9241292
Description
Flashcards by Adelia John, updated more than 1 year ago
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Created by Adelia John
over 7 years ago
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| Question | Answer |
| What are leakages and give examples? | Leakages is when money leaves or is loss in the economy (Eg. Tax, savings, imports) |
| What are injections and give examples? | Injection is when money is put back into our economic system ( spending, loans , exports) |
| What is monetary policy? | Where the RBA is designed to influence the cost, availability and demand for credit and money through interest rates |
| What is fiscal policy? | AK: budgetary policy Governments economic policy to encourage or discourage the economy to grow. ( either increasing or decreasing govenermenf receipts and government expenditure) |
| What do fiscal and monetary policies have in common ? | They try to decrease and increase economic growth by incouraging and discouraging spending |
| Deficit budget? | Level of government receipts is LESS than level of government expenditure |
| Budget surplus | Where the level of government receipts is GREATER than the level of government expenditure |
| Balanced budget: | Level of government receipts= level of government expenditure |
| What happens in budget surplus? | Spending of government expenditure is HIGH |
| What happens in budget deficit | Savings, cost cutting and borrows will be HIGH |
| List examples of recent Fiscal policies | ~carbon tax -First home owners Grant -Paid maternity leave - National Disability Scheme -Foreign Aid cuts |
| What happens to interest rates in recession? | ~Rates are at lowest ~RBA sets interest rates low - encourages spending and economical growth |
| What are the 2 ways low interest rates encourage spending? | Individuals pay less interest on mortgages - More disaposable income - more spending on goods and services 2- - discourages saving money in the bank - encourages people to overall spend |
| What happens to interest rates in boom? | RBA RAISES interest rates when HIGH economic growth Government aim: Slow inflation- avoid economic collapse |
| What is the GFC ? | - Occurred in 2007-2008 -Global Financial Crisis Many events caused it and started a domino effect around the world. Resulted- threat of total collapse of large financial institutions Bailout by banks and governments |
| Why did the GFC happen? | -Because of the US house market crashing - the US house market crashed due to banks lending money to people with bad credit rates - defaults in mortgages paid back= banks sell houses to receive their money back |
| How did this affect the US ? | - A fall in house prices to encourage spending on houses so banks can receive money - banks didn't receive money they were owed all together - flow on effect: Banks, businesses, individuals Individuals: lose jobs- unable to pay off their home loans Banks: Foreclose on loans- houses on market - write off debts - some banks close Others: unwilling to lend money Houses: drop prices businesses : can't borrow capital - |
| How were we affected ? | -slows/ stops trades with Australia - Effects exchange rates - Ripple effect - Foreign investors lose money - Caution of recession in other countries |
| GDP | Represents the total marketer value of final goods and services produced by a country over a period of time |
| What is the governments involvement in the economy? | - Largely operates independently from the governements decisions - decisions by the government are broken into monetary and fiscal policies |
| Draw the economic flow chart model : |
Savings, taxation and imports are leakages as they
are money leaving the household and business
model
Investment, government expenditure and exports
are injections, they are money entering the model.
Image:
Img 7265 (image/png)
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| Define Economic growth | An increase in the amount of goods and services produced per head of the population over a period of time |
| Define GDP per capita: | The measurement of increased value of goods and services per year in a certain area |
| What percentage should economic growth be? | Strong- Economic growth is between 3-4% which means the employment rate is high - inflation rates are low and achievable - Economic growth is above average - any higher can be a threat |
| A sustainable Economic Growth: | Where economic growth is balanced, -where the production rates in goods and services don't interfere with individuals living standards |
| Why economic growth may be considered A good measure of living standards? | ASK MR TAYLOR |
| What is meant by living standards? | Refers to how well a nation or a country is doing overall |
| Define the two living standards? | Materialistic- Goods and services and produce which effect our economic growth in a negative/ positive way Non- materialistic: The elements of human life which effect our personal wellbeing and environment |
| Define unemployment : | A person without a paid job but is able to work |
| Explain two main types of unemployment | Seasonal - jobs that are terminated at the same time in a year due to the season changes Frictional- when an individual is unemployed in finishing g a job and starting another |
| Explain the difference between monetary and fiscal policies | The main difference is that Monetary policy uses interest rates set by the Central Bank. Fiscal policy involves changing government spending and taxes to influence the level of aggregate demand. Fiscal policy is when the government manipulates/changes the spending levels of the economy via tax rates. |
| What is real GDP | Real GDP refers to the value of economic output produced in a given period, adjusted according to the changes in the general price level. |
| GDP percentage: | It's generally considered to be acceptable for the rate of increase in GDP to be between 3% and 4% per year. This rate allows for increase in population. New products and replacement of consumed goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. |
| What is inflation | Inflation is defined as a sustained increase in the general level of prices for goods and services. When the price of a good or service increases but the value of stays the same. This proves that we may not be getting full value for money. (Eg. An auction) |
| How is inflation measured, | Inflation in Australia is traditionally measured by calculating the Consumer Price Index (CPI). The CPI measures the average change in retail price of a basket of local and imported goods and services that represent a high proportion of expenditure by metropolitan households. |
| Different types of unemployment? | Sesasonal- when jobs are terminated at the same time in a year due to the regular change in season ( Apple picking) |
| Direct impacts | impact upon a certain market, company, individual or the environment |
| Indirect impacts | They are flow on effects of the decision. There are generally a ripple effect of what decision occurs. involves the opportunity cost. |
| Major trading partners | Major trading partners? China, US, Japan and South Korea. |
| Biggest goods exported and Imported | Exports-Iron Ore, coal, petroleum gas, gold meat and wheat. Imports- cars, refined petroleum, computers, crude petroleum and packaged medicine. |
| What's a labour force | The labour force as people who are older than 15 years and who are able and willing to work. Any types of working status like: full-time, part-time, self-employed; work in a family business who all receive payment. |
| Why does an economy need to grow every year | The economy need to grow to replace the goods and services that have been used/consumed. To support the population growth (which requires more goods and services). To continually improve the quality of products |
| What are the limitations to GDP | GDP doesn't include non-market produce GDP doesn't measure the distribution of production GDP doesn't consider the impacts of the environment GDP involves some guesstimates in production |
| Effects of unemployment | Deteriorating living standards Decreased national production Changed government budgeting |
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