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HASS > Economics 1st half > Flashcards

Economics 1st half Flashcards

(56 cards)

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1
Q

What is a leakage

A

Actions that take money out of the economy causing it to contract

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2
Q

What is an injection

A

Actions that take money into the economy causing it to expand

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3
Q

When does the economy expand

A

When total leakages < total injection

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4
Q

When does the economy contract

A

When total leakages > total injection

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5
Q

What do households give to firms

A

Labour and consumption

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6
Q

What do firms give to households

A

Goods and services and income

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7
Q

What does the financial sector give to firms

A

Investment

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8
Q

What does the financial sector get from households

A

Savings

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9
Q

What does the government sector get from households

A

Taxation

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10
Q

What does the government sector give to firms

A

Govt. spending

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11
Q

What does Australia give to the international sector

A

Exports

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12
Q

What does the international sector give to the Australia

A

Imports

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13
Q

What is GDP

A

Gross domestic products. It is the total value of final goods and services produced in a country in a given time (year or quarter)

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14
Q

What is economic growth

A

An increase in the amount of good and services produced in a country, over a year

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15
Q

What are final goods

A

Only final goods are counted in GDP. Sugar sold to a bakery doesnt count by sugar sold to households does

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16
Q

How do you calculate GDP

A

GDP = Consumption + investment + government spending + net exports

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17
Q

What is consumption

A

Spending by households on goods and services and it is the biggest sector

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18
Q

What is investment spending

A

Spending by businesses on capital goods that increase their ability to produce other goods

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19
Q

What is Government spending

A

When governments spend money on hospitals, schools, defense or welfare

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20
Q

What is GDP per capita

A

The amount of money per person and helps to measure living standards

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21
Q

How do you calculate GDP per capita

A

GDP level divided by population

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22
Q

What are the limitations of GDP as a measure of economic well being

A

It doesn’t take into account for harmful side effects like pollution. Household, voluntary work and second hand sales don’t count and its only an average

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23
Q

What is a quarter

Study These Flashcards
A

3 months in a year eg december quarter is oct, nov and dec

24
Q

What months are in the june quarter

Study These Flashcards
A

april may and june

25
What is the GDP level
The total value produced
26
What is the GDP growth rate
How much an economy grew from on period to the next
27
Why is GDP growth rate better than GDP level
It shows how much an economy has expanded or contracted. GDP level only shows total so it could have decreased
28
What is Inflation
General rise in prices of goods and services in an economy overtime
29
What is cost pull inflation
When the cost of making a product goes up leading to the business charging more for it
30
What is demand pull inflation
When consumers demand more goods and services leading to businesses raising prices as they don't have enough stock to keep up
31
How is inflation measured
Through the consumer price index. The ABS gets a basket of goods and services (1000s of items) and measures how one average the prices of these goods and services changed between one year or quarter. The increase is the inflation rate.
32
What is good inflation
When the inflation rate is in 2-3%
33
What is bad inflation
When it is over 3% because the price of goods might increase faster than people income
34
Who are the winners of inflation
High income earners because there income increase faster than inflation, importers as g&s and cheaper in other countries.
35
Who are the losers of inflation
Low and middle income earners as their money doesn't increase as fast as inflation, exporters as their prices have gone up and they aren't the cheapest, and bank savers as their money isn't worth as much as it was
36
What is deflation
When their is a sustained decrease in the average price level of goods and services
37
What is disinflation
A temporary slow down in the growth of the inflation rate
38
What is hyperinflation
A rapid excessive increase in prices in an out of control manner
39
What is unemployment
Someone who is not employed and is not actively seeking work
40
What is employed
People in a paid job
41
What is the labour force
Total number of workers willing and able to work. Employed+Unemployed
42
What is the unemployment rate
The % of labour force who cant find work
43
What is the formula for unemployment
Unemployed/labour force x 100
44
What are the harms of unemployment for households
Reduced standard of living due to lost income, phycological effects like depression
45
What are the harms of unemployment for the government/economy
Less tax received from workforce means less gov money, increased centrelink payments less gov money and less spending in the economy
46
What is the participation rate
The % of people in the working age population that are in the labour force
47
What is the formula for participation rate
labour force/ working age pop. x 100
48
Why does the australian gov not aim for 0% unemployment
It knows there will always be unemployment eg uni graduates and people changing careers
49
What is the full employment rate in aus
4-5%
50
What is the business cycle
A cycle of increasing and decreasing economic growth overtime
51
What is a recession
When a country has 2 quarters in a row of falling GDP levels
52
What are the 4 phases of the business cycle
Expansion, peak, contraction and trough
53
What happens in the expansion phase
The economy is growing, inflation increasing, unemployment is slow, wages are growing and production is increasing
54
What happens at the peak
Where expansion turns into contraction, economy grows out of control causing high inflation
55
What happens in the contraction phase
Economy shrinking, inflation is low, unemployment is high, wages are growing very slowly, production is falling
56
What happens at the trough
Where contraction turns into an expansion, economy starts to recover

HASS (3 decks)

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