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econ 3/4 > econ U3 AOS 2 > Flashcards

econ U3 AOS 2 Flashcards

1
Q

GDP

A

The total market value of all final goods and services produced in a given time period (usually one year)

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2
Q

Sustainable growth

A

Growth which does not cause problems for inflation, external stability, or overuse of natural resources.

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3
Q

The goal of strong and sustainable economic growth

A

the highest growth rate possible, consistent with strong employment growth, but without running into inflationary, environmental or external pressures. Generally considered to be within the range of 3 - 3.5% per annum.

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4
Q

Why is strong and sustainable economic growth pursued?

A

To boost material living standards as measured by real GDP per person. Stronger growth increases access to the goods and services that improves our material wealth and lifts living standards.

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5
Q

Sustainable development

A

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

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6
Q

Inflation

A

a sustained increase in the general or average price level over time

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7
Q

The goal of low inflation

A

2-3% growth in inflation per annum on average over the course of an economic cycle to maintain price stability within the economy.

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8
Q

Bracket creep

A

Where nominal wage increases, move taxpayers into higher income tax brackets which reduces their real disposable income.

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9
Q

Real wages

A

the actual purchasing power of income

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10
Q

International Competitiveness

A

The ability of an economy’s firms to compete in international markets.

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11
Q

Consumer Price Index (CPI)

A

The most common measure of inflation or average price level of a basket of G+S measured over a period of time and is calculated on a quarterly basis in March, June, September and December

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12
Q

‘fixed’ basket of goods and services
a high proportion of expenditure by metropolitan households.

A

Approximately 100,000 prices are collected each quarter across the eight capital cities and the ‘basket’ covers a wide range of goods and services, arranged across eleven groups, which are weighted according to their relative importance to the ‘typical’ metropolitan household.

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13
Q

inflation rate =

A

Price index (end) - Price index (beginning)
———————————————— X100
Price index (beginning)

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14
Q

headline inflation

A

The price movements of all goods and services contained in the CPI

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15
Q

underlying rate of inflation

A

A rate of inflation based on consumer price index that excludes goods with highly volatile (unstable) prices. This is most notable in food and energy prices.

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16
Q

Trimmed Mean (CPI)

A

The prices of all CPI items but removing the top 15% of goods and services whose prices increased the most and the bottom 15% of goods and services whose prices increased the least.

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17
Q

Deflation

A

A sustained decrease in the general or average price level. This means that prices on average are falling, but it occurs relatively infrequently in Australia.

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18
Q

Disinflation

A

Refers to fall in the rate of inflation. For example, if Australia’s rate of inflation falls from 4% in year 1 to below 2% in year 2, prices on average are still rising over the period (i.e. inflation still occurs), it’s just that prices are not rising as rapidly in year 2 when compared to year 1.

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19
Q

Employed (ABS)

A

Over 15 years of age and working more than one hour per week in return for some form of measurable remuneration (such as wages)

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20
Q

Unemployed (ABS)

A

Over 15, without work or working for less than one hour per week, and actively looking for (more) work.

21
Q

Goal of full employment

A

The lowest rate of unemployment that can be achieved without running into excessive inflationary pressure. Often referred to as the NAIRU, and is currently considered to be 4.5%.

22
Q

Non Accelerating Inflation Rate of Unemployment (NAIRU).

A

An unemployment rate of approximately 4.5% . Any attempts to target unemployment rates below 4.5% are likely to stimulate inflation to unacceptable levels.

23
Q

structural unemployment

A

where the skills of the unemployed do not match the skills required by industry.

24
Q

seasonal unemployment

A

occurs for some workers, but only at certain times of the year e.g. fruit pickers, ski instructors, etc.

25
Q

frictional unemployment

A

A type of unemployment that occurs when workers are between jobs, eg, contractors

26
Q

hard core unemployment

A

Being without paid work, and/or have been looking for work, for a year or more.

27
Q

Labour force

A

Those people aged 15 and over who are willing and able to work. The labour force therefore comprises both those that are employed and those that are unemployed (i.e. actively seeking work but unable to find a job)

28
Q

Participation rate

A

The percentage of the working-age population in the labour force (that is, the percentage that is either employed or looking for work)
The rate tells us what proportion of our potential labour force is actually in the labour force.

29
Q

Unemployment rate (U/E)

A

Represents the proportion of the labour force that are not employed (i.e not working for more than one hour per week)

30
Q

Hidden unemployment

A

When people who are not members of the labour force, would actually prefer to be working, but are not actively seeking employment because they are discouraged about their employment prospects.

31
Q

Real GDP per capita

A

real GDP divided by the total population of a country

32
Q

Real GDP

A

GDP expressed in constant, or unchanging, prices

33
Q

Chain volume GDP

A

Refers to the market value of goods and services produced by Australia, adjusted to remove the effect on the value of national production caused by changes in prices against a reference year.

34
Q

Aggregate Demand

A

the total demand for final goods and services in an economy at a given time

35
Q

Aggregate Supply

A

the total amount of goods and services in the economy available at all possible price levels

36
Q

Material living standards

A

standards that can be easily measured in terms of income per person, or consumption or purchase of goods and services

37
Q

Non-material living standards

A

The aspects of a person’s quality of life that cannot be measured by monetary factors.

38
Q

business cycle

A

Fluctuations in economic activity, that result in expansions and contractions in rates of economic growth

39
Q

Structural Unemployment

A

unemployment that occurs when workers’ skills do not match the jobs that are available

40
Q

Cyclical Unemployment

A

unemployment that rises during economic downturns and falls when the economy improves

41
Q

Frictional unemployment

A

A type of unemployment caused by workers voluntarily changing jobs; unemployed workers between jobs.

42
Q

Participation Rate

A

The percentage of the working-age population in the labor force (that is, the percentage that is either employed or looking for work)

43
Q

Underemployment

A

The number of people who work part time that would be able and willing to work full time jobs

44
Q

Living Standards

A

The level of income, comforts and services available, generally applied to a society or location, rather than to an individual. Standard of living is relevant because it is considered to contribute to an individual’s quality of life.

45
Q

Leakages

A

Withdrawals from an economy’s circular flow which include savings, taxes, and imports

46
Q

Injections

A

Additions to an economy’s circular flow which include investments, government spending, and exports

47
Q

graphs: circular flow model, business cycle & AS/AD curves

A

connections to diff things 3

48
Q

consequences of not achieving low & stable inflation

A
  1. Erosion of purchasing power
  2. Loss of international competitiveness
  3. Delayed consumption - low inflation
  4. Unemployment - low inflation

econ 3/4 (5 decks)

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