Economics & Business Flashcards
Explain how the Australian Government measures ‘Economic Growth’
Economic Growth Rate is the percentage change of GDP from one year to the next, it is measured through the total production of goods and service within an economy known as GDP.
Explain how the Australian Government measures ‘Inflation’
Inflation rate is the rate of increase in prices in a given amount of time. It is typically measured through Consumer Price Index (CPI) which is the percentage change of goods and services consumed by households.
Explain how the Australian Government measures ‘Unemployment’
Unemployment rate is the percentage of the labour force that is currently unemployed.
Define ‘Gross Domestic Product’ (GDP)
The total market value of all goods and services produced in an economy within a year.
Explain why GDP is often seen as an insufficient way as a measure of economic well-being
GDP is seen as an insufficient way to measure economic development as it excludes non-market transactions such as household and underground production.
Describe the difference between the 2 types of GDP - Nominal and Real
Real GDP measures output for inflation, showing actual growth or contraction, it is vital for long-term trends and accurate comparisons.
Nominal GDP measures at current market prices, it is valuable for short-term analysis and budget alignment.
Define ‘Inflation’
In economics, inflation is a general increase on price and the value of money falls. When inflation is low, it is difficult for workers to obtain wages. When inflation is high, it reduces the country’s competitiveness.
How do we measure ‘Inflation Rate’
Inflation rate is measured through ‘Consumer Price Index’ (CPI) which measures the percentage change in the price of goods and services consumed by households.
Define ‘Human Development Index’ (HDI)
Human Development Index is a statistical measure of expected lifespan, education, and the average income within a country. The higher the HDI, the higher the standard of living.
Define ‘Better Life Index’
Better Life Index allows you to compare wellbeing across countries. The index looks at 11 different measures of wellbeing including the GDP per person, job security, air quality, and work-life balance.
Define ‘Sustainability Indexes’
Sustainability Indexes measures business’ sustainability across environmental and social factors such as air quality, access to clean water, and biodiversity.
Describe the impact on Inflation and Unemployment when economic activity decreases.
When economic activity decreases, firms start dismissing their workers and refrain from pushing up prices this means the main indicator, unemployment rises and inflation falls in times of recession.
Describe the impact on Inflation and Unemployment when economic activity increases.
When economic activity increases, usually its a strong growth in GDP and employment which leads to the unemployment rate declining and inflation rising.
Define ‘Price’
Price is the amount of money required in order to purchase a good or service.
Define ‘Price Elastic’
‘Price Elastic’ are products that fall in demand due to an increase on the price, typically having substitute availability.
Define ‘Price Inelastic’
‘Price Inelastic’ refers to products whose consumers demands remain the same after an increase or decrease on the price.
Define ‘Law of Demand’
The Law of Demand is the fundamental principle stating the inverse relationship between price and the quantity demanded.
Identify and Explain some of the factors that influence consumers when they are making purchasing decisions
- Price
Price influences the perceived value of a product, a product with lower price compared to its substitutes can make consumers feel like they are getting good value. - Finance
Consumers may not have the money required to purchase a good or service. However, if other options such as credit or afterpay consumers are more likely to purchase. - Consumer Preference
Through personal taste
Explain why there is a negative relationship between price and quantity demanded of goods and services.
There is a negative relationship between price and quantity demanded as it is the consumers logic and behaviour in response to the price changes.
Define ‘Productivity’
Productivity is the amount of output that can be produced through a given amount of input.
Define ‘Capital’
Capital are financial and physical assets used to produce value within an economy.
Define ‘Capital Investment’
Capital Investment is the process of investing financial and physical assets for long term benefits and improve productivity.
Define ‘Inventory’
Inventory refers to the assets, materials, and goods held by a business for market selling or production use.
Discuss the benefits of a business improving their productivity
Through improving productivity, it allows businesses to produce more goods and services resulting in economic growth, financial stability, and employee satisfaction.
