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year 12 economics💸🤍 > introduction to eco issues > Flashcards

introduction to eco issues Flashcards

1
Q

measures of economic performance / indicators :

A
  • EG
  • Unemployment
  • Inflation
  • Environmental
  • External stability
  • Inequality
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2
Q

four economic functions of the government

A
  1. stabilising economic activity
  2. resource allocation
  3. redistribution of income
  4. market regulation
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3
Q

macroeconomic policies

A
  • fiscal policy
  • monetary policy
  • price and income policy
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4
Q

microeconomic policy

A
  • product markets
  • factor markets
  • competition policy
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5
Q

economic growth definition

A

A quantitative measure of an increase in real GDP ( output ) over time.

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6
Q

Economic Development:

A

A qualitative concept of wellbeing ( e.g; access to health and education )

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7
Q

Sustainable Economic Growth

A

Governments aim for sustainable economic growth rather than growth at any cost to ensure economic growth raises quality of life

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8
Q

Internal Balance Focus:

A

full employment
price stability

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9
Q

full employment

A

The economic objective to achieve an unemployment rate near the non-accelerating inflation rate of unemployment ( NAIRU ).
- no cyclical UE, only structural
- UE gen at 4-5%

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10
Q

price stability

A

price stability is the economic objective to minimise inflationary pressures
- target band of 2-3%

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11
Q

external stability

A

To have an economic situation in which external sector ( CA, foreign debt + foreign ownership ) is sustainable and does not constrain domestic policy making
- historically CAD below -6.0% –> now 3.4%

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12
Q

environmental sustainability

A

Economic activity is only acceptable if it does not damage the environment and does not compromise intergenerational equity

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13
Q

intergenerational equity

A

Leaving the environment for next generation in as good condition as the present

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14
Q

equitable distribution of income

A

Govt. seeks to promote greater equality in distribution of income to bridge gap between rich and poor via progressive tax system and transfer payments

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15
Q

measurement of income distribution

A

gini coefficient
lorenz curve

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16
Q

macroeconomic policies

A

Concerned with stabilising economic activity on the DEMAND side ( AD )
- Intended to find sustainable balance between various objectives
- Short term + medium term economic management

17
Q

aggregate demand definition

A

Total expenditure for final G+S in the economy over a period.

18
Q

AD formula

A
  • AD = C + I + G + ( X - M )
  • AD = Y = Output
19
Q

loosening monetary policy

A

expansionary effect
decreasing interest rates –> stimulates AD

20
Q

tightening monetary policy

A

Raising interest rates –> dampens AD
contractionary effect

21
Q

neutral monetary policy

A

No change to the official interest rate

22
Q

Microeconomic Policies:

A
  • Concerns with areas of economy which mostly impacts supply ( Aggregate Supply )
  • Designed to improve efficiency of targeted sectors
  • Rationale to increase Aus’s productive capacity in long term
    Operate on supply side to boost AS
23
Q

allocative efficiency

A

Occurs when resources ( capital, labour ) are distributed so that the net benefit to consumers of output is maximised.

24
Q

Technical Efficiency:

A

Occurs when productive output is increased from a set of volume of resources.

25
Q

Dynamic Efficiency:

A

Refers to an economy’s ability to adapt to changing economic conditions, having strong short-term performance while also improving long-term goals.

26
Q

area of MER: dereuglation

A

Removal of government controls over a sector over product and factor markets.
Eg: financial markets, banking sector, airlines

27
Q

MER: privatisation

A

Sale of state owned enterprises
Eg: commonwealth, qantas

28
Q

legislation MER

A

To increase economic liberalisation
Competition Policy: Competition & Consumer Act 2010

29
Q

Price Stability & Full Employment:

A

conflict
Unemployment falls → higher inflationary pressures ( COST PUSH ) due to fall in labour supply + wages ris

30
Q

Price Stability & Economic Growth:

A

Strong EG ( AS may not rise as quickly ) → demand pull inflation
conflict

31
Q

Economic Growth & External Stability:

A

conflict
EG raises incomes → consumers buy more imports → worsens CAD

32
Q

Economic Growth + Environmental Sustainability:

A

conflict
Increased consumption of resources ( natural etc ) → Higher rates of EG

33
Q

Economic Growth + Distribution of income:

A

conflict
Benefits of growth are skewed to skilled workers and owner of capital

34
Q

Inflation + External Stability:

A
  • Low inflation → increases int competitiveness → exporters offer cheaper goods → boosting revenues → improving CAD
  • compatability
35
Q

Economic Growth + Full employment:

A

increasing govt action to increase EG → dec cyclical UE → increasing production creates derived demand for labour
- compatible

year 12 economics💸🤍 (6 decks)

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