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Year 10 Economics test 1 > Economics test 1 > Flashcards

Economics test 1 Flashcards

1
Q

What is macroeconomics?

A

The part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity

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2
Q

What is micro economics?

A

The part of economics concerned with single factors and the effects of individual decisions.

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3
Q

What does the business cycle measure?

A

Measures the change in economic growth within a specific economy (national/state) overtime.

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4
Q

what is a boom?

A

a period when the general level of economic activity is above average. The economy almost or has full employment, feelings of confidence in the economy, Little excess capacity, Inflationary pressure.

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5
Q

what is trough?

A

Troughs in which there are two quarters of negative, Growth are called recession, Levels of AE are below levels required for full employment, Low levels of consumption expenditure, lack of confidence in economy

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6
Q

what is a downswing?

A

Decreasing levels of AE that are below levels required for full employment, decreasing levels of consumption expenditure, Decreasing levels of investment in capital equipment, Declining confidence in the economy

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7
Q

what is an upswing?

A

A trough cannot last forever, at some point government Policies (monetary and fiscal policy) together with Unplanned investment will cause the level of AE to Increase and growing demand

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8
Q

what is GDP?

A

Gross domestic product. The measure of the total value of goods and services produced in Australia over a year.

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9
Q

why do we measure GDP?

A

The percentage change in the GDP tells us whether or not the economy is growing.

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10
Q

What is a recession?

A

This is when economic growth falls for two or more quarters (6 months or more) in a row.

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11
Q

What is a depression?

A

A depression is more severe than a recession and is classed as an extreme recession lasting two years or more

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12
Q

What are the consequences when there are two or more quarters of negative growth in GDP?

A

There is a decline in the number of goods and services being produced, a decline in number of people being employed and overall a decline in their standard of living

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13
Q

What percentage change in GDP is considered suitable by economists?

A

Economists hope to see economic growth exceed 2%

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14
Q

what is inflation?

A

Inflation is a steady upward movement in the general level of prices decreasing purchasing power over a period of time

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15
Q

What terms are given to the official measure of inflation in Australia?

A

Consumer price index (CPI) and inflation rate.

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16
Q

What is consumer price index?

A

The CPI can be thought of as an imaginary ʻbasketʼ of over 100,000 selected goods and services bought by a typical capital city household. The CPI is a measure of the changes in the price of this basket of goods
and services.

17
Q

How often are prices collected for CPI?

A

Quarterly surveys

18
Q

How many groups is CPI divided into?

A

11

19
Q

Why are items listed on the CPI weighted?

A

To reflect the importance of each class in relation to total household

20
Q

What is inflation rate?

A

The measure of economic growth short term

21
Q

What are the two types of inflation?

A

Demand pull and cost push inflation

22
Q

What is demand pull inflation?

A

When demand increases at a rate faster than the capacity of goods and services. This increases competition for goods and services drives up their prices.

23
Q

What is an example of demand pull inflation?

A

An increase in government spending can increase aggregate demand, thus raising prices

24
Q

What is cost push inflation?

A

When prices are pushed up by rising costs to producers who compete with each other or increasingly scarce resource

25
Q

what is an example of cost push inflation?

A

An increase in the price of oil increases the cost of production for almost all goods and services and results in immediate increase in inflation

26
Q

What are the effects on inflation?

A
  • Price rises
  • Causes productive investment to fall
  • Drop in confidence
  • Less products being purchased
  • Domestic interest rates increasing
27
Q

what is full employment?

A

Anyone who wishes to work can find a job

28
Q

what is unemployment?

A

People who are willing and able to work canʼt find a job

29
Q

What is participation rate?

A

Participation Rate consists of the proportion of the working age population (15-70 years of age) recorded as either in work or actively looking for work

30
Q

What is the labour force?

A

Those people over 15 who are not:

  • a full-time student
  • retired
  • in prison
  • permanently
  • incapacitated
  • hospitalised
31
Q

what is cyclical unemployment?

A

Occurs in the downswing and recession phases. This type of unemployment is due to substantial reductions in aggregate demand or total spending in the economy.

32
Q

what is structural unemployment?

A

This type of unemployment is due to things such as technology changes or changes in the pattern and nature of consumer spending

33
Q

what is seasonal unemployment?

A

The nature of the peoples work means that employment may not be available for the whole year only certain seasons

34
Q

what is frictional unemployment?

A

People quit one job to get a better one, may be as a result of undertaking training or courses to learn more skills

35
Q

what is long term unemployment?

A

Those who cannot get a job because of their lack of physical or mental ability

36
Q

How do we measure unemployment?

A

Through the unemployment rate. A percentage of people willing and able to work yet canʼt find a job.

37
Q

What factors contribute to unemployment?

A

demand, education, competition and injuries.

38
Q

what is the fiscal policy?

A

A government adjusts its spending levels and tax rates to monitor and influence a nation’s economy

39
Q

what is the monetary policy?

A

The macroeconomic policy laid down by the central bank.It involves management of money, supply and interest rate

Year 10 Economics test 1 (1 decks)

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