Humanities Flashcards
(34 cards)
Define Inflation
The overall increase in the prices of goods and services within a country
Why is high unemployment bad for the government?
As the government collects less tax and pays out more benefits
What are some consequences of high unemployment
Reduced standard of living, loss of skill from the workforce, psychological effects of not working such as depression
What is CPI
Consumer Price Index
What is the governments target unemployment rate?
5%
What are the three main reasons for unemployment
- Frictional unemployment
- Structural unemployment
- Seasonal unemployment
What does frictional unemployment mean
The time when someone is looking for work
What does structural unemployment mean
Mismatch in workers skills against the needs of the nation
What does seasonal unemployment mean
unemployment caused by seasonal patterns in activity (for example harvesting crops or tourism)
What does GDP stand for
Gross (Total)
Domestic (Home)
Product (Produced goods and services)
How long is an economic quarter
3 months
What is the level of economic growth aimed for?
2-3% per year
what is a recession?
when growth falls for more than two quarters in a row (6 months)
what is the problem with using GDP as a measure of economic performance?
It can rise because if price increases, this is not necessarily because of increased productivity. GDP does not take this into account
What does GDP measure
GDP is a measure of the total value of all goods and services produced in Australia over the period of a year.
Explain the importance of an economic growth rate of at least 2%
If more goods and services are being produced it means that more people are being employed to make them. People are then able to spend their wages on a wider variety of goods and services that may impose their living standard.
What is inflation
a general increase in prices and fall in the purchasing value of money
Define interest rates
Reward for lending or cost of borrowing
Define expenditure
Funds spent
What is the CPI
It is the method of working out inflation rate
What do stronger/ higher demand for goods and services lead to?
Supply shortages
Prices increase to slow demand
Higher prices means people have to spend more
What is our current economic growth rate and target rate
Current rate: 2.3%
Target rate: 3.25-3.5%
What is our current and target inflation rate
Current: 1.3%
Target: 2-3%
What is our current and target unemployment rate
5%
5%
