Macroeconomics - L6 Sustainable Economic Growth Flashcards
The Australian Government aims to boost the economic prosperity of all Australians.
What are the two ways it goes about achieving this aim?
- By maximising the nation’s living standards.
- By achieving domestic stability.
Achieving domestic stability for the nation involves 3 goals.
What are the 3 goals?
- Achieving strong and sustainable economic growth.
- Achieving full employment.
- Achieving low inflation (price stability).
To achieve strong and sustainable economic growth, what % range does the government aim for?
Between 3 and 3.5%
If a nation’s economic growth is strong and sustainable, living standards will also be high.
What are 3 benefits resulting from SSEG?
- Greater access to G & S.
- More jobs and less unemployment.
- More tax revenue for the government and therefore more spending on public goods and services.
What is inflation?
A general rise in the prices of goods and services in an economy.
What does ‘inflationary pressures’ refer to?
How levels of economic activity can result in changes to the general level of prices.
When prices start to increase, they can reduce the purchasing power of consumers’ disposable income if disposable income is not increasing at the same rate as prices are.
Why would economic growth above 3.5% not be sustainable?
B/c prices will be rising too quickly for wages to keep up, resulting in a cost of living crisis.
What does environmental pressures refer to?
The over-use or unsustainable use of natural resources (depletion/degradation) and the increase in the level of negative externalities in the Australian economy.
What is environmental sustainability?
Preservation of the natural environment into the future, ensuring current levels of economic activity do not contribute to environmental degradation (particularly in the form of climate change) and depletion of our natural resources.
Will an economic growth rate above 3.5% be sustainable for the environment?
Yes / No? Why?
No.
B/c levels of economic activity will contribute to rapid environmental degradation and depletion of natural resources.
Will an economic growth rate below 3% increase living standards?
Yes / No? Why?
No.
B/c unemployment levels will be high and people have less money to spend on G & S. This results in reduced access to G & S, declining material living standards. This further leads to declining non-material living standards (quality of life and wellbeing).
In what ways has Australia worked towards sustainable economic growth?
- Conducting environmental impact studies.
- Introducing environmental policies.
