The Economic and Business Environment Flashcards

1
Q

Long-term impacts of recessions:

A
  • Educational achievement
  • Opportunity
  • Private investment
  • Entrepreneural activity
  • Generational debt
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2
Q

Circular flow of income:

A
  1. Consumers
  2. Business
  3. Financial institutions
  4. Overseas sector
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3
Q

What is an injection into the economy + example?

A

An injection into the economy is an increase in spending that adds to the overall economic activity. These injections stimulate demand and can boost growth. For example, when the government builds new infrastructure like highways or schools, it injects money into the economy by hiring workers and purchasing materials, which increases demand for goods and services.

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4
Q

What is a leakage in the economy + exmaple?

A

Leakage is the outflow of money from the economy, which reduces the total amount of spending and economic activity. Fo example, when people save a portion of their income in a bank rather than spending it, that money is not circulating in the economy immediately, creating a leakage.

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5
Q

What is economic growth?

A

Economic growth is when injections are greater than leakages.

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6
Q

What is economic contraction?

A

Economic contraction is when leakages are greater than injections.

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7
Q

What is the household sector?

A

The household sector consists of consumers who hold econmic resources such as land, labour, captial or enterprise.

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8
Q

Explain the two-sector economic model.

A

People sell their resources to firms (businesses) in exchange for an income. Firms then use these resources to produce goods and services. Households use their income to buy various goods and services, known as conumption.

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9
Q

What is the finanical sector?

A

The finanical sector refers to finiancial institutions such as banks that act as intermediaries between the savers and burrowers of an economy.

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10
Q

What is saving money?

A

Saving means putting money away for later use and classified as a leakage from the circular flow of income.

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11
Q

What is investment?

A

Investment is when money is burrowd and used to expand a business. It is classified as an injection into the circular flow of income.

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12
Q

What is the government sector?

A

The government sector refers to the local, state and federal governments and has two signifcant rates in the circular flow of income: taxation and governemnt expenditure.

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13
Q

What is the overseas sector?

A

The overseas sector refers to the part of an economy that involves trade and financial transactions with foreign countries, including exports, imports, and international investments.

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13
Q

What are exports?

A

Exports refer to Australian businesses selling their goods or services to overseas individuals, business or governmnets and are an injection into the circular flow of income.

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13
Q

What are imports?

A

Imports refer to the buying of overseas goods and services by Australians, and are a leakage from the circular flow of income.

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14
Q

What is a recession?

A

A recession is where an economy gets smaller for a period of six months or longer.

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15
Q

Key features of economic contraction:

A
  • Falling levels of production (output)
  • Decreasing consumer spending
  • Rate of inflation may fall
  • Wage and interest rates generally fall
  • Level of unemployment rises
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16
Q

Key features of economic expansion:

A
  • Rising levels of production (output)
  • Increased consumer spending
  • Rate of inflation may rise
  • Wage and interest rates eventually rise
  • Level of unemployment falls
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17
Q

What is the cause of recession?

A

A lack of spending causes recssions.

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18
Q

What is the cause of booms?

A

Booms are caused by excessive spending.

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19
Q

Define supply.

A

Supply is the quantity of goods and services that a business is willing to offer for sale at a given price.

20
Q

What is demand?

A

Deman is the quantity of a product that consumers are willing to purchase at a particulare price at a given point in time.

21
Q

What is a market?

A

A market exists in any situation where buyers and sellers come together to exchange goods and services.

22
Q

Where can markets exist?

A
  • Physical location
  • Spread acorss a number of locations
  • No physical location
23
Q

4 types of markets:

A
  • Retail amrkets
  • Labour markets
  • Financial markets
  • Stock markets
24
Q

What is a retail market?

A

These are markets with a physical location such as shopping centres.

25
Q

What is a labour market?

A

Labour markets are the exchange of labour between employers.

26
Q

What is a financial market?

A

Financial markets are any place or system qhere buyers and sellers trade financial instruments, including bonds and equities.

27
Q

What is a stock market?

A

Stock markets are a place or system wher shares of companies are bought and sold.

28
Q

What is a private company?

A

A private company is not listed on the stock exchange.

29
Q

What is a public company?

A

A public company is listed in the stock exchange

30
Q

What is the Australian Stock Market called?

A

The Australian Stock Market is called the Australian Stock Exchange (ASX)

31
Q

What were the reasons for the closure of the cary industry in Australia?

A
  • Globalisation
  • High labour costs
  • Changes in consumer preferences
  • Australian Government did not provide enough support
32
Q

Define globalisation.

A

Globalisation is the process by which the world is becoming increasingly interconnected as a result of increased trade and cultural exchange.

33
Q

Factors influencing business decisions:

A
  • Technology
  • The business cycle
34
Q

How does technology affect business decisions?

A

Technology has changed administration tasks, communication, service provision and manufacturing processes.

35
Q

How has the business cycle affected business decisions?

A

When the economy grows, consumer confidence returns and the consumer is more likely to purchase luxury goods. This sees spending levels rise and improved business profits. However when the economy contracts, the opposite occurs and consumers are forced to cut costs.

36
Q

Positive impacts of globalisation for businesses:

A
  • Expanded markets
  • Cheaper materials
  • Access to labour
37
Q

Negative impacts of globalisation for businesses:

A
  • Increased competition
  • Increased unemployment in some industries
  • Environmental and social issues
38
Q

Types of businesses:

A
  • Online
  • On-demand
  • Small and large
  • Global
  • Offshore
  • Government business
  • Non-profit
39
Q

What is an online business?

A

An online business runs some or all of its business using the internet.

40
Q

What is an on-demand business?

A

An on-demand business uses mobile technology such as apps to maximise consumer convenience.

41
Q

Small and large business:

Micro, small, medium, large businesses

Talk about how many employees in each

A
  • Micro-business: less than 5 employees
  • Small business: 5-19 employees
  • Medium business: 20-199 employees
  • Large business: 200+ employees
41
Q

What is a non-profit business?

A

A non-profit business provides services to the community and does not earn a profit for its owners.

42
Q

What is a global business?

A

A global business is a large company than has branches in many different countries. They are also called Transnational Corporations (TNC)

43
Q

What is an offshore business?

A

Offshore businesses get many of their functions completed in different countries.

44
Q

What is a government business?

A

A government business is governmnet-owned and operated.

45
Q

Reasons for government intervention in the market:

A
  • Protecting the environment
  • Monopolies
  • False advertising, unsafe products and exploitation
46
Q

What are monopolies?

A

Monopolies are when one company controls all or most of the supply of a product or service, with no room for competition.

47
Q

Long-term economic impacts of resource depletion:

A
  • Loss of raw materials
  • Reduction in tourism and recreation
  • Loss of ecosystem services
  • Social and political instability
  • Impact on global trade