Our Global Economy

Question 1

What is the Australian economy?

Answer 1

the total of all activities undertaken for the of production, distribution and consumption of all goods and services we require to satisfy our needs and wants

Question 2

What is a need?

Answer 2

something that is essential for survival

Question 3

What is a want?

Answer 3

something that you would like to have but is not essential

Question 4

What is a good?

Answer 4

physical items you can feel and touch

Question 5

What are services?

Answer 5

a non-physical thing that assists you in some way or that we experience

Question 6

What are consumers

Answer 6

Use their disposable income to purchase goods and services and Some influence over what producers will produce and the types of products that are provided in the marketplace.

Question 7

What are limited resources?

Answer 7

choices have to made as to what can be produced and therefore consumed because resources used to make the goods and services are limited

Question 8

What is a natural resource?

Answer 8

Come from nature – above or below the ground e.g., coal, fish, wood, crops

Question 9

What is labour resources?

Answer 9

The skills needed to make the good or provide the service e.g., carpentry skills, banking skills, nursing skills

Question 10

What are capital resources?

Answer 10

Manmade resources that are used to produce and transport the goods and services e.g., buildings, roads, machinery, equipment

Question 11

What is scarcity?

Answer 11

Where there aren’t enough resources available to satisfy our needs and wants

Question 12

What is an oppotunity cost?

Answer 12

Whenever we make a choice between two or more alternatives, we gain the benefit of what we choose but we lose any benefit that may have come from choosing differently

Question 13

Q1. What is an economic system?

Answer 13

An economic system is the way of organising how goods and services are going to be produced and distributed. All systems must answer the three questions of ‘what to produce’, ‘how to produce’, and ‘for whom to produce,’

Question 14

What is a traditional/subsistence economy?

Answer 14

Producers are self-sufficient, producing only enough to survive and Money is not used

Question 15

What is a market capitalist economy?

Answer 15

Producers exchange goods and services with consumers in return for money
Exchange takes place in a market (may or may not be a physical space)

Question 16

What is a planned capitalist economy?

Answer 16

Individuals and firms own the productive resources, but the government determines how to use them (what, how, for whom)

Question 17

What is a market socialist economy?

Answer 17

Three economic questions are answered in same way as the market capitalist system BUT Productive resources are mostly owned by the government on behalf of the people

Question 18

What is a planned socialist economy?

Answer 18

Government determines the ‘what to’, ‘how to’ and ‘for whom to’ produce and Majority of productive resources owned by ‘the state’. Production takes place in line with the government plans, both short-term and long-term. As a consequence, shortages of consumer goods may occur.

Question 19

Why might there be a black market for items such as chocolate biscuits in North Korea?

Answer 19

North Koreans go onto the black market because the government determines what to produce within the country and holds the resources to produce it. This means individuals are unable to decide what they want to produce.

Question 20

What is the household sector?

Answer 20

refers to the total of all consumers in the economy also provides the labour for the business sector to produce goods and services (part of the household sector when buying goods and services)

Question 21

What is the household sector?

Answer 21

refers to the total of all consumers in the economy also provides the labour for the business sector to produce goods and services (part of the household sector when buying goods and services)

Question 22

What is the business sector?

Answer 22

made up of large numbers of producers, all seeking to provide goods and services to satisfy the need and want of the household sector (natural, labour, capital)

Question 23

What is the government sector?

Answer 23

The government sector charges individuals and business taxes – e.g. income tax, GST, company tax, payroll tax

Question 24

What is the financial sector?

Answer 24

Keeps savings from both household and business sectors and lends money to both sectors

Question 25

What is the overseas sector?

Answer 25

Australians buy imported goods and service from other counties, and we also export goods and services overseas

Question 26

Explain exchange rate.

Answer 26

The value of one country’s currency when swapped with another country’s currency
If AUD rises – Australian exports more expensive and imports cheaper
If AUD drops - Australian exports are cheaper and imports more expensive

Question 27

Australia is linked to the global economy because of:

Answer 27

Trade: import goods and services made overseas
Foreign direct investment – foreign funds used to establish new or existing businesses in Australia
International labour market – many Aussies work overseas and people from other countries work in Australia
Technology – allows us to easily and quickly communication with customers all over the world
Migration – people come to live in Australia

Question 28

International trade benefits:

Answer 28

earning money from trading goods
providing employment for both Australian and overseas countries
Australia can buy products it does not produce itself
Australia can sell products other countries need
Strengthening trading relations
Greater prosperity for Australia future

Question 29

Explain Comparative Advantage

Answer 29

• The ability of an economy to produce a good and service at a lower cost than another country
• Comparative advantage manually benefits from cooperation and voluntary trade
• It is seen as the foundational principle for international trade.

Question 30

What is an import?

Answer 30

Goods or services that are bought from a global market

Question 31

Explain why we need imports

Answer 31

• Cheaper to buy goods and services than to produce them
• Do not have the resources to produce everything we need
• Strengthen trade relations

Question 32

What are some things Australia imports?

Answer 32

Cars, computers, telecommunications, equipment, personal travel services

Question 33

What is an export?

Answer 33

Goods and service that sold in the global market

Question 34

Why do we need to export?

Answer 34

• Improves our economy
• Countries need the goods or services we specialise in
• Strength trade relations

Question 35

What are some things Australia exports?

Answer 35

Beef, wheat, pharmaceuticals, wine, beer, education and travel services