HSC - Economics Flashcards
1
Q
Free - Trade
A
No barriers to trade are imposed between economies
2
Q
Specialisation
A
When countries only make the goods/services that they can optimise in producing
3
Q
Most efficient producer
A
absolute advantage in production of goods
4
Q
Comparative Advantage
A
Countries should produce the goods where they have the lowest opportunity cost
5
Q
Public Sector
A
all parts of an economy owned or controlled by the government. Includes government business enterprise.
- Public sector outlay as a percentage of GDP
- Employment by the public sector as a percentage of total employment
6
Q
Taxes - catagories
A
1) Progressive tax = higher income earners pay a larger proportion of their income in tax
2) Proportional tax = higher income earners pay the same proportion of their income in tax
3) Regressive tax = higher income earners pay a smaller proportion of their income as tax
7
Q
Opportunity Cost
A
The value of your choice’s next best alternative
8
Q
Advantage to Free - Trade
A
Consumers
1) Lower prices
2) Improved availability of goods
3) Increased Consumer choice
Producers
1) Improved efficiency of domestic industries
2) Structural change and specialisation
Economy
1) Reduced inflation
2) Increased international competitiveness
3) Increased economic growth
9
Q
Allocative efficiency
A
when resources are allocated in a way that reflects demand and makes best use of them
10
Q
Structural change
A
Change in size and composition of industries within the economy
11
Q
Trade Agreements
A
Formal agreements between countries designed to breakdown barriers to trade
- bilateral agreements - (ANZCERTA) no barriers at all
- Multi-lateral - more than 2 members (WTO)
- Trade Blocs - barriers to trade reduced
- Monetary Unions - currency conversion costs are removed encouraging investment and trade
12
Q
Methods of Protection
A
1) Tariff = Tax on Imports
2) Quota = Restriction on the amount of a goods/services that can be imported
3) Subsidies = cash payments given by the government to produces
4) Local content rules = government specifies that goods must contain a minimum percentage of locally made parts
5) Export incentives = Incentivising firms to export (grants, loans or technical advice)
13
Q
Protection definition and effect
A
Refers to government policies that give domestic producers an artificial advantage over foreign competition
- Keeps price higher and slows innovation
- Makes it hard for countries to identify their areas of comparative advantage
- Harder for countries to achieve economies of scale
- Inhibits efficient allocation of global resources, thus reducing global growth
- Developing countries tend to be most negatively effected
14
Q
Autarky
A
A state of self efficiency
15
Q
The global economy
A
sum of all countries in the world engaging in economic activity
16
Q
Gross World Product (GWP)
A
Refers to sum of total output of goods/services by all economies
17
Q
Globalisation
A
Refers to the integration between countries and economies and the impact of international influences on all aspects of life
Effects
- Increased trade
Caused by
- Improvements in technology
18
Q
International economic integration
A
Occurs when trade barriers are reduced or removed between countries to facilitate growth, trade investments and the mobility of resources
19
Q
Financial Flows
A
Flow of Money between countries
Another indicator of globalisation is the integration of international financial markets/ Money flows between countries far quicker than goods This includes: - Bond markets - Share markets - Remittances - Foreign markets
Caused by
- Deregulation = the removal of regulations or restrictions
- Technological advancements
Effects
- Countries can access money to finance domestic investment, leading to faster accumulation of capital, more employment and increased range of products
- Speculative actiivty can cause volatility
20
Q
Transnational corporations (TNC’s)
A
A company that operate in at least 2 countries
Caused by:
- Technology improvements
- Also growth in merges (when one company buys another)
Effect:
- Less small business
- Increasing technology
- Potentially low taxes and labour laws to attract TNC’s
21
Q
Foreign direct investment (FDI)
A
Investor establishes a new company aborad or buys >10% of shares in extisting (overseas) company
22
Q
Portfolio Investment
A
The short term movement of funds between economies for loans or the purchase of shares (<10%)
23
Q
Migration
A
The movement of people between countries on a permanent or long-term basis
Cause
- Political
- Differing job prospects
24
Q
International Business Cycle
A
The fluctuations in global economic growth. The level of growth in one country is influenced by what is going on in other economies
25
Austerity
Governments cutting back on spending
26
Economic Growth
Refers to an increase in the size of a countries economy over a period of time *measured by GDP
27
Economic Development
A broad measure of welfare in a nation that includes indicators of health, education and environmental quality as well as material living standards
Seeks to improve quality of life indicators:
- Education
- Unpaid domestic work
- Environmental damage
- Inequality
- Health
28
Human Development Index
Life expectancy
Education
Gross National Income (GNI)
29
World Bank
An international financial institution that aims for development of poorer countries through loans and grants
30
International Monetary Fund (IMF)
Ensuring financial stability through loans (organisation of 190 countries)
31
World Trade Organisation
Encourage international trade by organising trade negotiations, implement and enforce unilateral trade agreements, resolve trade disputes
32
United Nations (UN)
Makes global rules, focuses on global development (zero hunger, food security...)
33
Organisation for Economic Co-operation and Development (OECD)
Publishes economic research - goal is to shape policies for benefit
34
Global Economic Forums G7/G20
Allow most influential economies to discuss issues related to economic growth, development and stability and develop responses
G7 - largest countries in 1975
G20 - The world largest 19 economies + EU
35
Gross national income
Gross domestic product, plus net receipts from abroad
36
Categories of development
Advanced - America
Emerging - India
Developing - Nigeria
37
Phantom Aid
Aid that doesn't improve lives of those in poverty - e.g money flowing to payment of debt
38
Official developing assistance
difference between aid that was promised and aid that has been delivered
39
Factors endowment
A countries factors of production
40
Land
All resourced found in nature
RENT
41
Labour
Human effort… Includes both physical and mental effort.
WAGES
42
Capital
Goods used in the production of other goods and services.
Interest
43
Enterprise
The organisation of the other factors of production
Profit
44
Effects of Globalisation
Benefits
- Consumer choice
- Vertical specialisation increases efficiency
- Emerging economies can 'catch up'
- Increasing global labour mobility
- Increasing exports for Australia
Negatives
- Economies of scale lead to global monopoly
- Benefits of FDI and trade mostly missed by developing economies
- "Brain drain" loss of highly skilled workers
- Countries attract FDI or earn export revenue through depletion of resources
- Increasing use of non-renewable resources
45
Growth dividends
rising incomes for households and/or rising profits for businesses, therefore tax revenue increases
46
Short-run
At least one of the factors of production is fixed
47
Long-run
None of the factors of production are fixed
48
Composition of Trade
What goods and services are traded
Australia currently has a narrow export (24% of GDP) base mostly contributed by natural resources such as coal and iron ores
49
Direction of Trade
Where goods and services are traded to/from
| Asian market for Australia
50
Changes in global economy
- Environmentalism
- globalisation
- Industrialisation
- Intellectual property
- Pushback against free-trade
- Increased integration of global labour markets
51
Balance of Payments
A record of Australia's economic transactions with the rest of the world over a period of time. It shows trade and financial flows
Credit - Debit
Currant Account (CA)
Balance of Goods and Services (BOG)
Net primary income account (NPY)
Net secondary income account (NSY)
```
Capital and Financial Account (KAFA)
Capital account (KA)
Financial account (FA)
```
52
Current Account
Shows transactions that are non-reversible. This included trade, transfer payments and income flows
```
BOGS = records all export and import transactions
NPY = Records all earnings on foreign direct investment. This includes interest, and dividends, profit and rent
NSY = Records all non-market transfers. Includes remittances, pensions, unconditional foreign aid and insurance claim payouts
```
53
Capital and Financial Account
Records the borrowing, lending, sales and purchases of assets
```
KA
- Capital transfers -> ie debt forgiveness and conditional foreign aid for capital projects
- Purchase and sale of non-produced non-financial assets -> ie intellectual property rights like patents, trademarks and franchises
FA
Foreign financial assets and liabilities
- FDI
- Portfolio investment
- Financial derivatives
- Reserve assets e.g RBA owns gold
```
54
Floating exchange rate system
Currency price of a nation is set by the forex market based on supply and demand relative to other currencies
Balance of payments is supposed to balance. If the CA is negative, the KAFA should be positive
55
Cyclical Factors
Vary with level of economic activity
56
Structural Factors
Underlying or consistent influences on balance of payments
57
Exchange Rates
The value of one currency in terms of another countries currency
58
The Trade Weighted Index
A measure of the value of the Australian dollar against a basket of foreign currencies of major trading partners. These currencies are weighted according to their significance to Australia's trade flows (imports/exports)
59
Labour Force
Employed: includes those on paid leave, strike, workers comp, self-employed or stood down for less than four weeks
Unemployment: actively seek work
60
Not in Labour force
- Unable to work
- Retired
- Studying
- Imprisoned
61
Types of Unemployment
- Long term
- Structural
- Cyclical
- Seasonal
- Frictional
- Hard-core
- Hidden
- Geographical
- Underemployment
62
Social effects of Unemployment
- Poverty
- Isolation
- Crime
- Erosion of self-esteem
- Homelessness
- Family tensions
- Poor health
- Risk of suicide
63
Causes of Unemployment
1) Issues in Economic Growth
2) Changes in labour market
3) Structural change
4) Wage instability
5) Productivity change
64
Natural Rate of unemployment
The level of unemployment which is unavoidable. That is improving economic growth will not reduce it.
To decrease unemployment:
- pre-emptive education and training, support to infrastructure to math workers with jobs, reduce barriers to workers finding jobs
- Labour Market policies
- Micro-economic reform
* instead of expansionary fiscal policy
65
NAIRU
The non-accelerating inflation rate of unemployment
| - The lower level of unemployment that can be sustained without an increase in inflation
66
Net worth
the extent to which the value of household assets exceeds the value of their liabilities
67
Income inequality
The degree to which income is unevenly distributed
68
Quintiles
What % of income each proportion of population has
69
Marginal Utility
The extra satisfaction you get from consuming one more unit of a good or service
70
ECONOMIC/SOCIAL Benefits/Costs of inequality
```
ECONOMIC
Benefits
- Human capital, productivity of labour
- Geographical mobility of labour
- Increasing quantity of entrepreneurship
- Increase APS
```
Costs
- Decrease APS
- Decreased labour productivity due to labour force participation (hidden unemployment)
SOCIAL
Costs
- Class divisions
- lack of social mobility
71
Ecological Sustainable Development (ESD)
Relates to utilising our scarse resources to satisfy the needs and wants of present/future generations (intergenerational equality)
- Non depletion of non-renewable resources
- biological diversity
- increased quality of life
- decreasing air and water pollution
72
Externality
When a third party who was not involved in choosing to incur the cost/benefit is affected
73
Private Costs and Benefits
Borne or enjoyed by produces or consumers who have chosen to produce/buy the good/service
74
Social Costs and benefits
Borne or enjoyed by society in general, cost or benefit is rarely factored in private decisions
75
Market Failure
When a market outcome is unsatisfactory to society
76
Meret Goods
Beneficial for an individual
77
Demerit goods
Disadvantageous for an individual
78
Internalise Negative Externality
Making the public cost (negative externality) a factor for business. Ie Taxing heavy carbon emitting businesses
79
Environmental Issues
Environmental Issues
- Natural environments effects human’s health
- Pollution – mining and manufacturing associated with industrialisation and globalisation creates pollution
- Climate change – increasing ‘living standards’ contributes to carbon emissions
- Resource depletion -> free rider problem and “tragedy of the commons; resources are used more than socially optimal, causing market failure
80
Environmental Destruction
A reduction of quantity and quality of natural resources (shifts PPC inwards)
81
Targets
Renewable energy target (Australian government target policy designed to reduce emissions from greenhouse gases in the electricity sector). This has legal obligations.
82
Subsidies
A cash payment given by the government to lower price of a good service. Encourage the production of environmentally friendly goods/services
83
External Stability
External stability is an aim of government policy that seeks to promote sustainability on the external accounts so that Australia can service its foreign liabilities in the medium to long run and avoid currency volatility.
84
Causes of Impact to External Stability
1) Current Account Stability
- Key way to measure external stability is using CAD as a percentage of GDP
- CAD greater than 5% of GDP leads to debt accumulation that is unsustainable
2) Dutch Disease: discovery of natural resources simultaneous to increasing demand. Appreciation of currency harming other export industries
3) Changes in Terms of trade also effects external stability
4) Net foreign debt
5) Net foreign Liabilities
6) Exchange rate
7) External stability policies
85
Current Account Deficit - External Stability
- CAD as a percentage of GDP can be used to measure external stability
- CAD averaged in Aus since GDP
- CAD greater than 5% of GDP leads to a debt accumulation that is unsustainable
86
Dutch Disease
Discovery of natural resources simultaneous to increasing demand. Leads to appreciation of currency and thus other export industries fail.
87
Terms of Trade
Changes in terms of trade also indicate changes in external stability.
Prior to 2000's, global commodity prices were falling, and our export prices / TOT was low. Low export revenue caused our growing trade deficit and a worsening of CAD
88
Net Foreign Debt
Net foreign debt is the total stock of loans owed by Australian's to foreigners, minus the total stock of loans owed by foreigners to Australian's
89
Net Foreign Equity
This poses less of a risk because servicing (dividends, profits) only happens when the business/asset is generating a return
90
Exchange rate
Changes in the value of the dollar can make it more difficult to pay off foreign debt
91
Aggregate Demand
total amount of demand for goods/services within economy
- Consumption (household)
- Investment (business)
- Government (expenditure)
- Net Exports
92
Aggregate Supply
Total amount of goods and services (productive capacity) an economy can supply
Price increase leads to output increase (expansion in AS)
93
Macro-economic Equilibrium
Total output demanded = Total output supplied
94
AD/AS Diagram
Determines GDP and Price
When aggregate demand shifts outwards...
- Increased price and output
- Increase in economic growth
- Increase in Inflation
When Aggregate supply shifts outwards...
- Increased output, decreased price
- Increased economic growth
- Lower rates of inflation
95
Economic Growth
An increase in the output produced by an economy over a period of time (usually one year)
Measured by rate of change in Gross Domestic Product
Real GDP y2 - Real GDP y1 / Real GDP y1 x100
96
Nominal vs Real GDP
Nominal GDP
- Considered market value (influenced by price level)
- If inflation increase nominal GDP will increase
Real GDP
- Adjust for inflation
- Looks at changes in output itself
97
Inflation
Inflation is a sustained increase in the general level of price in an economy - measured using CPI
98
Inflation rate
The percentage change in CPI between two periods
99
Headline/Underlying Inflation
- (unaltered CPI) experiences large fluctuations
- accurately reflects economic conditions
Indicators of underlying inflation are the trimmed mean and the weighted median
100
Demand-pull inflation
when AD exceeds AS. Consumers compete for scarse resources by bidding prices up.
101
Cost-push inflation
When F.O.P increase in cost e.g. oil firms maintain profitability by passing this cost onto consumers.
102
Inflation expectations
If we expect inflation to increase, we negotiate wages with this in mind (cost-push) and bring forward planned purchases before prices rise (demand-pull)
103
Imported inflation
If the price of imports rises then inflation will occur
104
Inflation - Government Policies
Gov policies like tariffs minimum wage laws, price controls can also influence inflation (headline at least)
105
Inflation - Excessive increase in money supply
Too much money, too few goods, prices bid up
106
Wage Price Spiral
higher prices -> rising cost of living -> indexation of wages -> higher wages -> increased demand of goods -> repeat
107
Inflation - Negative effects
- high inflation distorts spend/save decision making
- high inflation distorts investment decision making
- high inflation increases our export prices, reducing international competitiveness
- wage price spiral
- high inflation contributes to inequality (up inflation = up interest
- Raising of interest rates puts a break on growth and raises unemployment. IN the short term, appreciating the dollar in the long term; thus causing depreciation
108
Inflation - Positive effects
- Philips curve - high levels of inflation are often associated with low levels of unemployment
- Allow firms to adjust real wages even in the face of downwards nominal wage rigidity
- Keeps us away from deflation and the deflationary spiral
109
Policies / Management of Inflation
- Monetary policy
- Fiscal policy
- Micro-economic policies - e.g. lowered tariffs and increased international competition through trade (especially low-cost international competition through trade (especially low-cost China) has lowered inflation in Australia. Infrastructure improvements have reduced bottlenecks in production that caused some cost-push inflation in the past
110
Economic Objectives
In managing the economy, the first priority for a government is to determine what it will pursue as its economic objectives. Often the prioritises of government shift over-time
- Economic growth and quality of life
- Full employment
- Price stability
- External stability
- Environment sustainability
- Distribution of income
111
Good
A material that is bought to satisfy customers need.
- Public
- Individual
- Private
- Competitive
112
Service
A transaction of a non-physical value from seller to buyer
113
Dumping
Lowering prices to a point of losses to negatively effect businesses in other countries
114
predator pricing
Dumping but within an economy
115
Fiscal policy
Macro-economic policy where governments spending and taxation are used to effect aggregate demand
Redistribute income - tax
Reallocate resources - public and merit goods
Reduce fluctuations in business cycle - alter spending and taxation. (slow eco growth increase spend decrease tax)
116
Monetary Policy
Macro-economic policy relating to the management of interest rates by RBA in order to influence the level of economic activity
Contractionary Monetary Policy = Raising Interest Rates slow down an overheating economy
Expansionary Monetary Policy = Lowering interest rates, speed up a sluggish economy
The Reserve Bank of Australia will likely utilise monetary policy to mitigate the economic downturns caused by a recession—2 economic quarter of negative growth. The main strategy utilised would be changing the cash rate—cost of funds in the overnight money market—to lower interest rates. To do this they would lower the cash rate by injecting cash into the economy through purchasing of banks bonds. Thus, the lowering the interest rate due to increased supply. Thus, the lower interest rates cause consumers to increase spending; leading to stimulation of the economy. This would allow an economic to more quickly 'bounce back' from recession into economic growth
117
Micro Economics Policy
Resource allocation between firms and industries in order to maximise output from scarce resources
- Competition policy
- Deregulation
- Privatisation and Corporisation
- Infrastructure development
- Labour Market Reforms
- Tax Reform
- Education
- Trade Reforms
118
Savings Investment Gap
Where existing level of savings is insufficient to achieve an economic objective
119
Keynesian Theory
Demand sides theory that focuses on changes in economy in the short run
Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression (expansionary fiscal policy)
120
Classical economic theory
The economy is self‐regulating.
The economy is always capable of achieving the natural level of real GDP or output, which is the level of real GDP that is obtained when the economy's resources are fully employed.
121
Market Based Solutions
Market-based solutions connect the “incentive” with “economy” and show that making use of an environmental protective incentive in an appropriate way could finally achieve a cost-efficient process. This is how the market-based solutions operate, they connect the environmental missions with the financial incentives.
122
Vertical Specialisation
when countries specialise only in particular stages of a good's production sequence
123
Price Elasticity of demand
How responsive quantity demanded is to a changing price
1) Inelastic (change in price = little change in quantity demanded)
2) Elastic (change in price = large change in quantity demanded)
124
Demand for Labour (markets)
PRODUCT FACTOR MARKET
- In most markets, Demand comes from consumers who belong to household
- supply comes from producers, who belong to firms
LABOUR MARKETS
- "backwards" compared to product factor market
- in labour markets, Demand comes from the employer of labour, which area firms
- supply comes from the owners of labour which are households in exchange for wages
*demand for labour is "derived demand"
125
Philips Curve
high levels of inflation correlated with low levels of unemployment
126
Tight/Loose Labour Markets
```
Tight = Demand for workers (higher wages)
Loose = Demand for Jobs (lower wages)
```
127
Neo-malthusian theory
Population control through the use of contraception is essential for the survival of the earth's human population.
Leads to inequality
128
Market vs non market methods
```
market = tax, subsidies
non-market = ban
```
129
Stagflation
Stagnant economic growth, rising unemployment, rising inflation (oil crisis)
130
Cash Rate
the interest charged on overnight loans in the short-term money market
131
Okun's Law
Okun’s law says that a country’s gross domestic product (GDP) must grow at about a 4% rate for one year to achieve a 1% reduction in the rate of unemployment.
132
Pitch-ford's thesis
CAD is not bad. It encourages investment rather than saving as long as its driven by the private sector. Not government debt.
133
Say's law
Production of a product creates demand for another product by providing something of value which can be exchanged for that other product.
So, production is the source of demand.
134
Net Capital Importer
value of imported goods and services is higher than its exported goods
135
Cash Basis Accounting
Only recognises a transaction when you spend or receive money
136
Accrual basis accounting
Recognises a transation when money is earned, but not exchanged (like sending an invoice)
137
Reccurant expenditure
All Payments other than for capital/assets
138
Capital Expenditure
Payments for acquisition of fixed capital assets, stock, land or intangible assets (ie building schools)
139
Measures of Budget outcome
CASH ACCOUNTING
Underlying Cash Balance
- Cash accounting. Known as the 'cash deficit' or 'cash surplus'
Headline Cash Balance
- Underlying cash balance + sales/purchase of assets + net future fund earnings
ACCRUEL ACCOUNTING
Fiscal Balance
- Accrual accounting known as 'fiscal deficit' or 'fiscal surplus
Net operating balance
- Known as 'operating surplus' splits spending into recurrent vs capita;
140
Methods of financing a deficit
1) Borrowing from private sector
- gov sells bonds (lowest interest -> highest) Market sets rate ensuring deficit to be financed
2) Borrowing from overseas
- 2/3 of Aus gov debt is held by resident investors. Lower interest due to higher amount of demand
3) Borrowing from RBA
0 Gov could borrow direct from RBA. Create new currency but causes hyper-inflation
4) Selling assets
- Capital expenditure. Ie selling Telstra (could cause crowding out)
141
Crowding Out
When government borrows from private sector, they increase demand for loanable funds. Creates competition between private and public investment. Competition bids price up.
142
Use of Surplus earnings by Gov
- Deposit with RBA
- Pay down debts
- Invest
- Buying Assets
143
Effect of Monetary Policy
- Influence interest rates
- Control the money supply (only partially effective)
- Influence inflationary expectations
144
Micro Policy
The overall aim of micro-economic reform is to encourage the efficient operation of markets and increasing aggregate supply - b y raising productivity, making the economy more adaptable to change
145
Types of Micro Policy
1) Competition Policy
- Aims to promote competition in markets to increase efficiency and lower prices for consumers
2) Deregulation
- Simplification or removal of rules that constrains the operation of market forces. Can however lead to market failure.
3) Privatisation and Corporisation
- Privatisation = gov sells GBE to private market
- Corperisation = Gob encourages public trading
4) Infrastructure development
- More productive and efficient if infrastructure is of a higher quality.
5) Labour Market Reforms
6) Tax Reform
- Aus tax system not designed to deal with multinational trade and digital economy. Unattractive to investors and limits job growth.
7) Education
- Increasing quality/quantity of education will improve Aus international competitiveness. Can change focus of comparative advantage.
8) Trade reforms
- tarrifs, free trade, barriers etc
146
The Fair Work Act
(2009)
| Simplified Aus award system and thus increased efficiency.
147
Dispute Resolutions
Relates to how work related disputes are settled in Australia
```
Conciliator = provide advice resolving disputes
Arbitration = making binding decision if conciliation is unsuccessful
```
Australia - Arbitration use
Declining use within Aus. Used in these scenarios:
1) Compulsory dispute settlement terms = cannot resolve dispute and instead enact "refer to third party"
2) Bargaining in good faith = if bargaining is not occuring in 'good faith'
3) Resolving industrial action = are conducting industrial action in a threatening manner
148
Employment Programs
A major long-term goal of the labour market is to increase and sustain participation in the workforce.
Examples:
- Reducing unemployment assistance
- 2011 national minimum scheme of paid parental leave
149
Gonski Reforms
Initiated in 2012 and recommended gov reduce excessive payments to schools that didn't need them. Complications due to private school being filled with higher income earners. Affected political popularity.
150
Decentralisation - Centralisation
A centralised labour market is one in which wages and other labour market is where wages and other labour market outcomes are primarily determined by a government
A decentralised Labour market means that market forces as well as the individual firms capacity to pay, plays a greater role
In Aus we set a safety net of minimum wages and conditions but otherwise have decentralised bargaining.
151
Arguments for/against decentralisation
FOR
1) Efficient allocation of resources
2) Productivity
3) Unemployment
AGAINST
1) Inequality
2) Inflation
3) Enforcement
4) Policy tool
152
Key Limitations of Economic policy
1) Time Lags
- Implementation time lag
- Impact time lag
Monetary - short implementation and long impact
Fiscal - long implementation and short impact
Micro - Long implementation and long impact
2) Global Influences
- The global economy greatly influences effectiveness. Ie in global recession there is generally low demand for exports (not necessarily true for Australia)
- global investors tend to favour classical policies
3) Political Constraints
- Unpopular policy is hard to pass
- Biased for popularity
153
Discretionary Fiscal vs non-discretionary
```
Discretionary = when the government inter-veins to change fiscal policy
Non-discretionary = automatic stabilisers such as government spending goes up in recession due to gov payments
```
154
ChAFTA
China-Australia Free Trade Agreement
Eliminates tariffs on majority of trades
