Macroeconomics Flashcards
(24 cards)
Material living standards
Tangible Living standards measured by access to goods and services
Non-material living standards
Aspects of a persons quality of life that can not be measured by monetary factors
eg: air quality, crime rate
Economic growth
Economic Growth in an economy is defined as the rate at which economic activity grows over time.
GDP
GDP is the final value of the goods and services produced during a specified period of time, normally a year.
GDP per capita
GDP divided by the size of the population
Nominal GDP
Nominal GDP measures a country’s gross domestic product using current prices, without adjusting for inflation.
Real GDP
Real GDP is a measurement of economic output that accounts for the effects
of inflation or deflation.
5 Limitations of GDP
- excludes non-marketed production
- Uses inaccurate guesses of some types of production
- Does not account for negative externalities
- Does no measure quality of goods and services
- Does not measure the way goods services and incomes are distributed
Alternate measures of national growth / living standards
MAP (measurement of Australia’s progress)
GPI (genuine progress indicator)
HDI (human development index)
GNH (gross national happiness)
MAP ( Measures of Australia’s progress )
Collection of measures published periodically by the ABS
four main categories: Society, Economy, environment m and governance
HDI ( Human development index )
Index created by combining range of economic and social indicators but DOES NOT COUNT ENVIRONMENTAL EFFECT
1= highest 0 = lowest
-GDP per capita, life expectancy, education standards, adult literacy rates
Productivity
The volume of output (Real GDP) produced from a given input
Monetary policy
RBA decisions to manipulate interest rates to encourage or discourage saving/ borrowing money
Budgetary / Fiscal policy
Government decisions on taxation and spending ( expansionary or contractionary stance)
Economic prosperity
Having high incomes per person and being able to consume more goods and services now and into the future avoiding inflation
Issues with economic prosperity / growth
Can lead to structural unemployment
Can accelerate inflation and reduce purchasing power
can limit future economic growth
Environmental sustainability
Preservation of natural environment into future using sustainable and renewable practices to mitigate environmental harm.
Sustainable economic growth
Expanding an economy’s production levels without impairing ability of future generations to meet their own needs
Common access resources
Resources we all share and depend on
Eg: air, oceans, climate, ecosystems
Inter temporal efficiency
Development that meets the needs of the present without comprising the ability of future generations
Environmental policy + examples
Any policy designed to protect the physical or natural environment from damage and depletion
- regulation + legislation
- market based approaches
- direct action
Regulation and legislation
Environmental protection and biodiversity conservation act (1999)
-laws and guidelines to asses environmental impacts of developments
projects require proof that benefit > cost
Market based approaches
involves gov action to provide businesses / consumers
financial incentives and subsides to support environmental sustainability
or taxes and fines to penalise unsustainable practices
-Eg: carbon tax, subsidies, ETS
Direct action
Direct action by government to promote or fund projects which minimise impact on environment
Eg: investment in planting trees or environmental funds
