Our economy

Question 1

Market-based economy

Answer 1

People earn an income based on the demand and supply of products.

Question 2

Welfare benefits

Answer 2

Firect payments to vulnerable australians

Question 3

Progressive Taxes

Answer 3

Income tax applied progressively. Money collected in distributed for government services and people in need

Question 4

Provision of essential services

Answer 4

government doesn’t pay money just to underprivileged also redistributes income by providing services to low-income earners

Question 5

Compulsory superannuation

Answer 5

Protects future of Australians and reduces future reliance on the government. 11.5% of income

Question 6

Trends of the Australian Economy

Answer 6

QOL: unhappy at work leads to a drop in quality of life and other health issues

Economy: less specialisation, consistency, outsourcing allows firms to specialise in certain tasks, allows the economy to become more competitive and productive

Question 7

Monetary Policy

Answer 7

Set by the RBA and used to influence the economy. Aims for economic prosperity and welfare.

Question 8

Fiscal Policy

Answer 8

Government initiatives intended to impact the economy.
Includes lowering tax rates, and increased or decreased spending to influence economic growth.

Question 9

Aus Economy Performance

Answer 9

One of the best in the world.

Mixed market economy does not satisfy the LAISSEZ-FAIRE system where the market sorts itself out or like a centrally controlled system where the government handles everything

Question 10

Factors that affect economic performance

Answer 10

HR - quality and quantity of available resources

Natural resources - efficient use depends on skill of HR

Capital Formation - involves bringing together of land, buildings and machinery

Technology - advances that increase productivity, quality, and quantity of goods and services produced with limited resources

Politics - important for stable economic growth

Question 11

GDP

Answer 11

Gross domestic product.
Increase typically indicates a strong economy
GDP = C + I + G + (X-M)

Growth Rate = [(current real GDP - previous real GDP)/ previous real GDP] x100

Question 12

Consumer Price Index

Answer 12

The measure of the increased cost of living.

Calculated by measuring the cost of essential goods and services.

Question 13

Inflation

Answer 13

Rise in cost of goods and services in a certain period of time.

High usually means a reduced value of money quicker than the increase of a consumer’s income.

Question 14

Types of inflation

Answer 14

Demand-pull: increased aggregate demand
Cost-push: Decreased supply
Imported: overseas influence

Question 15

Balance of trade

Answer 15

Difference between value of exports and imports - shows whether there is a surplus or deficit

Question 16

Exchange rate

Answer 16

Countries with a strong rate can sell products overseas at higher prices and also import them cheaper

Question 17

Economic Growth

Answer 17

measures the size of a country’s economy’s growth.

high: sign of expanding economy and can cause high inflation if it exceeds the SPEED LIMIT

Low: contracting economy, lower inflation, less spending

Question 18

Unemployment

Answer 18

When someone does not have a paid job.

Includes people who are available and looking for work

Question 19

Labour Force

Answer 19

In the labour market older than 15 and able to work, willing to work, and employed

Rate: [unemployed/labour force] x100

Question 20

Types of Unemployment

Answer 20

Cyclical - businesses cut back on costs, and reduced production, due to reduced income and higher interest/inflation

Structural - happens because of a change in the way goods and services are produced

Seasonal - Termination of job at the same time every year

Frictional - Unemployed between jobs

Regional - Large industries reduce demand for labour

Long-term - unemployed for over 12 months

Hidden/Disguised - not officially counted as part of the statistics

Question 21

Distribution of Income

Answer 21

The way in which wealth and income are divided.

Measured by LORENZ CURVE.

Question 22

Gini Coefficient

Answer 22

Index of income inequality.

Area A/Area B

It has fluctuated between 0.32 and 0.33 over the last few decades

Distribution of wealth is usually more uneven than income