Semester 2 EXAM

Question 1

define unemployment

Answer 1

the percentage of the population that is willing and able to work but is not employed

Question 2

what are the two groups of the labour force

Answer 2

1. People who are employed
2. People who are not employed but are willing and able
   to work

Question 3

what is the target rate of unemployment in Australia

Answer 3

4.5%

Question 4

why is our target unemployment rate 4.5%

Answer 4

this is because we always factor in a level of unemployment because there will be people taking a break, moving between jobs technological advancements which would put people out of jobs, etc. but are still willing and able to work

Question 5

how do you calculate the unemployment rate

Answer 5

unemployment ÷ labour force x 100

Question 6

what are the 3 categories of unemployment

Answer 6

people are are employed

people who aren’t employed but are willing and able to
work

People who are not in the labour force. they are not
willing and/or able to work.

Question 7

how do you calculate the labour force

Answer 7

employed + unemployed

Question 8

explain frictional unemployment

Answer 8

People leave their job in search for another job

Positive type of unemployment

1 of the reasons target rate is not set to 0%

Responsible for a small proportion of unemployment

Duration is usually less than 4 weeks

Question 9

explain cyclical unemployment

Answer 9

Unemployment that follows the swings in the business cycle

Demand for labour comes from consumer demand for goods and services

At the peak of a boom in the economy (e.g. 2000’s mining boom) cyclical unemployment should be close to 0

Question 10

Explain structural unemployment

Answer 10

Mismatch of available skills and required skills in a geographical or occupational sector of the economy

In other words it changes to how we produce goods and services to make workers skills redundant
E.g. Bank tellers being replaced by ATM’s, self-
checkouts at Woolworths and Coles etc.

Can be good for the economy if the worker then retrains and up-skills in order to find a new job

Can be bad for the economy if the worker does not retrain and their lack of useful skills turn into long-term unemployment

Question 11

Explain seasonal unemployment

Answer 11

Occurs when workers are unemployed at
certain times of the year, because their
job does not require work all year round,
it’s seasonal.

E.g. farmers, lifeguards & workers in tourism

Question 12

What are the effects of unemployment

Answer 12

Lower consumer spending

Lower investment

Lower business and consumer confidence

Lower economic growth

More government spending on welfare (and less on other things)

Creates personal, family and social problems in society

Question 13

why will there always be some structural unemployment in the economy

Answer 13

Because the goods and services we produce and the way in which we produce those goods and services are always changing, it is expected that there will always be some structural unemployment in the economy

Question 14

What is Australia’s target rate for inflation

Answer 14

2-3%

Question 15

Define ‘inflation’

Answer 15

The increase in the general level of prices across a range of goods a services in an economy over a period of time, usually one year.

Question 16

what do we use to measure inflation

Answer 16

Consumer Price Index (CPI).

It is merely a measure of the overall changes in the price of this basket of goods and services.

It is calculated by the Australian Bureau of Statistics.

Price of CPI basket in base period is given a value of 100 and the prices of the next few years are compared against base year

Question 17

how often is the rate of inflation reported

Answer 17

It is measured quarterly but only presented annually.

Question 18

what are some examples of the goods and services that inflation includes

Answer 18

• Housing
• Food
• Transportation
• Recreation
• Education
• Communication

Question 19

what are the 2 types of inflation

Answer 19

demand pull inflation

cost push inflation

Question 20

what is demand pull inflation

Answer 20

Occurs when demand increases at a rate faster than the capacity of the economy to produce goods and services. Demand is higher, increases competition of goods and services and businesses increase their prices.

Question 21

what some causes of demand pull inflation

Answer 21

Full employment causes labour shortages, employers this bid up wages to attract labour, The increased income transpired onto increased consumption.

High levels of foreign demand

Growth in foreign economies, higher incomes for out exporters

Inflationary expectation: if members of an economy expect prices to rise, it bring forward expenditure decision leading to demand and pull inflation

Changes in consumption patterns e.g. if everyone decides to save more and spend less

Monetary considerations – too much credit in the economy.

Question 22

What is cost push inflation

Answer 22

Occurs when prices are pushed up by rising costs to producers who compete with each other for increasingly scarce resources. The increased costs are passed onto consumers.

Question 23

What are the causes of cost push inflation

Answer 23

Any input may become a major cost to business e.g. wage increases lead

Labour shortages e.g. wars, people have to fight in wars and less people to do farming

Inflation imported from abroad e.g. the rise in the cos of intermediate resources imported from other countries e.g. oil prices

Government budgetary problems – an increase in the cost of public utilities e.g. electricity, water

Question 24

give an example of demand pull inflation

Answer 24

Prices for housing in Karratha may go up because they are in high demand in a mining boom, and many miners are bidding for dwellings, which are in higher demand so housing prices in that area go up.

Question 25

give and example of cost push inflation

Answer 25

Petrol and oil is becoming more and more expensive because it is an increasingly scarce resource. Because it is a scarce resource, it is harder to find and produce, so producers that compete with each other need to increase their prices.

Question 26

define the business cycle

Answer 26

The regular oscillation of economic activity.

Question 27

what is 'equilibrium' in term os the business cycle

Answer 27

the amount of leakages = the amount of injections the economy. There is not economic growth or contraction

Question 28

what are the 4 phases of the business cycle

Answer 28

upswing downswing boom trough

Question 29

what are the characteristics of a boom

Answer 29

- higher levels of consumption expenditure - higher consumer confidence - businesses are relatively profitable - businesses have little excess capacity - cyclical unemployment is low - labour force participation rates are high - increase in imports - higher levels of investment

Question 30

describe the characteristic during a downswing

Answer 30

- happens more quickly than an upswing - lower consumer confidence - element of fear - fear of recession can actually cause a downswing as consumers begin to spend less and sell shares and investments

Question 31

describe the characteristics of a trough

Answer 31

- high levels of cyclical unemployment - lower company profits - lower consumer confidence - prices of goods and services may fall - higher levels of saving

Question 32

what are automatic stabilisers

Answer 32

reduce growth rate during a boom as the government wants to avoid really high booms and really low troughs, and to avoid unsustainable economic growth. a government can use automatic stabilisers by putting money in or out of the economy manually or automatically. Manual e.g. choosing to fund an infrastructure project or introduce a new tax. automatically e.g. unemployment benefits when the government automatically pays more people when they are unemployed., or investing into businesses.

Question 33

define GDP

Answer 33

stand for Gross Domestic Product. GDP is a measure in the total value in dollars of goods and services produced in Australia over a specific period of time.

Question 34

How often is GDP measured

Answer 34

quarterly, every 3 months.

Question 35

what does the percentage change in GDP represent

Answer 35

tells us how much the economy is growing/shrinking and is a measure of economic activity. When there are less goods and services being produced, there will be a lower GDP.

Question 36

how do we calculate GDP

Answer 36

GDPyear2 - GDPyear1 __________________ x 100 GDPyear1

Question 37

how do we calculate the inflation rate (CPI)

Answer 37

CPIyear2 - CPIyear1 __________________ x 100 CPIyear1

Question 38

define leakages

Answer 38

economy contracts, more money goes out of the economy rather than in

Question 39

define injections

Answer 39

economy expands/grows, more money put into the economy that out.

Question 40

in the business cycle, what does the long term trend slope represent

Answer 40

this shows the natural population growth (which is why the line is always growing upward) migration technological advancements

Question 41

define economic growth

Answer 41

The growth in production and value of goods and services over time to increase an economy's living standards.

Question 42

what is Australia's target GDP growth rate

Answer 42

3 - 4%

Question 43

What do you use to measure economic growth

Answer 43

GDP (gross domestic product)

Question 44

what are the disadvantages to using GDP

Answer 44

doesn't measure improvement in quality of goods and services over time doesn't take into account non-market production (services which aren't payed for) e.g. volunteer work and housework doesn't measure non material welfare of economy e.g. life expectancy, freedom of speech, equal distribution of income etc. doesn't measure improvement in working conditions over time

Question 45

what are the advantages to using GDP

Answer 45

easily quantifiable universal easy to compare to other country's economies consistent measure of economic growth

Question 46

why is the inflation rate only 2 - 3%

Answer 46

high inflation reduced purchasing power. If prices rise faster than income, households cannot afford to purchase the same amount of goods and services lower income earners' living standards fall during periods of inflation (e.g. unemployed people) as their incomes tend not to rise with inflation, and cannot afford the increased prices of goods and services.

Question 47

how does the government intervene when we are not achieving out target rates

Answer 47

through demand management policies: fiscal policies monetary policies

Question 48

explain fiscal policies

Answer 48

applies to economic growth and unemployment They are changes in government spending and tax to increase or decrease consumer spending so we don't have extreme booms or troughs during a boom: decrease government spending and higher tax to decrease consumer spending during a trough: increase government spending (e.g. infrastructure investment and funds) and lower tax to increase consumer spending.

Question 49

explain monetary policies

Answer 49

applies to inflation the RBA (central bank) will change interest rates to increase/decrease consumer spending during a boom: RBA increase interest rates to decrease consumer spending during a trough: RBA decrease interest rates to increase consumer spending

Question 50

what is relative scarcity

Answer 50

Compares limited resources to unlimited wants

Question 51

what is extremely high inflation called

Answer 51

hyper-inflation: money has no store of value and consumers lose purchasing power too quickly.

Question 52

who was the Ku Klux Klan

Answer 52

group of white protestants opposed to rights for people of colour, Catholics, Jews and immigrants responsible for many hate crimes 2 people were killed and hundreds of protestors and soldiers injured by the Ku Klux Klan in the protest for African-American student James Meridith to enrol in the Oxoford Campus. Methods included: Burning wooden crosses next to the homes of people they wished to frighten Held rallies and marches through streets with banners carrying threats of violence kidnapped, hung and tortured African-Americans

Question 53

Explain who Rosa Parks was and the Montgomery Bus Boycott

Answer 53

December 1955 Rosa Parks vs US Supreme Court Montgomery, Alabama on the Montgomery bus service form of protest adopted: African-American Rosa Parks refused to give up her seat at the front of the bus for a white passenger. African-Americans were expected to sit at the back of the bus and give up seats for white passengers. Result: Arrested in december 1955 Boycott of the montgomery bus service began Boycott ended 1 year later when the City of Montgomery was ordered to stop segregating black and white passengers on the bus services This inspired further efforts to end segregation in America.

Question 54

Explain the Little Rock Nine protest

Answer 54

1957 People involved: 9 African American Students, President Dwight Einsenhower vs Arkansas governor 9 African-American students tried to enrol in the all-white Little Rock Central Highschool in Arkansas despite 1954 Supreme Court ruling to end segregation in schools, Arkansas govenor used armed forced to prevent student from entering the school students had to face a white crows threatening to hang them result: President Dwight Einsenhower intervened and sent the US army to allow the African-American students to enter the school they were legally allowed to attend.

Question 55

Explain the significance of Martin Luther King Junior

Answer 55

leader of the montgomery bus boycott established Southern Christian Leadership Conference, (one of the most important groups in the civil rights movement) his book Stride toward Freedom inspired many other protests in the movement, including the Woolworths lunch bar sit in and freedom rides achieved significant political influence in 1960 presidential election delivered i have a dream speech 28 August 1963 received nobel peace prize in 1964 for his work toward ending segregation led opposition toward Vietnam war assassinated 4 April 1968

Question 56

when did the US congress pass the civil rights act in America

Answer 56

1964

Question 57

Explain the freedom rides protests

Answer 57

1961 activits wanted to test effectiveness of US supreme courts act to end discrimination on public transport black and white passengers would sit side by side on the bus and at least 1 african-american passenger would sit in a seat reserved for white people ate in restaurants together and ignored segregation signs journeys often interupted by mob attacks from KKK and arrests from southern law enforcements Once in jail riders would sing freedom songs until released result of protest: after pressure from Martin Luther King J, and other activists, attourney General Robert Kennedy intervened 1961, he insisted all states comply with desegregation laws

Question 58

explain the lunch bar sit-ins protests

Answer 58

first sit in at a lunch counter in Greensboro, North Carolina Feb 1 1960. It was unplanned 4 college students refused to leave the woolworth's lunch counter when they were refused service because they were black next day they were joined by 23 more students and 66 the next day. 1000 by the end of the week movement swelled to 50 000 lunch counters were desegregated in 126 cities.

Question 59

Explain the Marches as a form of protest

Answer 59

Marches held in Washington and Selma, Alabama 1963, Martin Luther King Jn led march in Washington attended by 250 000 people they demanded an end to segregation

Question 60

Explain what protectionism was

Answer 60

in 19th century and much of 20th century there were policies separated aboriginal Australians from white Australians to be protected for their own good many aboriginals were removed from their land and placed in missions of reservations white australians saw this as providing support for aboriginal people aboriginal people had no right to vote, receive basic wage of pension and restrictions on their private lives

Question 61

Explain what the Day of Mourning was in Australia

Answer 61

On australia day 1938 the nation celebrated the 150th anniversary of first white settlement in Australia a group of over 100 Aboriginal men and women assembled to mourn the loss of their land and to demand basic human rights and list of demands were sent to Prime Minister Joseph Lyon

Question 62

Explain the 1967 Australia referendum

Answer 62

Constitution in 1901 only made 2 acknowledgments toward Aboriginal people, aimed at excluding them from participation in the life of the new nation aboriginal people were not to be counted in the census the welfare of aboriginals was a state of matter referendum held 27 may 1967 and was successful and the 2 sections of the constitution were taken out

Question 63

Explain the Australian freedom rides

Answer 63

when Charles Perkins was a student at Sydney university he wanted to highlight the hardships aboriginal people had to face in the NSW country concerned students at the uni formed the Student Action For Aborigines and organised a freedom rise protest They were predominately white students and In 1965 they hired a bus they hired a bus to highlight the discrimination that existed in rural NSW

Question 64

Explain the Mabo decision

Answer 64

concerned the issue of native title 'DId Aboriginal people legally own the land before white settlement?' in 1962 a group of people from the Mer islands in Torres Strait, led by Eddie Mabo took a case to the Supreme Court of Queensland. They claimed that they had ownership of the island since their people had lived their long before white settlement queensland court dismissed the case and Mabo took the case to the high court where they ruled in his favour concept of native title was established

Question 65

Explain the Stolen Generation

Answer 65

belief that something had to be done to the increasing number of Aboriginal children of 'mixed blood.' it was believed if they were removed from their tribal influences they could become European many children were taken away from their families to be raised with new names and culture thousands of children were taken away from their families and didn't have any contact with them or their culture ever again many girls were placed in domestic labour and boys in manual labour gangs, providing the government and European households with cheap labour

Question 66

Explain the Bringing them Home report

Answer 66

in 1995 as apart of the reconciliation process the Keating government placed an inquiry to the stolen generation report called for government to apologise for misguided policy of earlier years and to compensate for those affected by the action the Howard government made no response except to say that there would be no national apology or compensation

Question 67

What was the Apology

Answer 67

February 13 2008 Prime minister Kevin Rudd apologised to Indigenous people, specifically the stolen generation whose lives were terribly affected by government policies of forced child removal and indigenous assimilation.