The economic and business environment

Question 1

What are the five sectors of the economy?

Answer 1

Household Sector, Firm sector, Financial sector, government sector and the overseas sector

Question 2

What is leakage? Use example

Answer 2

A leakage is when money leaves the circular flow of the economy, an example of this is when you buy and import something from overseas as it leaves our economy.

Question 3

What is an injection? Use an example

Answer 3

An injection is when money is injected or added into the circular flow of the economy, an example of an injection is when a country buys goods or services from us.

Question 4

Does investing expand or contract the economy?

Answer 4

Expand

Question 5

Does higher taxes expand or contract the economy?

Answer 5

Contract

Question 6

Does reduced government spending expand or contract the economy?

Answer 6

Contract

Question 7

What is the household sector made up of?

Answer 7

Consumers

Question 8

What does the firm sector do?

Answer 8

Sells resources and labour in return for income

Question 9

How do resources, production and consumption relate?

Answer 9

Resources are sold by the firm sector, which is then used to make goods and services (Production), which is then sold to the household sector which they purchase with their income from the firm sector (Consumption)

Question 10

What is the financial sector and what does it consist of?

Answer 10

The financial sector consists of financial institutions like banks that provide a middle ground for people and their savings/investments

Question 11

What is the difference between savings and investments and how do they affect the economy differently?

Answer 11

Savings means to put money away for later use, making it a leakage as that money leaves the economy. An investment is borrowing or spending money to grow something, this grows our economy and it is an injection.

Question 12

What are the key roles of the government sector?

Answer 12

Taxation: (Leakage) collecting tax from people or businesses when they make a income or profit.

Question 13

What does the overseas sector invlove?

Answer 13

The overseas sector involves imports and exports

Question 14

What are exports? Is it an injection or a leakage

Answer 14

Australian businesses selling goods and services to other countries. This is

Question 15

What are imports? Is it an injection or a leakage?

Answer 15

Buying goods or services from other countries. This is a leakage from the circular flow of the economy as the money leaves our economy.

Question 16

What happens when there is more injections than leakages?

Answer 16

Economic growth

Question 17

What happens when leakages are greater than injections?

Answer 17

Economic decline

Question 18

What does ASIC stand for?

Answer 18

Australian Securities and Investment Commission

Question 19

What does ASIC do?

Answer 19

Provide a wide range of support services for consumers, some examples include financial advice, insurance disputes and education on the economy

Question 20

why does the government need to protect the consumers?

Answer 20

Because if they are unable to do so then large sums of money are potentially at risk of being misplaced, misspent, misused or stolen if they do not act

Question 21

Does a demand graph move downwards or upwards?

Answer 21

Downwards

Question 22

Does the supply graph move upwards or downwards?

Answer 22

Upwards

Question 23

What is the law of supply?

Answer 23

The law of supply is that when the price of a good or service increases the quantity supplied will also be increased

Question 24

What is market equalibrium?

Answer 24

The meeting point of supply and demand in a balanced position that shows the position of the economy.

Question 25

What is a market?

Answer 25

A market is a situation where buyers and sellers come together to exchange goods and services

Question 26

What are the main four markets within Australia?

Answer 26

Labour Market, Retail Market, Financial Market and the Stock Market

Question 27

What is the retail market? What are examples?

Answer 27

The retail market is where we purchase/buy goods and services, examples of this include shopping centres/malls, online shopping main streets or CBD’s

Question 28

What is the labour market?

Answer 28

At all times people are looking for employment and at all times businesses are looking for employees and these two together create a labour market where the employer is the buyer and the employee is the seller as they are selling them self for a service

Question 29

what are some examples within the labour market?

Answer 29

Signs advertising job vacancy, advertising of any kind for job vacancy, and online job boards like Seek.

Question 30

What is the financial market?

Answer 30

The financial market is the middle ground between savers and borrowers in the economy