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Description
Flashcards by Annalise Watson, updated more than 1 year ago
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Created by Annalise Watson
over 6 years ago
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| Question | Answer |
| Market socialist economy | Producers decide what, how, and for who to produce Productive resources are owned by the government on behalf of the people |
| Planned Capitalist | Government determines the how, for who and what to produce Individuals and firms own the productive resources This type of economy does not currently exist |
| Market Capitalist | Producers exchange g & s with consumers in exchange for money Producers decide how, what and for who to produce The majority of productive resources are owned by individuals and firms |
| Planned Socialist | Government determines what, how and for who to produce Production takes place in line with government's short and long term plans Productive resources are owned by the government Emphasis may not be on producing goods and services that people want, but ones that the government sees desirable, like defence |
| What does GDP stand for? | Gross Domestic Product |
| What is GDP? | Gross domestic product is a monetary measure of the market value of all final goods and services produced in a period of time. |
| Why do economists measure GDP and economic growth? | Because they want to monitor growth output of an economy. |
| What is the yearly Australian target for economic growth? | 3-4% |
| Identify two limitations to using GDP as a measure of progress in Australia. | Does not take into account government debt Does not take into account welfare of citizens |
| Define Inflation | The rate at which the general level of prices for goods and services increases. |
| What is the yearly inflation target in Australia? | 2-3% |
| What are the two ways inflation is measured? | Consumer Price Index and Domestic Final Demand (CPI and DFD) |
| Describe how CPI is used as a measure of inflation | The Consumer Price Index measures the general rate at which prices increase, specifically concerning the 'Households'' inflation |
| Describe how DFD is used as a measure of inflation | The chain price index of Domestic Final Demand is used to measure the general rate that prices increase, specifically concerning Businesses and Governments. |
| What are three causes of Inflation? | Rising wages Devaluation in Currency Profit-pushing businesses (As long as you can back it up with proper evidence, anything works) |
| Explain why businesses trying to make more profit might lead to higher inflation rates | Businesses increase their prices or lower the amount of goods or services consumers can buy with the same amount of money, so their consumers need to spend more to purchase the same amount, or will spend the same to receive less |
| Explain why increasing wages might lead to higher inflation rates | Higher wages mean an increase in consumers' disposable income, meaning that producers can push up prices in order to make more profit. |
| Explain why a devaluation in currency might lead to higher inflation rates | If the currency values drop, consumers of international products will have to spend more to purchase the same amount, meaning they make less profit if they use these resources. If this happens producers who rely on international products will have to increase their prices in order to maintain profit |
| Define the term: Unemployment rate | The Unemployment rate is the percentage of a population who are above the age of 15, and who are willing and able to be providing paid work but are not. |
| What is the Unemployment rate target in Australia? | 5% |
| Why is the target Unemployment rate not 0%? | If the Unemployment rate is at 0%, there is no room for economic growth involving new jobs as there would be no one to work them. |
| What are the four types of unemployment? | Seasonal Frictional Structural Cyclical |
| Define and give an example of Seasonal unemployment | Seasonal unemployment occurs when employment opportunities increase or decrease based on the time of year/seasonal periods of activity. E.g. Majority of Adventure World workers only work during the summer season, when it is the busiest |
| Define and give an example of Frictional unemployment | Frictional unemployment occurs when an individual is in the process of changing jobs. E.g. If someone decides to move states, their unemployment position is frictional as they are in between jobs |
| Define and give an example of Structural unemployment | Structural unemployment is the mismatch of skills that workers can offer and what are required by employers. It is also called the 'Skills Gap' |
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