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Economics > Unit 2 AOS 1 > Flashcards

Unit 2 AOS 1 Flashcards

1
Q

Define economic activity

A

A term used to describe the process of making or selling goods and services

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2
Q

What is GDP?

A

Gross Domestic Product, commonly used measure of the total value of a nations output of goods and service from all economic activity

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3
Q

Material living standards

A

Peoples ACCESS to goods and services.
Eg. Rate of employment, real GDP per capita, distribution of G+S

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4
Q

Non-material living standards

A

Factors that affect a persons quality of life irrespective of income. Eg. Levels of personal happiness, crime rate, literacy, health, pollution, life expectancy

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5
Q

What are the 5 sectors of the economy?

A

Households
Businesses
Financial
Government
Overseas

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6
Q

What are the 4 main flows in the economy

A

Labour
Income
Consumption
Goods & services

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7
Q

3 leakages from the economy

A

Savings S
Taxes T
Imports M

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8
Q

3 injections to the economy

A

Investments I
Gov spending G1+G2
Exports X

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9
Q

Elements of the business cycle

A

Peak
Contraction
Expansion
Trough
Recession
Boom

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10
Q

What goes on the axis of a business cycle

A

X- time intervals (eg. Years)
Y- GDP

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11
Q

Influencers of Consumption

A

Consumer confidence
Wage rates
Income tax rates

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12
Q

Influencers of investments

A

Interest rates
Business confidence
Company tax rates

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13
Q

Influencers of g1+g2 spending

A

The federal budget outcome

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14
Q

Influencers of exports and imports

A

Exchange rate
Overseas economic conditions

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15
Q

Define recession

A

Characterised by two consecutive quarters of negative economic growth. Likely high rates of unemployment and low inflation rates.

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16
Q

Define contraction

A

When rate of economic growth is low or even negative for one quarter. Likely unemployment will rise and inflation will fall

17
Q

Define boom

A

Period of very high economic growth and low unemployment. Likely that inflation will be above goal range

18
Q

Expansion

A

Period of positive economic growth, job creation and relatively stable inflation.

19
Q

The business cycle

A

Recognition that over relatively long periods of time, levels of output and economic growth fluctuate and this tends to be cyclical in nature.

20
Q

Lagging indicators

A

Measures that ONLY tell the level of activity that has occurred. Eg. GDP figures and unemployment rate

21
Q

Leading indicators

A

Measures to PREDICT where the economy may be heading. Eg. Consumer confidence and business confidence

22
Q

Coincident indicators

A

Measures that move very closely with actual changes in economic activity. Eg. Share prices and monthly retail sales.

23
Q

Define aggregate demand

A

The combined or total value of all spending by households, businesses, governments and purchases made on Aus made g+s

24
Q

AD=

A

C + I + G1 + G2 + X - M

25
Q

What might cause a reduction in AD

A

Fall in net exports
Cuts in government spending
Higher interest rates
Decline in household wealth and confidence

26
Q

What might cause an increase in AD?

A

Depreciation of the exchange rate
Cuts in taxes
Increase in house prices
Lower interest rates

27
Q

Define disposable income

A

Money available off spending after households receive welfare and pay taxes. (Affects AD)

28
Q

Define interest rates

A

Price or cost of borrowing credit from banks. Influences the incentive to save and levels of consumption and investment spending.

29
Q

Define consumer confidence

A

The level of household optimism or pessimism about their future employment and income prospects. It affects upcoming levels of household consumption spending.

30
Q

Define aggregate supply

A

A measure of the quantity of national production of goods and services that would be made available by suppliers at different price levels in order to meet demand.

31
Q

Factors impacting AS

A

Access to land labour and capital
Productive capacity
Cost of production
Efficiency and productivity

32
Q

Define affluenza

A

A social condition that arises from the desire to be more and more wealthy and successful

33
Q

Income

A

The reward for producing and selling goods and services and undertaking economic activities

34
Q

Consumption

A

Using income for spending on goods and services to help satisfy people’s needs and wants

35
Q

Purpose of economic activity

A

To use available resources efficiently to produce and sell those goods and services that best help to maximise the general satisfaction of society’s wants and wellbeing

Economics (2 decks)

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