Factors Affecting Economic Flows Flashcards
What Factors Impact Economic Flows
Various forces impact economic flows, including retail sales growth, business investment, exports and imports, government spending and taxation, changes in the cash rate, aggregate supply factors, and current economic events.
What does retail sales growth indicate?
Retail sales growth indicates the level of household consumption spending.
How does business investment impact economic flows?
Business investment reflects firms’ spending on capital goods, influenced by factors like confidence and expected profitability.
How do exports and imports affect economic flows?
Exports and imports are influenced by exchange rates, international competitiveness, and global economic conditions.
How do government spending and taxation impact economic flows?
Government spending and taxation are fiscal policy levers that directly influence aggregate demand and disposable income.
How does a change in the cash rate affect economic flows?
A lower cash rate encourages borrowing and spending, increasing aggregate demand, while a higher cash rate discourages borrowing and spending, reducing aggregate demand.
How do changes in aggregate supply factors impact the economy?
Factors like technology, innovation, entrepreneurship, and immigration can increase productive capacity, leading to increased flows of goods and services and potentially higher income. These factors can also shift the PPC outwards.
How do current economic events impact economic flows?
Changes in confidence levels, minimum wage, government subsidies, currency movements, and global economic conditions can significantly impact economic flows.
