Business Cycle/Inflation Flashcards
(14 cards)
Inflation
A persistent and significant rise in the general price level of goods and services in an economy over time. It decreases the purchasing power of money.
Consumer Price Index
A measure that tracks the average change in prices of a fixed “basket” of goods and services typically purchased by Australian households. Used to calculate inflation.
Demand-pull Inflation
Happens when demand for goods and services exceeds supply, causing prices to rise. Common in periods of strong economic growth.
Cost-push Inflation
Occurs when the costs of production rise, and producers pass those costs onto consumers through higher prices (e.g., higher wages or fuel prices).
Economic Growth
The increase in the amount of goods and services produced in an economy over time. It is usually measured by changes in Real GDP.
Human Resources
A large quantity, highly skilled (quality) workforce will result in increased quality and quantity of production, which will increase GDP and therefore economic growth
Natural Resources
Countries will an abundance of natural resources that are utilised efficiently will have higher levels of economic performance.
Infrastructure/capital formation
A country with well-functioning and adequate infrastructure supports economic performance as it facilitates the production and distribution of goods and services.
Gross Domestic Product
The total value of all final goods and services produced in a country over a specific period. It is a key indicator of a country’s economic performance.
Business Cycle
An economic model which shows the level of economic activity
Boom
The peak of the busines cycle, where economic griwth and general economic activity are above average
Downswing
After the boom in the business cycle, where economic activity slows down
Upswing
Follows the trough phase; economic activity starts to increase
Trough
Where production is at it’s lowest, involving negative rates of economic growth
