Year 10 Economics Flashcards
What is Gross Domestic Product (GDP)?
the total value of all goods and services created in an economy
What is Gross National Product (GNP)?
the total value of all finished goods and services produced by a country’s citizens in a given financial year
What is Gross Domestic Product Per Capita?
the countries GDP divided by the population. the economic output per person.
What is Inflation Rate?
Inflation is the rise of prices of goods and services in an economy whilst also decreasing the purchasing power of consumers. Inflation measures the rate of change of these prices.
What is Unemployment Rate?
the percentage of the total labour force that is unemployed but actively seeking employment and willing to work.
What is Underemployment?
a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work. It refers to a situation in which individuals are forced to work in low paying or low skill jobs.
What is the Human Development Index (HDI)?
a statistic composite index of life expectancy, education, and per capita income indicators is used to rank countries into four tiers of human development.
Opportunity cost
The cost of choosing one option over another
What is the difference between unemployment and underemployment?
Unemployed means you don’t have a job, while underemployment means the job you have is inadequate.
Opportunity cost?
The cost of choosing one option over another
Why is GDP a flawed economic indicator?
- Does not account for the distribution of income
- An estimate
- Does not adjust to environmental factors.
Does a nation with a high GDP always have a high standard of living?
No. Because the standard of living is calculated by the GDP per capita. If a country has a high GDP but also has a large population then when the GDP is divided to get the GDP per capita, the number will be lower than some other nations with a not-so-high GDP but also not a large population. For example, China has a much higher GDP than Australia but also has a larger population than Australia, so the GDP per capita is actually lower than Australia’s. Therefore, china with a higher GDP actually has a lower standard of living.
Why are intermediate goods not counted in GDP?
Intermediate goods are not counted as a part of a nation’s GDP because GDP counts the total value of all FINAL goods and services. Those intermediate goods would get counted twice. So if a confectioner buys sugar to add it to her candy, it can only be counted once—when the candy is sold, rather than when she buys the sugar for production. This is called a value-added approach because it values every stage of production involved in producing a final good.
What is participation rate?
the total number of people or individuals who are currently employed or in search of a job.
What are the 5 types of unemployment?
Frictional, Structural, Cyclical, Seasonal and Technological
What is frictional unemployment?
when workers change jobs and are unemployed while waiting for a new job. A worker may already have a job lined up, but they may not be able to start for a few months.
What is structural unemployment
when economical shifts reduce the need for workers. If the economy is not doing very well, that means you’re not going to need as many workers.
What is cyclical unemployment
when natural business cycles bring about a loss of jobs. It’s not always easy to predict, but economies do tend to go through fluctuations. When the economy dips down, and there isn’t much work, and there aren’t as many products being purchased, people aren’t buying as much, then the economy is set to go into a recession.
What is structural unemployment?
when economical shifts reduce the need for workers. If the economy is not doing very well, that means you’re not going to need as many workers.
What is cyclical unemployment?
when natural business cycles bring about a loss of jobs. It’s not always easy to predict, but economies do tend to go through fluctuations. When the economy dips down, and there isn’t much work, and there aren’t as many products being purchased, people aren’t buying as much, then the economy is set to go into a recession.
What is seasonal unemployment?
when seasonal cycles reduce the need for certain jobs. Seasonal unemployment could be people that maybe work in a farming or ranching community. There are certain times of the year when you’re going to be harvesting, certain times of the year when you’re going to be planting, and certain times of the year when it is going to be waiting for things to happen.
What is technological unemployment?
When advances in technology result an elimination of certain jobs. Going with telephones, you had telephone operators.
What is living standards?
the material well being of the average person in a given population. It is typically measured using gross domestic product (GDP) per capita.
What are 2 ways nations can improve the productivity of their workers?
Increase the skills of workers and enhance the competition.
What is the difference between a developed nation and a developing nation?
Developed nations are generally categorized as countries that are more industrialized and have higher per capita income levels. Developing nations are generally categorized as countries that are less industrialized and have lower per capita income levels.
What is the economic problem?
there are unlimited wants but a limited amount of resources to satisfy those wants.
Expenditure definition
the act of spending
What is the Fiscal policy?
the use of government revenue collection and expenditure to influence a country’s economy.
Monetary Policy
monetary policy involves using interest rates to influence aggregate demand, employment and inflation in the economy. It is one of the main economic policies used to stabilise business cycles.
What is the Gini coefficient?
a statistical measure of the degree of variation represented in a set of values, used especially in analyzing income inequality.
What is a Monetary Policy?
monetary policy involves using interest rates to influence aggregate demand, employment and inflation in the economy. It is one of the main economic policies used to stabilise business cycles.
What is the cash rate?
the interest rate that a central bank – such as the Reserve Bank of Australia or Federal reserve – will charge commercial banks for loans. The cash rate is also known as the bank rate or the base interest rate.
What is the economic role of the government?
The government:
(1) provides the legal and social framework within which the economy operates
(2) maintains competition in the marketplace
(3) provides public goods and services
(4) redistributes income
(5) corrects for externalities
(6) takes certain actions to stabilize the economy.
What is the impact of economic inequality?
At a microeconomic level, inequality increases ill health and health spending and reduces the educational performance of the poor. These two factors lead to a reduction in the productive potential of the work force. At a macroeconomic level, inequality can be a brake on growth and can lead to instability.
What is the poverty trap?
when government-support payments for the poor decline as the poor earn more income. As a result, the poor do not end up with much more income when they work, because the loss of government support largely or completely offsets any income that is earned by working.
Why is there a difference in distribution of income?
gender, ethnicity, geographical location, occupation/education, historical income
What is the Consumer Price Index (CPI)?
a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
What is Demand-Pull Inflation?
When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up. It involves inflation rising as real gross domestic product rises and unemployment falls. “too much money chasing too few goods.”
What is Cost-Push Inflation?
when overall prices increase (inflation) due to increases in the cost of wages and raw materials
What are Externalities?
a cost or benefit that is imposed on a third party who did not agree to incur that cost or benefit.
Leakage
Any money that is not being spent on goods and services
- savings
- taxation
- imports
Injection
Money that is spent on goods and services
- investments
- exports
