5 sector model

Question 1

What are the five sectors of the Australian economy?

Answer 1

1. Household sector
2. Business sector
3. Finance sector
4. Government sector
5. Overseas or foreign sector

Question 2

What equation represents the equilibrium in the economy?

Answer 2

S + T + M = I + G + X

Question 3

What does the S stand for?

Answer 3

Savings

Question 4

What does the T stand for?

Answer 4

Taxations

Question 5

What does the M stand for?

Answer 5

Imports

Question 6

What does the I stand for?

Answer 6

Investments

Question 7

What does the G stand for?

Answer 7

Government spending

Question 8

What does the X stand for?

Answer 8

Exports

Question 9

Are savings a leakage or injection?

Answer 9

Leakage

Question 10

Are investments a leakage or injection?

Answer 10

Injection

Question 11

What is the Equilibrium condition of savings and investments?

Answer 11

S=I

Question 12

Is taxation a leakage or injection?

Answer 12

Leakage

Question 13

Is government spending a leakage or injection?

Answer 13

Injection

Question 14

What is the Equilibrium condition of Saving, Taxations, Investments and Government Spending?

Answer 14

S+T=I+G

Question 15

Are imports a leakage or injection?

Answer 15

Leakage

Question 16

Are exports a leakage or injections?

Answer 16

Injections

Question 17

A shop assistant collects her weekly wage

Answer 17

Income (Y)

Question 18

A plastics firm installs a new moulding machine

Answer 18

Investment (I)

Question 19

Fans buy meat pies at a softball match

Answer 19

Consumption (C)

Question 20

Australian wheat growers sell grain to China

Answer 20

Export (X)

Question 21

A schoolgirl opens a building society account

Answer 21

Savings (S)

Question 22

Unit owner in Byron Bay pays local council rates

Answer 22

Taxation (T)

Question 23

A car enthusiast buys a vintage Rolls Royce from overseas?

Answer 23

Import (M)

Question 24

An 80-year-old woman collects her pension cheque

Answer 24

Government Spending (G)

Question 25

When is the budget outcome a balanced budget?

Answer 25

When government spending (G) is equal to taxation revenue (T), G=T

Question 26

When is the budget in deficit (owes money)?

Answer 26

When government spending (G) is greater than taxation revenue (T), G > T

Question 27

When is the budget inn surplus (more money)?

Answer 27

When government spending (G) is less than taxation revenue (T), G < T

Question 28

For the economy to be balanced what must happen?

Answer 28

total leakages must be equal to total injections

Question 29

What will happen is leakages are greater than injections?

Answer 29

money supply may contract

Question 30

What does GDP stand for?

Answer 30

Gross Domestic Product

Question 31

What does total spending equal?

Answer 31

Total spending = E = C + I + G + (X-M)

Question 32

How will increased saving effect the equilibrium level of the economy?

Answer 32

fall

Question 33

How will increased investment effect the equilibrium level of the economy?

Answer 33

rise

Question 34

How will lower taxes effect the equilibrium level of the economy?

Answer 34

rise

Question 35

How will lower government spending effect the equilibrium level of the economy?

Answer 35

fall

Question 36

How will increased export receipts effect the equilibrium level of the economy?

Answer 36

rise

Question 37

How will decreased import levels effect the equilibrium level of the economy?

Answer 37

rise

Question 38

How will higher government spending effect the equilibrium level of the economy?

Answer 38

rise