Our Economy Flashcards
what is the economy
the economy is a system that decides how scarce resources are used to produce goods and services so that they can be consumed
what is budgetary or fiscal policy
fiscal policy is the use of government revenue collection and expenditure to influence a country’s economy.
monetary policy
monetary policy is policy operated by the rba which essentially involves controlling money in the economy and the cash rate and therefore the interest rate. (where is the money coming from)
what is the budget outcome
the budget outcome is the difference between receipts and expenditure
difference between revenue and spending
can either be a deficit, surplus or balanced
deficit is spending is higher than revenue
surplus is revenue is higher than spending
balanced is revenue is equal to spending
what is micro economic policy
studies the smaller fragments of the economy, in more detail
studies individual income
supply and demand of labour
invididual prices
supply and demand of goods
what is macro economic policy
studies the larger picture and overview of the economy.
national income
total employment in economy
deals with aggregate decisions
analyses aggregate demand and aggregate supply
what are 4 ways microeconomic policy can be implemented
trade liberalisation - removing tariffs or protections to allow for more imports in australia
market deregulation - privatising government owned businesses to improve efficiency (buses etc)
national reform agenda - encouragement of competition between countries to lower prices for consumers and businesses.
labour market reforms - establishing a system of wages and benefits for workers that reflect their productivity
describe tightening and loosening of monetary policy
tightening of monetary policy: rba sells securities, lack of borrowable funds, cash rate increases therefore interest rate increases, then borrowing decreases and economic activity is reduced,
loosening: rba buys securities, increased amount of borrowable funds, decreased cash rate decreased interest rate, increased borrowing and investing
fiscal policy and monetary policy simply?
fiscal: governments decision on taxation and spending
monetary policy: rba activities that are directed towards quantity of money and credit in an economy
what are 3 ways to measure standard of living
gdp
gdp per capita
economic growth
what is gdp
gross domestic product
total value of all products manufactured and goods provided in a given time period
difference between income and wealth
income is the amount of money you earn in a year - taxes
wealth is the amount of assets that generate income e.g passive incomes property and investments
