Economics and Buisness Term 4 2023

Question 1

Scarcity

Answer 1

Scarcity is the central idea in economics and business and is about the shortage of resources relative to wants.
The wants of society are unlimited but the resources available to satisfy these wants are limited

Question 2

Making Choices

Answer 2

The economic problem is a dual problem of scarcity and choice.
When making decisions, consumers, businesses and governments must compare the costs and benefits of using their limited resources.

Question 3

Specialisation and Trade

Answer 3

Specialisation by both workers and business leads to increased production and provides for the most efficient use of resources.
The exchange of goods and services between countries (trade) results in increased interdependence between the sectors in, and between, economies

Question 4

Interdepedence

Answer 4

The concept of interdependence is about the connections between the different sectors (or groups) in an economy, and between countries and how the actions of one sector impact on the other sectors in an economy

Question 5

Allocation and Markets

Answer 5

How will an economy’s scarce resources and goods and services be allocated? Every society must decide how to answer the basic questions of what goods and services produce, how to produce these goods and services, how many goods and services to produce and for whom to produce these goods and services.
A market provides a way to allocate resources, goods and services on the actions of consumers, producers and governments

Question 6

Economic performance and Living standards

Answer 6

Improving the living standards of people over time is an economic objective of government.
The level of economic activity, which influences people’s living standards, is measured by key indicators such as gross domestic product (GDP), the unemployment rate and the inflation rate

Question 7

Six key concepts of Economic and Business

Answer 7

Scarcity
Making choices
Specialisation and Trade
Interdependence
Allocation and Markets
Economic Performance and Living Standards

Question 8

Examples of Scarcity

Answer 8

Fossil fuels becoming more scarce
diamonds - the price is going up because of how scarce they are

Question 9

Examples of Making choices

Answer 9

rent / mortgage of a house
the more expensive items are the more choices we look at
Government - how much they spend

Question 10

Examples of Specialisation and Trade

Answer 10

Farmers
Electricians

Question 11

Examples of Interdependence

Answer 11

Fertilizer prices goes up, farmers sell produce for more, shops food produce price increases.

Question 12

Economics - definition

Answer 12

A social science (study of human behaviour) that analyses the decisions made by individuals, businesses and governments about how limited resources are used to satisfy societies unlimited needs and wants.

Question 13

Economic activity - definition

Answer 13

All the actions involved in producing, distributing and consuming goods and services.

Question 14

Microeconomics

Answer 14

Individual decision making

Question 15

Macroeconomics

Answer 15

Societal decision making

Question 16

Gross Domestic Product (GDP)

Answer 16

Is a measure of the total value (in dollars) of all goods and services produced in Australia over a specific period of time.
Only final goods and services are included when calculating GDP

Question 17

Financial year

Answer 17

July - June

Question 18

Types of unemployment

Answer 18

Cyclical
Seasonal
Frictional
Structural
Outsourcing

Question 19

cyclical unemployment

Answer 19

occurs when the level of spending in the economy falls. E.g. reduced spending, reduced production and reduced need for labour

Question 20

seasonal unemployment

Answer 20

results from the termination of jobs at the same time each year. E.g. shearing, fruit picking

Question 21

frictional unemployment

Answer 21

occurs when people are unemployed between finishing one job and starting another.

Question 22

structural unemployment

Answer 22

occurs as a result of changes in the way goods and services are produces (made)

Question 23

outsourcing

Answer 23

can also be another cause. This means a business may close a section and work is done overseas.

Question 24

Measuring Economic Growth

Answer 24

while tracking and analysing changes in Australia’s GDP- Gross Domestic Product is the main means of measuring economic growth, there are limitations (negatives) to this form of measurement, such as….
- GDP doesn’t consider the impact of production of the environment.
- GDP doesn’t include non-market production
- GDP doesn’t provide information about the distribution of production
- GDP involves some ‘guestimates’ of production, so data could be inaccurate

Question 25

Measuring Unemployment (economic growth)

Answer 25

• In Australia, unemployment rate is measured using the labour Force Survey
• The Australian Bureau of Statistics (ABS) defines the labour force as people who are older than 15 years and who are able and willing to work.

Question 26

Human Development Index (HDI)

Answer 26

is the best know index of social and economic well-being
it is a composite index, meaning that it’s made up of more than one indicator

Question 27

Poverty

Answer 27

a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living.

Question 28

Productivity

Answer 28

a measure of efficiency; the amount of output produced compared to the amount of input required for production
cause of differences in living standards

Question 29

Budgetary policy

Answer 29

a government economic policy that involves altering the level of government spending and government receipts

Question 30

Taxation

Answer 30

a government levy or revenue measure that can be used as a part of the budget to affect the level of prices, the growth rate and the distribution of income.

Question 31

Taxation examples

Answer 31

a direct tax - personal income tax and an indirect tax - goods and services tax

Question 32

RBA

Answer 32

Reserve Bank of Australia

Question 33

The economic cycle

Answer 33

refers to the changes or fluctuations in economic activity that occur over time

Question 34

Inflation definition

Answer 34

the rise in general prices and the reduction in the value of money. It is usually measured by the Consumer Price Index (CPI)

Question 34

Consumer Price Index (CPI)

Answer 34

measures the percentage change in the price of a ‘basket’ of goods and services.

Question 35

Unemployment define

Answer 35

unemployment is when an individual has stopped working or does not have a job. Unemployment types vary between people dependant on why they are unemployed.

Question 36

Income

Answer 36

the money that an individual receives in exchange for working or making other resources available for productive purposes. Wages and salaries are the most common forms of income.

Question 37

Wealth

Answer 37

the value of all the assets owned by an individual that have the ability to earn an income in the future. This includes savings, properties, shares, and other investments/

Question 38

Standard of living definition

Answer 38

the level of material comfort that people in a particular community are able to achieve

Question 39

Standard of living causes

Answer 39

Productivity
Employment patterns
Foreign investment
Debt levels
Other factors

Question 40

Unemployment rate

Answer 40

the percentage of people in the labour force that are unemployed. Unemployment occurs when someone is willing and able to work but does not have a paid job.
the amount of people unemployed divide by the people in the labour force

Question 41

Economic growth

Answer 41

an increase in the value in the goods and services produced by an economy over time. It is usually measured as a percentage change in real GDP.

Question 42

Economic indicators

Answer 42

Measures that give information about economic activity, such as economic growth rate, inflation rate, and unemployment rate

Question 43

Causes of inflation

Answer 43

Demand side factors
supply side factors

Question 44

Reasons for differences in the distribution of income

Answer 44

Patterns to workforce participation
Access to education
Government policies on the redistribution of income
National economic growth and development