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Commerce > Our Economy - Performance Of The Australian Economy > Flashcards

Our Economy - Performance Of The Australian Economy Flashcards

1
Q

What are the indicators of the Australian Economy?

A
  • economic growth
  • standard of living
  • distribution of income
  • environmental sustainability
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2
Q

How is standard of living measured?

what is purchasign power?

A
  • disposable income per capita
  • GDP per capita PPP (purchasing power parity)
  • ability to demand goods and services
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3
Q

Distribution of Income

A
  • income quintile ratio using the 5 quintiles in 20% incraments
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4
Q

Name macroeconomic policy tools

A
  • fiscal policy
  • monetary policy
  • policy mix
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5
Q

What is the monetary policy?

A
  • actions of the Reserve Bank Of Australia to effect money supply and interest rates to achieve macroeconomic objectives
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6
Q

Objectives of the monetary policy

A
  • Price stability
  • full employment
  • economic growth
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7
Q

What are the tools for the reserve bank of australia for affecting the economy?

A
  • Setting interest rates
  • adjusting reserve requirements in banks (min. of no. of liquid assests)
  • quantitative easing (purchasing government bonds into the economy)
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8
Q

What is the theory of aggregate demand?

A

Represents total demand for all final goods and services in an economy at a price level
- AD = C + G + I + (X-M)
Consumption, government spending, investment, exports, imports

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9
Q

What are the governments target growths for inflation, unemployment and GDP growth?

A
  • Inflation of 2-3%
  • Unemployment of 4-5%
  • GDP growth of 3-4%
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10
Q

Fiscal policy

A
  • governments use of taxation and government spending to alter the economic conditions
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11
Q

What are the types of fiscal policy?

A
  • Expansionary (low taxes, high government spending to encourage economic growth)
  • Contractionary (high tax, low government spending)
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12
Q

What is microeconomics?

A

branch of economics concerning the individual economic agents.
- supply and demand
- consumer behaviours
- market structures

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13
Q

What are the 4 areas of microeconomics?

A
  • trade liberalisation
  • labour market reforms
  • market deregulation
  • national reform agenda
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14
Q

Trade liberalisation

A

Reducing or removing barriers to international trade
- reducing tariffs and quotas
- providing subsidies
- increasing bi-lateral free-trade agreements

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15
Q

Labour Market Reforms

A

To increase the efficiency and flexibillity of the labour market
- changes to wage levels, working conditions and terms of dismissal

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16
Q

Market deregulation

A
  • removing certain government regulation to increase business competition and reduce prices
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17
Q

Aims of the National Reform Agenda

A
  • boost economic growth and productivity
  • raise workforce participation
  • improve living standards
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18
Q

What is the national reform agenda?

A

A broad microeconomic program by the Council of Australian Governments

19
Q

What is the formula for unemployment rate?

A

Unemployment rate = no.unemployed/no. in labour force x100

20
Q

What is the Labour Force?

A
  • 15+
  • Willing and able to work
  • not institutionalised
  • not in military, retired or in full time schooling
21
Q

3 forms of understating the labour force

A
  • Discouraged workers
  • Marginally attatched workers
  • Underemployed workers
22
Q

What are the 4 types of unemployment?

A
  • Frictional unemployment
  • Structural unemployment
  • Seasonal unemployment
  • Cyclical unemployment
23
Q

Frictional unemployment

A
  • temporary, between jobs
  • qualified workers, transferrable skills
24
Q

Structural unamployment

A
  • Change in labour force = unemployment
  • Jobs redundant, no transferrable skills
  • technological unemployment
25
Q

Seasonal unemployment

A
  • results from termination of jobs in differnet seasons
26
Q

Cyclical unemploynment

A
  • Unemployment from recession
  • aka. Demand Deficient Unemployment
  • Demand falls -> demand for labour falls -> workers fired
27
Q

What is the natural rate of unemployment?

A
  • when only structural and frictional unemployment -> economic success
28
Q

What is Full Employment Output?

A
  • Real GDP output when there is no cyclical unemployment
  • Australia’s full employment rate is 4-7%
29
Q

Impacts of unemployment

A
  • Falling living standards
  • Lower national production
  • changed government budget position
30
Q

Inflation, how to measure, forms of inflation

A
  • Lowering purchasing power of money
  • Consumer price index (100 000 goods and service to imitate household spending)
  • deflation (reverse inflation)
  • disinflation (slower inflation)
31
Q

Who is helped by unanticipated inflation?

A
  • Borrowers
  • A business where prices of product rise faster than resources
32
Q

Who is hurt by unanticipated inflation?

A
  • Lenders at fixed interest rate
  • People with fixed income
  • Savers
33
Q

How is inflation measured?

A
  • The inflation rate - % change per year
  • Price indicies - measurement of goods and service price change over time
34
Q

What are the 2 types of wages?

A
  • Real Wage - Adjusted to inflation
  • Nomial - wage by money not purchasing power
35
Q

Formula for Consumer Price Index

A

CPI = price of market basket/price in base year x 100

36
Q

What are the issues with the consumer price index?

A
  • Substitution bias
  • New products
  • Product quality
37
Q

Quantitative sustainability indexes

A
  • unemployment rate
  • inflation rate
38
Q

Qualitative sustainability indexes

A
  • Geniune Progress Indicator (GPI)
  • Measuring Australias Progress (MAP)
  • Human Development Index (HDI)
  • Liveability Ranking
  • World Happiness Report (WHR)
39
Q

Genuine progress indicator

A
  • Measures the pros and cons of the effect upon society’s wellfare
  • environmental damage
  • energy resource depletion
  • leisure time
  • income inequality
  • crime rate
40
Q

Measuring Asustralia’s progress

A
  • by the Australian Bureau of Statistics
  • Asseses sustainability
  • Society
  • Economy
  • Environment
  • Governance
41
Q

Human development index

include downsides

A
  • Compares countries wellbeing
  • uses positive and negative indicators
  • some subjective measures and inaccurate information from countries
42
Q

Liveability Ranking

A
  • desirability of cities
  • culture
  • environment
  • stability
  • healthcare
  • education
  • infrastructure
43
Q

World happiness report

A
  • GDP per capita
  • social support
  • healthy life expectancy
  • freedom of choices
  • generosity
  • corruption
44
Q

Comparisons with China

Global happiness report, economic growth rate, unemployment, inflation

A
  • Global Happiness Report - 10th, 60th
  • Economic growth rate - 1.5%, 5.3%
  • Unemployment - 3.8%, 5.3%
  • Inflation Rate - 3.6%, 0.3%

Commerce (5 decks)

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