unit 2 sac 1 Flashcards
(39 cards)
define aggregate supply
the total volume of goods and services that producers are prepared to supply to the market. it represents the ability of an economy to produce the goods and services vital to meeting aggregate demand. boosting aggregate supply will increase the nations productive capacity.
state the factors affecting future rates of economic growth
ageing population and labour force participation
define labour force participation
the ratio of the labour force relative to the size of the working age population. the labour force includes all individuals employees or actively seeking employment
define ageing population
an ageing population will decrease the labour force participation rate. with less people of the working age, shortages of labour will become more common, economic growth will decrease while government expenditure on aged care will increase.
strategies to combat an ageing population
population (immigration), participation (policies to keep workers in the workforce longer), and productivity (fostering innovation and technology, building infrastructure to boost productivity)
define aggregate demand
the total annual value of spending by households, governments and net overseas transactions on Australian made goods and services. AD is made up of consumption, investment, government spending and exports minus imports
formula for AD
AD=C+I+G+X-M
consumption
spending by households on goods and services
investments
spending by businesses on plant and equipment
government expenditure
public consumption or public investment spending by governments
define economic activity
the expenditure, production and income generated in an economy when goods and services are produced and sold. economic activity Is measured by GDP
define economic growth
the rate at which economic activity increases over time. It is the increase in the amount or level of national production. Most commonly measured by the changes in the level of Real GDP
define gross domestic product
GDP is the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time.
economic benefits of economic growth
growth in material living standards, employment opportunities, economic development and non material living standards
define material living standards
involve the Level of economic wellbeing of individuals and the quantity of tangible goods and services available to each person for consumption (financial wellbeing, disposable income)
define non material living standards
refers to quality aspects of a persons daily existence (crime rates, level of pollution, job satisfaction)
define monetary policy
involves the manipulation of interest rates to influence AD and therefore influence the total outcome of the economy. the objective is to promote the economic prosperity and welfare of Australians.
define budgetary policy
the manipulation of the level and composition of federal government receipts and outlays. the goal of budgetary policy is to Improve the welfare and living standards of Australians.
AS policies
used to boost the productive capacity of the economy. generally based on improving quality and productivity for businesses.
examples of AS policies
investment in infrastructure, increase labour participation rates, tax concessions and grants, trade liberalisation
define economic prosperity
focuses on the nations overall health, however also focuses on improving national incomes so that Australians can afford a more prosperous lifestyle
define environmental sustainability
the preservation of the natural environment into the future by ensuring our practices don’t contribute to environmental harm.
define sustainable development
meets the needs of the present without compromising the ability of future generations to meet their needs
define unsustainable development
depletes natural resources and reduces living standards for those in the future
