Economics - Chapters 12.1-12.4 Flashcards
(34 cards)
Define GDP:
Gross Domestic Product.
It measures total value of all goods and services produced within an economy over the course of 12 months.
Define GDP Per Capita:
A measure of a country’s economic output that accounts for its number of people.
Divide country’s GDP by its total population
What does GROSS mean?
Total
What does Domestic mean?
Production within a country
What does Product mean?
Goods and Services.
What is Economic Growth?
An increase in the amount of goods and services produced per person within a specific period of time.
How is Economic growth measured?
By using the three indicators; GDP, Inflation and Unemployment rate.
By comparing one year’s indicator percentage (Eg GDP) to the pervious year’s percentage. The percentage change is the level of economic Growth or Contraction in a country. -
What is a Recession?
It is when 2 or more consecutive quarters of negative growth or economic growth fall occurs
What is a depression?
It when the economic growth decreases for 2+ years and therefore there is mass decrease in available credit, increase in unemployment and little consumer confidence.
What is Inflation?
Inflation is when the general level of prices paid for goods and services over a certain period of time increases.
General rise in prices over time; measured by using a selection of 100 000 goods and services, then they compare prices from this year to the pervious year.
Define CPI
Consumer Price Index is a sample of final products used to measure inflation.
What is unemployment rate?
It it’s the percentage of people who are in the labour force and are unemployed. (The labour force includes those who are unemployed and employed).
Unemployment is the state of looking for a job but being unable to find one due to a variety of factors that must be met.
What is the labour force?
Number of employed and unemployed people within a population who have the ability to work.
Needs to be: 15+ Not a full time student Not part of military service Has the ability to work (no physical disabilities) Works part of 1 or more a week
What are the types of unemployment? Explain them…
- Seasonal unemployment; growing seasons, sales seasons etc
- Cyclical unemployment; changes in business cycles means that jobs are reduced
- Frictional unemployment; transitioning between jobs
- Structural unemployment; replaced or made redundant due to technology advancement
- Hardcore unemployment; lacking the personal skills to be employed anywhere
What is underemployment?
The under use of a worker due to a job that does it use the worker’s skills or is a part time, leaves the worker idle
What is the Poverty line?
Minimum level of an income deemed adequate in a particular country
What is Youth employment?
15-24 year olds that are unemployed; they don’t have a job but is actively seeking for work
What is Part time?
A form of employment that carries fewer hours (>30hrs) per week than a full time job.
They work in shifts
Why is it important for economic growth?
When there is economic growth them there is a higher production of goods and services and more employed people
-Employment means a Greater income which means More spending -> greater spending and a greater spending will increase living standards of citizens.
If the there is a negative growth or a contraction in the economy then it means decrease in available credit, increase in unemployment and little consumer confidence.
Decline in goods and services produced— decline in the number of people being employed and the wages they are paid and which means less spending and a decrease in living standards.
What are the limitations of GDP?
Limitations
- it is a measure of a Single factor in the economy
- it is Not evenly distributed through all members of society
- there is Social/environmental consequences of producing more goods and services
What is the target rate of GDP? What is the Current rate of GDP?
Targeted rate: 3.25-3.5%
Current rate: 2.3%
What is a quarterly?
3 consecutive months of the year ...
Eg January - March,
April-June,
July-September
October-DecemberWhat causes inflation?
- consumers feeling confident about their income and employment in the future
- businesses feeling confident about the future - expand business operations-> employ more staff->
- trading partner countries of Australia performing well and demanding the economy’s exported goods and services
- lower taxes
- relatively low interest rates
Who are the Inflation winners?
Winners
- High-income earners: income increases at the same rate or faster than inflation
- Borrowers: Borrow with a fixed interest rate, purchase now
- Importers: Price of imported goods are cheaper than those locally produced
