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Humanities > Humanities economics term 1 > Flashcards

Humanities economics term 1 Flashcards

1
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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2
Q

What is GDP?

A

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

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3
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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4
Q

what is economic recession?

A

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

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5
Q

What is Economic depression?

A

A depression is more severe than a recession and is classed as an extreme recession lasting 2 years or more.

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6
Q

What are the consequences when there are two 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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7
Q

what Percentage change in GDP is considered suitable by economists?

A

Economists hope to see economic growth exceed 2 per cent.

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8
Q

define inflation?

A

Inflation is a steady upward movement in the general level of prices decreasing purchasing power over a period of time, usually one year.

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9
Q

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

A

Consumer Price index (CPI) - long term

Inflation rate - short term

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10
Q

What is consumer price index?

A

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

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11
Q

how Often are the prices collected for CPI calculations

A

quarterly surveys.

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12
Q

In groups is CPI divided into?

A

11

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13
Q

Why items listed on the CPI weighted?

A

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

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14
Q

What is inflation rate?

A

The measure of economic growth short term.

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15
Q

What are the two types of inflation?

A

Demand-pull inflation

Cost-push inflation

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16
Q

Explain 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.

17
Q

Explain cost-push inflation?

A

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

18
Q

When does demand-pull inflation occur and what’s an example?

A

In the upswing.

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

19
Q

what’s 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.

20
Q

What are sources of demand pull inflation?

A

Sources of this are demand, full employment, Foreign investment, growth in foreign economies and increasing consumption.

21
Q

What are sources of cost push inflation?

A

Sources of this are labour shortages, Inflation, Government budgetary problems.

22
Q

What are some effects on inflation?

A
  • Price rises (impact on output)
  • Causes productive investment to fall
  • Drop in confidence
  • Less products being purchased
  • Domestic interest rates increasing
23
Q

What is macroeconomics?

A

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

24
Q

What is microeconomics?

A

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

25
Q

Explain the boom

A

A period when the general level of economic activity is above average.

  • Levels of AE that are at or above levels required for full employment,
  • General feelings of confidence in the economy,
  • Little excess capacity,
  • Inflationary pressure,
  • Strongest economic position.
26
Q

Explain the trough

A

Troughs in which there are two quarters of negative Growth

  • Levels of AE are below levels required for full employment,
  • Low levels of consumption expenditure,
  • General lack of confidence in the economy
27
Q

Explain the downturn

A

Decreasing levels of AE that are below levels required for full Employment, Decreasing levels of consumption expenditure particularly on durable goods, Decreasing levels of investment in capital equipment, Declining feelings of confidence in the economy

28
Q

Explain the 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

29
Q

Explain unemployment (cyclical)

A

Cyclical Unemployment occurs in the downswing and recession phases of the trade cycle.
due to substantial reductions in aggregate demand or total spending in the economy.

30
Q

Explain Unemployment (Structural - technical)

A 
technology changes (check out staff reduced due to self-serve check outs) 
Changes in the pattern and nature of consumer spending (not as many retail outlets necessary due to online shopping).
31
Q

Explain Unemployment (Seasonal)

A

Seasonal Unemployment affects occupations such as fruit pickers, fishermen and shearers. Where the nature of their work means that employment may not be available for the whole year.

32
Q

Explain Unemployment (frictional)

A

Frictional unemployment may be as a result of undertaking training or courses to learn more skills so that people get a better job or to change industries

33
Q

Explain Unemployment (long term)

A

Those who cannot get a job because of their lack of physical or mental ability to do the available jobs or their attitude to work or be undesirable to employers

34
Q

Explain 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.

35
Q

What are the effects of unemployment

A
  • lower spending
  • lower producing
  • decreasing inflation
36
Q

What is the unemployment rate?

A

Percentage of those willing to work yet cant find a job

37
Q

ABS definition of unemployment

A
  • not working more than 1 hour a week
  • Actively looking over 4 weeks
  • Able to start
38
Q

Relationship between inflation and business cycle?

A

Inflation decreases in recession (downturn) and increases in expansions (upswing and boom)

Humanities (4 decks)

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