how are they measured?

Answer 25

Freedom of speech, free elections, low discrimination, low crime, preservation of environment. Measured by OECD (Organisation for Economic Co-Operation and Development) Better Life Index.

Question 26

What does the OECD stand for and what does it do?

Answer 26

Organisation for Economic Co-Operation and Development. Measured progress based on 11 criteria (e.g income & education) in different countries to determine their true living standards.

Question 27

What are some factors that affect a country’s living standard?

Answer 27

1) Freedom to work - people benefit directly from labour (in wages) and so are more willing to work.
2) Natural resources - allow trade and therefore income.
3) Political stability - the government are focused on their people rather than the production of G&S.
4) Labour productivity - more money going back into economy as a result.
5) Labour resources - e.g an increase in employment means a country is better off using people as resources that machines.

Question 28

Explain price as a factor that influences a consumer’s decision to buy.

Answer 28

Price is associated with quality, so if the price is too low it will, not be bought, but if it is too high it won’t be bought. Customers can also be swayed by prestige: high-priced item may be a symbol of wealth and power so they buy it even though it is overpriced.

Question 29

Explain availability of credit as a factor that influences a consumer’s decision to buy.

Answer 29

Credit availability refers to how easy it is to borrow; in other words, whether you are able to obtain a loan. Credit cards make it easy to borrow money, leading people to spend more.

Question 30

Explain marketing as a factor that influences a consumer’s decision to buy.

Answer 30

Divide products into target groups with common needs/characteristics who will most likely need the goods and services. Aim adverts at certain people. E.g funeral directors would aim marketing at elderly people.

Question 31

Explain age and gender of consumers as a factor that influences a consumer’s decision to buy.

Answer 31

Different groups have different needs. Marketing ties in here. E.g education services aimed at parents (young/middle-aged people). Genders like/need different things - e.g only girls will be influenced to buy tampons.

Question 32

Explain convenience as a factor that influences a consumer’s decision to buy.

Answer 32

Items that save consumer time and are easier to use make people want to buy them more. E.g ready-made meals have experienced 3.6% annual growth over the past few years because it is convenient to buy.

Question 33

Explain ethnical and environmental considerations as a factor that influences a consumer’s decision to buy.

Answer 33

Ethics = standards that provide guidance on what is considered right and wrong. Many people will buy products because they believe in the way they have been made - e.g vegan dr martens. Environmental issues have the same idea concerning production.

Question 34

What is macroeconomic policy?

Answer 34

An economic policy that effects a particular industry or market. Focuses on promoting competition, productivity, and efficiency.

Question 35

What is the budgetary policy?

Answer 35

(Also the fiscal policy) is a budget created by the Australian Government that provides a plan of spending and revenue for the country. Can be a balanced budget (both are equal), deficit budget (spending is more) or a surplus budget (revenue is more).

Question 36

What is the monetary policy?

Answer 36

By the RBA (Reserve Bank of Australia), it is changing the official interest rate - ultimately changing the rate of interest paid on a bank loan. [interest = cost of borrowing money or the return on lending money). Can change living standards because of the amount of money in economy due to spending.

Question 37

What is trade liberalisation?

Answer 37

An example of the monetary policy. Involves opening up markets for free trade so that countries can trade without restrictions (e.g tariffs - a tax on imported goods). Aim is to promote efficiency by forcing producers to compete in the market by cutting costs or becoming more innovative.

Question 38

What is deregulation?

Answer 38

An example of the macroeconomic policy. It is the removal of certain government rules in specific areas of the economy. E.g no longer a minimum price for wool. Aim is to get people to spend more by buying more products (I think).

Question 39

What is labour market reform?

Answer 39

An example of macroeconomic policy. Involves moving away from governments deciding wages and working conditions, and instead these things are decided directly between employees and employers. Done through an enterprise agreement. Aim is to see improvements in work efficiency as employee will gain more benefits and flexibility.

Question 40

What is the productivity policy?

Answer 40

Ensures Australia remains competitive with other countries and has a high standard of living by making sure resources at used with a certain level of output. Productivity can be increased by use of machines, computers, mines, and tools.

Question 41

What does the productivity policy include?

Answer 41

1) Privatisation of government-owned businesses (incentive to cut costs and increase profits is stronger in private businesses).
2) Government policy committed to education & research development.
3) Innovation policy: e.g federal policies targeting entrepreneurs to make their dreams a reality, or encouraging people to enrol in STEM subjects.

Question 42

What is the training and workforce development policy?

Answer 42

Focuses on improving workforce so more can be produced. Helping people have access to programs to develop their skills and knowledge, therefore increasing productivity.

Question 43

What is the migration policy?

Answer 43

Policy focussed on helping migrants provide skilled labour in areas of need in the economy.

Question 44

What are some things the government uses text revenue for?

Answer 44

Street lights, roads, welfare payments - unemployment benefits and aged pension.

Question 45

What is a negative externality?

Answer 45

The negative side effect of producing more goods: some of the cost of production is passed on to a third party (e.g the community). This means the true cost of producing cigarettes, for example, is not paid for by the producer.

Question 46

What are some ways that governments redistribute income?

Answer 46

Welfare payments, budgetary policies, funding of public hospitals, progressive taxation policies (higher income rareness are taxed at a higher rate), superannuation, minimum wage (Wages Policy).

Question 47

What is the APEC and is Australia part of it?

Answer 47

Asia-Pacific Economic Cooperation forum. Works on creating economic growth and prosperity within the Asia region. Australia is a part of this.