Year 10 Business and Economics Term 4 Test Flashcards
Outline three limitations of GDP as a measure of living standards
Does not take into account
- illegal work (‘cash in hand’ work)
- unpaid work (volunteer work)
- reductions of quality of life and losses through natural disasters
What is structural unemployment and give a example
Occurs when the workers available for employment do not have the skills and experience required for the jobs that are available
Re-training of employees is required
what is seasonal unemployment and give a example
Occurs because the demand for certain types of employees changes according to the season (e.g. fruit pickers)
what is cynical unemployment and give a example
When the economy is in a period of downturn or economic recession, the demand for goods and services falls.
This leads to many employers reducing their workforce.
what is frictional unemployment and give an example.
Occurs because it generally takes time to transition between one job to the next
Also occurs when students move from education into the workforce full time as well as when women move back to the workforce after having children
The government will invest in infrastructure such as railway and road infrastructure to improve living standards. Provide two examples of how this can reduce the unemployment rate in Australia.
Investing in railway and road infrastructure can reduce unemployment by creating jobs in construction, engineering, and related industries such as manufacturing and logistics. Additionally, improved connectivity lowers transportation costs and attracts businesses to expand, fostering long-term economic growth and generating employment in sectors like retail, services, and tourism.
Identify and explain two benefits of high employment for an individual and a country
High employment benefits individuals by providing financial stability and improving their quality of life through regular income, which enables them to meet their needs and pursue personal goals. For a country, high employment leads to greater economic productivity and growth as more people contribute to the economy. It also reduces government spending on welfare programs, allowing funds to be redirected to infrastructure, education, or healthcare, further supporting societal development.
explain how occupation can influence the distribution of income and wealth in Australia
Occupation plays a significant role in the distribution of income and wealth in Australia, as different jobs offer varying pay levels, job security, and opportunities for wealth accumulation. High-paying professions like doctors and executives tend to provide higher wages and benefits, enabling wealth accumulation, while lower-paying roles in sectors like retail or hospitality offer less financial stability. Additionally, access to education, training, and networking opportunities often determines who can enter high-income occupations, perpetuating income inequality. These disparities are further influenced by geographic location, with urban areas offering more high-paying jobs than rural areas, contributing to unequal wealth distribution.
outline how cutting interest rates could ease the cost-of-living pressures for Australians
Cutting interest rates can ease cost-of-living pressures for Australians by reducing the cost of borrowing. Lower interest rates make mortgage repayments, personal loans, and business loans more affordable, leaving households with more disposable income to spend on essentials such as food, utilities, and transport. Additionally, lower borrowing costs can stimulate economic activity, potentially leading to higher employment and wage growth. This increased financial capacity can help offset the rising costs of living and provide some relief to struggling households.
Explain how extra government spending could stimulate the economy and lead to interest rate hike in Australia
Extra government spending can stimulate the economy by increasing demand for goods and services, creating jobs, and boosting household incomes. This increased economic activity often leads to higher consumer spending and business investment, driving economic growth. However, if this growth causes inflation to rise above the Reserve Bank of Australia’s target range, the central bank may respond by raising interest rates. Higher rates are used to cool inflation by making borrowing more expensive and encouraging saving, thereby slowing down excessive demand in the economy.
During the last two years interest rates have increased in Australia.
Who benefits from this?
Who is disadvantaged from this?
why would an economic crisis in China affect the economy in Australia
An economic crisis in China would affect the Australian economy significantly because China is Australia’s largest trading partner. A downturn in China’s economy could reduce its demand for Australian exports, particularly resources like iron ore and coal, which are vital to Australia’s economy. This decline in trade would lower Australia’s export revenue, potentially leading to slower economic growth, job losses in export-dependent industries, and reduced government income from trade taxes. Additionally, weakened Chinese investment and tourism in Australia could further exacerbate the economic impact.
