Unit 3 AoS2 Definitions

Question 1

Material Living Standards

Answer 1

Material living standards refer to the level of economic well-being of individuals or households, typically measured by their access to and consumption of goods and services. It focuses on tangible aspects of living standards, such as income, housing, food, healthcare, education, and other material possessions that contribute to a person’s quality of life. It is measured by indicators such as real GDP, disposable incomes and level of unemployment.

Question 2

Non-material Living Standards

Answer 2

Non-material living standards are qualitative factors that impacts individual’s daily life. It is subjective and can be impacted by: the amount of leisure time, happiness, life expectancy and health, crime rates, freedom and quality of the natural environment.

Question 3

5 Sector Circular Flow Model

Answer 3

Illustrates how the Australian economy works and how it’s different parts interact and are interrelated. It identifies some of the macroeconomic variables affecting Australia’s domestic economic conditions.

Question 4

Business Cycle

Answer 4

Refers to the wave-like ups (recovery and boom) and downs (slowdown or recession in a nation’s level of production or economic activity. There are 4 main phases - expansion, peak, contraction and trough (recession)

Question 5

Aggregate Demand

Answer 5

Represents the sum of spending on goods and services produced by a nation over a year. It is made up of C(consumption) + I (investment) + G (government spending) + X (exports) - I (imports)

Question 6

Aggregate Supply

Answer 6

Represents the total output of all types of goods and services produced at different price levels measured over a period by the nation’s businesses. It is affected by the availability of a nation’s resources and the efficiency with which these resources are used.