(t4) economic objectives and possible conflicts among objectives Flashcards
How is economics growth measured, and what benefits does it offer to the nation?
Economic growth is measured by the annual rate of change in real GDP. Benefits include increased living standards, improved job prospects, and greater public investment in infrastructure and services like education and healthcare.
What does full employment mean, and what is NAIRU?
Full employment refers to the full use of resources, especially labour, and is achieved when unemployment is at the non-accelerating inflation rate of unemployment (NAIRU). NAIRU is the natural rate of unemployment after eliminating cyclical unemployment caused by economic fluctuations
What are the social and economic benefits of achieving full employment?
Achieving full employment increases living standards by fully utilising economic capacity and minimises the economic and social problems of unemployment, such as loss of skills, personal issues, and greater inequality
What is price stability, and why is it important?
Price stability refers to maintaining inflation at an acceptable level, typically 2-3% in Australia. It is important because high inflation reduced the real value of income and wealth, lowers international competitiveness, distorts economic decision-making, and can lead to uncertainty
What are the consequences of high inflation?
High inflation reduces real income, harms international competitiveness, depreciates the exchange rate, creates uncertainty, distorts resource allocation, and encourages speculation while discouraging productive investment.
What does external stability mean and what are some key measures used to achieve it?
External stability means a country can meet its long-term financial obligations. Key measures include maintaining sustainable CA balance, managing foreign debt as a percentage of GDP, monitoring the ToT, stabilising the exchange rate, and improving international competitiveness.
How does achieving external stability benefit the economy?
Achieving external stability reduces vulnerability to global economic shocks, supports higher growth, and keeps inflation low by balancing external payments and managing foreign debt levels effectively
What is the goal of creating an equitable distribution of income and wealth?
The goal is to reduce the inequality produced by free markets by providing for vulnerable groups, redistributing wealth through higher taxes on high-income earners, and offering social security to lower-income individuals.
How do government policies aim to reduce inequality?
Through redistribution policies like progressive taxation, social security payments, and improving access to education and opportunities for disadvantaged groups, governments work to reduce income gaps and prevent generational poverty.
What is environmental sustainability, and why is it important in economic management?
Environmental sustainability involves reducing negative side effects of economic activity, such as pollution and resource depletion. It’s important to balance long-term environmental objectives with economic growth, particularly in light of climate change and sustainable development.
What is ecologically sustainable development?
Ecologically sustainable development involves
conserving and enhancing the community’s resources so that ecological processes and quality of life are maintained.
How have government priorities shifted regarding environmental sustainability?
Governments have increasingly prioritised ecologically sustainable development due to the growing recognition of climate change’s impact, spending more environmental programs and balancing long-term sustainability with short-tern economic benefits.
What was the highest short-term priority of economic policy in Australia in 2024?
Containing inflationary pressures after inflation surged to 6% in 2022-23, following the COVID-19 recovery.
What monetary and fiscal measures were taken to control inflation in 2023-24?
The RBA implemented aggressive interest rate hikes, while the government introduced measures to reduce energy costs, despite some concerns that increased JobSeeker payments might offset these efforts
What is fiscal consolidation, and why is it a priority in 2024?
Fiscal consolidation refers to reducing budget deficits and government debt. It became a medium-term priority after high pandemic spending, with the government aiming to increase tax revenue through measures like taxing multinationals and combating tax avoidance.
How did the Australian government plan to achieve net zero emissions by 2050?
By legislating a 43% reduction in emissions by 2030 and transitional away from fossil fuels, with broad support form economists and businesses for the economic opportunities this creates.
How did unemployment levels affect economic policy in 2024?
With unemployment at 3.4% in 2022, policy focused on preventing inflation from eroding long-term economic growth and keeping unemployment low through skills training, workforce participation, and labour mkt efficiency.
Why has improving productivity become a critical economic focus for Australia?
Slowing productivity growth, especially in the service sector, and an ageing population threaten long-term growth. The government introduced polices like fee-free tafe courses, childcare support, and infrastructure investment to boost productivity,.
What steps has the Australian government taken to improve income and wealth distribution?
Policies include education reforms, increases in the age pension, the National Disability Insurance Scheme (NDIS), wage increases for low-income earners, expanded parenting payments, and investments in social housing.
