Economics Flashcards
(41 cards)
Explain what is ‘consumer sovereignty’.
Consumer sovereignty relates to the question: ‘what shall we produce?’ It is the power of consumers to ‘pick winners’ from goods and services that is offered. Consumers of an entire community eventually decide what is to be produced.
Name the 3 questions of economics:
What shall we produce?
How shall we produce it?
To whom shall we distribute the goods and services that we produce
Describe the two approaches to producing goods and services.
#1: Labour intensive. During production process, more physical labour was used to create goods and services. #2: Capital intensive. During production process, more machinery is used.
Name the 4 factors of production:
Land, labour, capita, and enterprise
What is GDP? Is it a good measure of growth?
GDP is the total monetary value produced in an economy over a year. No, because it ignores factors such as environmental sustainability, equality (GDP per capita), destruction and social cohesion.
Rate of inflation is measured by_______
Consumer Price Index
In Australia, the government’s target rate of inflation is ______%.
2% to 3%
Describe & give example of ‘Frictional Unemployment’.
Temporary unemployment or being between jobs (eg. season unemployment)
Describe & give example of Structural Unemployment.
Changes in labour force renders skills obsolete.
Workers do not have a transferrable skill, and the job won’t return. (e.g. technological unemployment: when workers get replaced by machinery)
Describe ‘Cyclical Unemployment’
Caused from a recession
Demands for goods and servives fall, demand for labour falls and workers are fired. AKA ‘demand dificient unemployment.
Name and describe 2 reasons for a rise in inflation.
Cost-push inflation: relates to increased cost of inputs (like raw materials, iron/gold) which forces people who use these materials to make goods and services to raise their prices for consumers.
Demand-pull inflation: AKA ‘too much money chasing too few goods’. This is where consumer demand for goods and services outstrip the goods and services, forcing prices to rise.
Describe 2 effects of rising inflation.
It benefits people who have wealth-producing assets that appreciate in value.
You get less ‘purchasing power’ with the money you own.
Define ‘unemployment’.
A situation that arises when people of working age Only actively looking for a job, but cannot find one.
What is current rates of unemployment in Australia?
5.5%
Name 2 effects of Unemployment.
Economic GDP decreases. There are less workers in the labour forces, and production of goods and services go down. Opportunities are lost.
Reduced purchasing power leads to a decrease in economic activity. It may fuel another cycle of unemployment.
Socially–it impacts people’s self-esteem and well-being. They get isolated from others and develop a sense of shame or depressoin (especially in countries where work ethics are strong).
List a few benefits of economic growth.
- increased employment
- increased incomes
- increased purchase power
- increased consumer demand
- increased business investment
Business Cycles are identified as having 4 distinct phases, name them:
Trough, upswing, peak, downswing
When does financial year begin in Australia?
July 1st
Define the ‘fiscal policy’.
When the government adjusts its spending levels and tax rates to monitor and influence a nation’s economy, as well as managing the annual budget, it is called the fiscal policy.
Name the non-budget policies that governments use to manage the economy.
Fiscal policy Productivity Monetary policy Macroeconomic policy Workplace training policy
Why do governments regulate business activity?
Business activity is regulated so owners don’t get caught colluding with other businesses to charge unreasonably high prices for consumers. The environment and society is kept safe and living standards are kept up.
What is productivity?
People earning more in less time, or produce more.
What does UNHDI stand for?
United Nations Human Development Index.
Describe the shape of an ‘expanding population pyramind’.
Has a triangular shape, which has a large base with a narrowing tip.
