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Unit 1 & 2 Economics > Unit 2 Outcome 3 > Flashcards

Unit 2 Outcome 3 Flashcards

1
Q

What are the characteristics of Australia’s changing population?

A

. Australia’s population has more than doubled in size over the past 50 years
. We have an ageing population
MORE

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2
Q

What are influences on Australia’s population size and growth?

A

. The rate of natural increase

. The rage of net migration

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3
Q

Explain the following influence on Australia’s population size and growth: The rate of natural increase

A

This represents the birth rage minus the death rate. This can be affected by many factors including social, economic, and political conditions in Australia. However developments in health and medical science, nutrition, education, and fertility rates have affected the birth and death rates.

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4
Q

Explain the following influence on Australia’s population size and growth: The rate of net migration

A

This reflects the rate of immigration (people coming into Australia) minus the rate of emigration (people leaving Australia). People can be driven to seek a new start in another country due to civil war, dictatorships, famine, terror and lack of opportunities. 65-70% of immigrants are referred to as skilled immigrants, and make up for Australia’s skill shortages.

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5
Q

What factors affect the distribution and composition of Australia’s population?

A

. Age-sex distribution
. Distribution by country of birth
. Geographic distribution by state
. Distribution between rural and urban

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6
Q

Explain the following factor affecting the distribution and composition of Australia’s population: Age-sex distribution

A

Age-sex distribution of the population refers to how different age groups are spread over the whole population of a country. Population pyramids are graphs which show the distribution of females and makes by each successively older age group. Australia has an ageing population, meaning we have a large and increasing proportion of people in older age groups in comparison to younger age groups.

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7
Q

Explain the following factor affecting the distribution and composition of Australia’s population: Distribution by country of birth

A

This involves considering the percentage of people born locally, as opposed to those born overseas. It also involves looking at the range of countries represented by those coming from abroad.

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8
Q

Explain the following factor affecting the distribution and composition of Australia’s population: Geographic distribution by state

A 
Australia's population is distributed unevenly geographically between states. 
. Over 33% live in NSW
. 25% in VIC
. 20% in QLD
. 10% in WA
. 8% in SA
. 2% in TAS
. and the balance in NT and ACT
To a large extent, this unevenness has been caused by differences in interstate migration, the age distribution and the growth in employment opportunities.
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9
Q

Explain the following factor affecting the distribution and composition of Australia’s population: Distribution between rural and urban

A

Theres has been a definite shift of population from rural to urban areas.
. 1910 - 43% lived in rural areas
. 1946 - 30% lived in rural areas
. Recently - 10% live in rural areas
Our population is now mostly distributed in capital cities.

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10
Q

What is distribution of population?

A

This refers to the way our people are spread between different age groups, genders, ethic backgrounds, states and regions. It helps to shape the composition of the population.

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11
Q

What is composition of population?

A

This refers to the features, characteristics or make up of a country’s population.

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12
Q

The economic consequences of demographic change and their effects on living standards.

A

Our standard of living is affected by both material wellbeing as well as non-material elements. Some key demographic changes might affect out living standards.

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13
Q

What is demographic change?

A

This involves trends in a nation’s population size and aspects of its distribution measured over a period of time.

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14
Q

What is Australia’s current population?

A

As of the 6th of October 2015 Australia’s Population is 23,891,775.
As of the 25th of October 2015 Australia’s Population is 23,910,018.
What a difference.

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15
Q

What changes has Australia experienced?

A

. Rate of population growth has been quite rapid
. Australia has an ageing population because of longer life expectancy, a low birth rate and better health and medical treatment = relative decline in number of young people
. Rise in proportion of people born overseas to over a quarter of the total population
. Most people live on coastal fringe on capital cities and around 60% of whole population live in NSW or Victoria

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16
Q

What are the non-economic effects of population trends on living standards?

A

. Cultural diversity
. Reduced social cohesion as a potential cost of immigration
. Environmental and other costs of faster population growth

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17
Q

Explain the following non-economic effect of population trends on living standards: Cultural diversity

A

Post-war immigration has led to a multicultural society (one based on ethnic diversity). Australia now has a more vibrant and interesting mix of traditions, foods, fashion and customs than Anglo-Saxon culture can offer, thereby improving out overall living standards.

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18
Q

Explain the following non-economic effect of population trends on living standards: Reduced social cohesion as a potential cost of immigration

A

A possible downside of multiculturalism is the loss of social cohesion. This is because periods of international conflict or stress may result in cracks appearing which could weaken our society. It could also lead to persecution of minority groups, this erodes the non-material living standards of Australians.

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19
Q

Explain the following non-economic effect of population trends on living standards: Environmental and other costs of faster population growth

A

Immigration causes Australia’s population to grow more than twice as fast as it would otherwise. Resources can therefore be used up and depleted at a higher rate. Carbon emissions from the productions of goods and services are higher. More difficult transport etc.

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20
Q

What are economic effects of demographic change on living standards?

A

. A growing local market for goods and services
. A rise in the labour force
. Changes in allocation of resources
. Effects on government budgets and finances

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21
Q

Explain the following economic effect of demographic change on living standards: A growing local market for goods and services

A

A rising population means a growing market for a whole range of goods and services. This is great news for local businesses which can expand their production and employment. It also helps to create economies of of large-scale production.

Economies of LSO = cheaper produced good or service in larger volumes = lowers cost per unit = firm can sell product both in Aus. and overseas = helps increase sales, market share and profit.

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22
Q

Explain the following economic effect of demographic change on living standards: A rise in labour force

A

A bigger population helps to grow the labour force or resources available to local firms. Migrants can also help overcome the shortage of labour and skills caused partly by our ageing population.

Immigration = rise in supply of labour = filled jobs created by growing size of Aus. market.

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23
Q

Explain the following economic effect of demographic change on living standards: Changes in the allocation of resources

A

Australia’s ageing population alters the way resources are allocated. An older population often wants different types of goods and services in comparison to those purchased by younger people. Resource allocation can also be affected by the sex and race.

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24
Q

Explain the following economic effect of demographic change on living standards: Effects on government budgets and finances

A

Without growth in the number of people of working age, the size of Australia’s tax base is unlikely to rise significantly. Due to our ageing society, the federal government’s budget outlays on welfare and services are expected to increase.

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25
Q

What is the concept of an optimum-sized population?

A

This is a theoretical concept relaying to the best-sized population that will allow a country to maximise material living standards or value of GDP per head.

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26
Q

What are Population Policies?

A

These refer to attempts by governments to alter the growth rate, size, age distribution and geographic distribution of a nation’s population.

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27
Q

Explain Australia’s population policy.

A

. Following the end of WWII Australia was seen as underpopulated so the slogan ‘Populate or perish’ was well known
. Kevin Rudd suggested a population of around 35 million people
. Whilst coalition believes current population growth rate (1.6% a year) is too fast
. Immigration targets have been most effective in in helping to grow Australia’s population
. Targets are often set according to economic circumstances (eg. Labour shortages)

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28
Q

Explain China’s Population Policy.

A

. Since 1978 a key feature of their population policy strategy has been the one-child policy
. This was initially introduced to help reduce growing social, economic and environmental problems associated with rapid population growth
. There was some softening of the policy possibly due to the fact that some regions had an ageing population causing labour shortages

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29
Q

Explain India’s Population Policy.

A

. (National Population Policy) The policy keeps the right if individuals to make free, voluntary and informed choices about family size and planning
. Government has set up a framework for achieving key goals, including reducing the birth rate so that it is equal to the death rate
. NPP aims to unmet needs for contraception and health care personnel and encourage girls to delay marriage until they are atleast 18 or 20

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30
Q

What are the two types of work?

A

. Paid work

. Unpaid or voluntary work

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31
Q

What is paid work?

A

This is when individuals sell their labour for wages or salaries.

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32
Q

Explain the demand for labour.

A

This is the number of staff with different skills that business firms need to purchase over a period of time. The demand for labour depends on various kinds of goods and services, and overall levels of spending.

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33
Q

Explain supply of labour.

A

This is the number of individuals and willing to work.

34
Q

Explain the demand for and supply of labour, and pay levels.

A

There are various factors affecting wage levels for paid work. Most importantly pay rates reflect the relative scarcity of each occupation, as determined by conditions of demand for and supply of each type of labour.

35
Q

What is unpaid work?

A

This is where individuals provide their labour free of charge or on a voluntary basis. The largest proportion of volunteers are involved with fundraising, management, instructing, preparing or serving food, providing transport, repairing and gardening.

36
Q

What are some of the reasons for working?

A
  • Work is a necessity. In other words, having a job helps us earn the income we need to purchase life’s necessities and luxuries.
  • Work can bring self-esteem or status in society and among our friends.
  • Work can be an escape from boredom by helping us meet people.
  • Work can bring pleasure and can be an outlet for creative thought and artistic talent.
  • Work can be satisfying by helping others.
  • Many people believe strongly in work ethic.
37
Q

How can you judge the performance of the Australian economy?

A

The best way to do this is to examine trends in indicators or measures that tell us about the prevailing conditions that exist in our labour market. Changes in the levels of employment and unemployment are important.

38
Q

What is employment?

A

A person is considered employed if they:
. are aged over 15
. have jobs
. and work for money.

38
Q

What is unemployment?

A

A person is considered unemployed if they:
. are aged over 15
. do not have jobs
. are able and willing to work for pay.

39
Q

What are labour market conditions?

A

These describe the level of demand for labour, relative to its supply. Conditions may be described as strong, weak or ideal. Levels of employment unemployment reflect labour market conditions.

40
Q

Explain the following labour market trend: Weak labour market conditions

A

This exists when there is a low demand for labour, relative to its supply. Here, unemployment is relatively high and there are few job vacancies. This occurs in recessions.

41
Q

Explain the following labour market trend: Strong labour market conditions

A

This exists when the demand for labour is high, relative to its supply. Here, unemployment is low and there are many job vacancies. This occurs in a boom.

42
Q

How are changes in labour market conditions measured?

A

The ABS carries put its labour force survey.

43
Q

What is the labour force survey?

A

This is conducted by the Australian Bureau of Statistic (ABS) and measures various aspects of the labour market including employment, unemployment, participation and duration of unemployment.

44
Q

Explain the following aspect of the labour force survey: Employed Persons

A

Employed persons are those members of the labour force who, in the survey week:
. Worked full-time (usually for more than 35 hours), or part-time (for one than 1 hour) for payment or profit
. Worked as self-employed or in a family business
. Had a job but were prevented due to illness, strikes, holidays, and other similar situations.

45
Q

Explain the following aspect of the labour force survey: Unemployed Persons

A

Unemployed persons are those members of the labour force who, in the survey week:
. Did not have a job but were actively looking for work
. Were able and willing to start employment in the week prior to the survey week
. Were waiting to resume a job after being laid off or stood down without pay.

46
Q

Explain the following aspect of the labour force survey: Participation Rate

A

The participation rate represents the proportion of all Australians aged over 15 years who are members of the labour force and are thus either employed of unemployed.

47
Q

How is the participation rate calculated?

A

Australia’s Participation Rate (percentage) = total number in the labour force x 100 divided by total number in the population raised 15 years and over.

48
Q

Why may the participation rate increase?

A

A rising participation rate causes the size of the labour force to grow. Over the years, Australia’s participation rate has tended to increase due to:
. Increased opportunities and acceptance of women in the labour force
. Increased incentives including changes in the welfare and tax systems, for those who have withdrawn from the labour force to re-enter it
. Increased average age of retirement
. and Increased necessity due to rising living costs.

49
Q

What are job vacancies?

A

They represent the number of unfilled job offers or positions advertised by firms wanting to hire labour.

50
Q

Explain aggregate weekly hours worked.

A

Aggregate weekly hours worked per employee indicates changes in the demand for labour by employers, as judged by the average number of hours worked per staff member in a week.

51
Q

Explain the following aspect of the labour force survey: Duration of unemployment

A

This shows the average number of weeks spent by the unemployed before work is found. Long-term unemployment exists when the unemployed take over 1 year to find a job.

52
Q

Explain the incidence of employment and unemployment.

A

This refers to the way employment or unemployment is spread among different age groups, ethnicities, regions, occupations and genders. This is important to know in order to work out government policies to be able to improve the situation.

53
Q

Why are economists interested on following trends in the labour market?

A

Because levels of employment and unemployment have a huge effect on people’s incomes and hence their living standards.

54
Q

What are the three types of labour market ‘conditions’ that can develop in Australia’s labour market?

A

. Stronger labour market conditions
. Weaker labour market conditions
. and Ideal labour market conditions.

55
Q

Explain the following labour market condition: Stronger labour market conditions

A

Labour market conditions are improving or getting stronger if the demand for labour by firms is rising relative to the supply of labour by households. This may be indicated by:
. lower unemployment rates
. rising job vacancies
. increasing hours
. declining duration of unemployment
. and increased employment growth
SLMC are typical when there is increased economic activity.

56
Q

Explain the following labour market condition: Weaker labour market conditions

A

Weaker labour market conditions occur if the supply of labour by households is rising relative to the demand for labour by firms. The usual signs of this include:
. increasing unemployment rates
. falling job vacancies
. declining hours
. increasing duration if unemployment
. and reduced employment growth
These changes usually decrease in the level of economic activity. (Perhaps during a recession).

57
Q

Explain the following labour market condition: Ideal labour market conditions

A

Ideal labour market conditions exist when there is a balance between the demand for and supply of labour. Here, conditions should not be so strong that there are labour shortages leading to inflation, but not so weak that there is high unemployment.

ILMC exist when the Australian Government achieve its economic goal of full employment.

58
Q

What have been the trends in the level of employment and unemployment?

A

As a general rule, labour market conditions conditions change in a cyclical or wave-like manner. They get stronger as the level of economic (GDP) rises quickly. By contrast, weaker labour market conditions are the result of slower levels of economic activity where GDP grows at a slower rate.

59
Q

What are the causes of unemployment?

A
  1. Weak aggregate demand-side conditions (cause cyclical unemployment)
  2. Aggregate supply-side developments (can cause natural unemployment)
60
Q

What are some weak aggregate demand-side conditions?

A

. Consumer pessimism (more saving = less spending)
. Depressed business confidence (firms cut spending on new plant and equipment)
. Reduced household income (less income = less spending)
. Recession among major trading partners (could cause sales of our exports to fall)
. Higher interest rates (up interest rates on credit depresses borrowing used to finance consumption)
. Higher taxes or lower government spending (discourage expenditure and slow economy)

61
Q

What are some aggregate supply-side developments?

A

. Poor business profits and closures
. Business relocation
. New technology and mismatch of skills
. The effect of globalisation and tariff cuts (aus. Businesses struggle)

62
Q

What are the different types of unemployment?

A 
. Cyclical unemployment
. Natural unemployment
. Structural unemployment
. Frictional unemployment
. Seasonal unemployment
. Hard-core unemployment
63
Q

What is cyclical unemployment?

A

This only occurs when national spending (AD) and production (GDP) levels are weak as during recessions or depressions. It then disappears when there is a boom and economic activity is strong.

64
Q

What is natural unemployment?

A

This is caused by changing supply-side conditions that alter the way firms organise production, business profitability and survival as well as the ability and willingness of individuals to be employed. It exists even in healthy economies where there is almost full employment.

65
Q

What is structural unemployment?

A

This occurs due to changes in the way goods and services are produced. It is the biggest source of natural unemployment in Australia and can be caused by factors such as business relocation, poor business profits as well as new technology and a mismatch of skills.

66
Q

What is frictional unemployment?

A

This exists when people are unemployed between finishing jobs and starting another. This is common in the building trades and in some areas of rural industry. (Gap between finishing one job and starting another).

67
Q

What is seasonal unemployment?

A

This results from the termination of jobs at the same time each year due to the regular change in the seasons. Eg. Fruit puckers, tourist and holiday operators, school leavers as well as shearers frequently suffer this problem.

68
Q

What is hard-core unemployment?

A

This is often the result of personal disabilities and attitudes that are seen as hostile to effective employment (personal characteristics).
- extended mental illness
- hasn’t worked for an extended period of time
Individuals get stuck or trapped on welfare. They accept their unemployment and instead have the welfare trap as a way of life. People are often trapped due to having a criminal record, physical disability or even a certain personal appearance, which isn’t great.

69
Q

What are the effects of unemployment on individuals, families and living standards?

A

. Reduced incomes lower material living standards

. Reduced non-material living standards and quality of life suffer

70
Q

Explain the effects of reduced incomes.

A

It lowers material living standards:
. Weekly earnings drop
. Requires change in lifestyle
. Big cutbacks in household spending on all but essential items
. Living standards fall
. Difficult to maintain interest repayments on personal debt or home loan
. Previous savings are quickly depleted
. Poverty and social inequality becomes more noticeable

71
Q

Explain the effects of reduced non-material living standards.

A

. Family tensions
. Lower self-image (feelings of personal failure associated with loss of status and friends)
. Less employable (individuals may lose their skills and possible their work ethic if they are out of work for long periods)
. Less healthy (can sometimes lead to higher incidence of health problems)

72
Q

What are the effects of unemployment on national production and living standards?

A

When some of the nations resources are unemployed or lying idle, the economy is not at its productive capacity. Put another way, the country is located inside its production possibility frontier. Because fewer goods and services are produced and national output of GDP is lower than its potential level, material living standards (income per person) are lower.

73
Q

What are the effects of unemployment on the government?

A

Unemployment is financially costly for both governments and taxpayers in different ways:
. On the one hand, unemployment lowers the number of income earners, thereby cutting government tax revenues.
. However, the problem becomes worse because unemployment also raises government outlays on things like welfare benefits.
Resources are taken from elsewhere (opportunity cost), eroding living standards.

74
Q

What are the Government’s goals in terms of employment?

A

The Australian Government seeks to create more jobs and achieve the goal of full employment.

75
Q

What does the Government do in order to achieve full employment and keep unemployment low?

A

They use various aggregate demand management policies and aggregate aggregate supply policies.

76
Q

What are aggregate demand policies?

A

These are used to lower cyclical unemployment by boosting AD, so firms lift their output and employment.

77
Q

What aggregate demand policies are there?

A

Expansionary monetary policy - This involves the deliberate changes in interest rates in order to affect the levels of AD, economic activity and cyclical unemployment. This is conducted by the Reserve Bank Australia (RBA). Lower interest rates earned on bank deposits could discourage saving, however it would encourage borrowing and spending. = increased employment.

Expansionary monetary policy - This involves annual changes in the levels of government taxes and outlays as ways of affecting the levels of AD, economic activity and cyclical unemployment. The government usually ends up running budget deficits because this involves either cutting taxes (= more money to spend) or the government increasing spending on g&s for community or increased welfare.

78
Q

What is aggregate demand?

A

This is the sum or total value of all goods and services produced by a nation measured over a period of time.

79
Q

What aggregate supply policies are there?

A

Tax reform - This includes lowering company and personal taxes to create incentive for hard work, investment and business expansion. Lower tax rates should help firms to become more profitable. (Encourages to expand and create new jobs.

Deregulation of the labour market - This is when the government reduces its controls over wage levels and working conditions. Instead enterprise bargaining was able to take place. Wage rises usually depend on improved productivity. This therefore encourages employees to work harder. (Wages don’t rise at once if they do rise)

Education and training - To lift efficiency and competitiveness of local firms through increased skills, and increase employability. Helps to reduce structural employment from a mismatch of skills.

Infrastructure projects - This helps lift efficiency and cut production costs for firms, so firms expand rather than close down. This can include the construction of important roads, railways and communication systems.

Tighten welfare access - This is done to help reduce the welfare trap, and increase incentives to work.

Unit 1 & 2 Economics (7 decks)

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