Our Economy - Performance Of The Australian Economy Flashcards
What are the indicators of the Australian Economy?
- economic growth
- standard of living
- distribution of income
- environmental sustainability
How is standard of living measured?
what is purchasign power?
- disposable income per capita
- GDP per capita PPP (purchasing power parity)
- ability to demand goods and services
Distribution of Income
- income quintile ratio using the 5 quintiles in 20% incraments
Name macroeconomic policy tools
- fiscal policy
- monetary policy
- policy mix
What is the monetary policy?
- actions of the Reserve Bank Of Australia to effect money supply and interest rates to achieve macroeconomic objectives
Objectives of the monetary policy
- Price stability
- full employment
- economic growth
What are the tools for the reserve bank of australia for affecting the economy?
- Setting interest rates
- adjusting reserve requirements in banks (min. of no. of liquid assests)
- quantitative easing (purchasing government bonds into the economy)
What is the theory of aggregate demand?
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
What are the governments target growths for inflation, unemployment and GDP growth?
- Inflation of 2-3%
- Unemployment of 4-5%
- GDP growth of 3-4%
Fiscal policy
- governments use of taxation and government spending to alter the economic conditions
What are the types of fiscal policy?
- Expansionary (low taxes, high government spending to encourage economic growth)
- Contractionary (high tax, low government spending)
What is microeconomics?
branch of economics concerning the individual economic agents.
- supply and demand
- consumer behaviours
- market structures
What are the 4 areas of microeconomics?
- trade liberalisation
- labour market reforms
- market deregulation
- national reform agenda
Trade liberalisation
Reducing or removing barriers to international trade
- reducing tariffs and quotas
- providing subsidies
- increasing bi-lateral free-trade agreements
Labour Market Reforms
To increase the efficiency and flexibillity of the labour market
- changes to wage levels, working conditions and terms of dismissal
Market deregulation
- removing certain government regulation to increase business competition and reduce prices
Aims of the National Reform Agenda
- boost economic growth and productivity
- raise workforce participation
- improve living standards
What is the national reform agenda?
A broad microeconomic program by the Council of Australian Governments
What is the formula for unemployment rate?
Unemployment rate = no.unemployed/no. in labour force x100
What is the Labour Force?
- 15+
- Willing and able to work
- not institutionalised
- not in military, retired or in full time schooling
3 forms of understating the labour force
- Discouraged workers
- Marginally attatched workers
- Underemployed workers
What are the 4 types of unemployment?
- Frictional unemployment
- Structural unemployment
- Seasonal unemployment
- Cyclical unemployment
Frictional unemployment
- temporary, between jobs
- qualified workers, transferrable skills
Structural unamployment
- Change in labour force = unemployment
- Jobs redundant, no transferrable skills
- technological unemployment
