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Underlined Refer to Movement of Wealth between sectors: h=household, f=firms. There's also a separate glossary set.
Five Sectors of the Circular Flow Model?
Household, Firms, Financial, Government and Overseas Sectors
Circular Flow Model?
A model that shows the connections between the five different sectors of an economy.
Household Sector
It is made up of consumers, who hold economic resources such as income (f), land, capital, etc. in order for the consumption (f) of goods and services.
Firms Sector
It is made up of businesses and enterprises that use economic resources (h) from households to produce goods and services (h).
financial sector
It is made up of financial institutions that act as intermediaries between the savers and borrowers in an economy. They receive the savings (h) of individuals and businesses and then lend this money to others who need to borrow money for investments (f).
government sector
Refers to local, state, and federal governments who collect taxes (t) and allocates that money elsewhere as government expenditure (f).
Overseas Sector
Overseas parties that trade with Australian businesses and individuals through importing (h) and exporting (f) goods.
Australian Securities and Investment Commission (ASIC)?
The commission that regulates the conduct of Australian companies, financial markets, financial services organizations (including banks, life and general insurers, and superannuation funds), and professionals who deal in and advise on investments, superannuation, insurance, deposit-taking and credit.
Reserve Bank of Australia
Australia’s central bank and onducts the nation's monetary policy and issues its currency. It seeks to foster financial system stability and promotes the safety and efficiency of the payments system.
Australian Competition and Consumer Commission (ACCC)?
A commission that regulates businesses to follow the Competition and Consumer Act and promotes competition and fair trading and regulates national infrastructure to make markets fair for everyone.
booms and busts of the business cycle
These are periods of high and low economic activity and make up the business cycle.
recession
A period for six months or longer when the economy becomes retracts and becomes smaller.
depression
More severe than a recession with high rates of retraction over a longer period of time.
contractions and expansions
The fluctuation of the business cycles between booms, recession and depression either as retractions or growths.
features of a contraction
Falling levels of production, Decreasing consumer spending, Rate of inflation falls, wage rates falls, lowering interest rates, unemployment rises.
features of an expansion
Rising levels of production, increasing consumer spending, Rising rate of inflation, Rise of wage rates, rising interest rates, unemployment falls.
characteristics of a recession
Low income and production, high unemployment, low inflation rate, consumer demand, business sales and profits are at a low level, unused resources, low interest rates.
demand
A consumer's desire to purchase goods and services and willingness to pay a specific price for them.
supply
refers to the quantity of a good or service that businesses are willing and able to offer for saleata given price, at a given point in time.
Law of Demand
The quantity of a good or service demanded varies inversely to price.
Law of Supply
The quantity of a good or service supplied varies directly with price.
Factors that cause a change in demand
Consumer income, consumer preferences, size of population, substitute goods, complementary goods, expected future price
market equillibrium
The point at which buyers and sellers agree on a price and exchange the good or service for money.
market
A situation where buyers and sellers come together to exchange goods and services.
types of markets
Retail (shops), Labour (Hiring Signs), Financial (Banks) and Stock (ASX)
Reasons Aboriginal and Torres Strait Islander people Traded
Aboriginal and Torres Strait Islander people traded to improve their standard of living by obtaining items that were not available in their area.
Trade Routes of Aboriginal and Torres Strait Islander people
Aboriginal and Torres Strait Islander people created exchange routes that follow rivers, or multiple watering holes. These routes often intersected with multiple people taking in different sections of the route.
Items Aboriginal and Torres Strait Islander people traded
Before European settlement, Aboriginal and Torres Strait Islander people traded many valuables such as shells, pearls and special stones. They were used to ornaments and jewellery. They also traded ochres for paint and decorations, tools, ceremonial items and foods such as fish, crab, turtle, eggs and yams. Besides goods, they also traded rituals, chants, ceremonies, ideas and words (literally).
Aboriginal and Torres Strait Islander Cultural Knowledge in the Economy
There have been many Indigenous enterprises and businesses established in recent times. They mainly consist on arts and craft, cultural tourism, land management, finance, mining and Indigenous education.
Reasons for Government Intervention in the Market?
Environmental Degradation, Conservation of Natural Resources, Socio-politically Offensive
Types of Businesses
Online, On-demand, Micro, Small, Medium, Large, Global, Government, Not-for-Profit and Offshore Businesses
Online Business
A business which runs some or all of its business using the internet.
On-Demand Businesses
Businesses that use technology to maximize consumer convenience. (Uber Eats)
micro business
a business with fewer than five employees.
small business
business with 5 to 19 employees.
medium business
business with 20 to 199 employees.w
large business
business with 200 or more employees.
global business/transnational corporation(TNC)
a large company that has branches in many different countries.
Offshore Business
A business that utilises other countries regulations by creating a branch to take advantage of cheaper production costs.
government businesses
government-owned and operated. They provide essential community services such as health, education, roads and welfare.
Not-for-Profit Business
A business provides services to the community and does not earn a profit for its owners. All of the money earned from donations or running the business must go back into the services the business is providing to the community. Typically, most not-for-profit businesses receive tax concessions, meaning they do not pay as much tax as other types of businesses.
Globalisation
the process by which the world is becoming increasingly interconnected as a result of increased trade and cultural exchange.
positives of globalisation
Expanded markets, cheaper materials, access to labour
negatives of globalisation
Increased competition, cheaper imported products, environmental and social issues.
Innovation of Technology
technology has increased efficiency and lowered the production costs for businesses, while globalisation has allowed businesses to sell their products worldwide and get their products produced in other economies, but has increased competition.
corporate social responsibility
When businesses consider the interests of stakeholders, society and the environment when making economic and business decisions.\
benefits of having an ethical business
Corporate social responsibility is good business — customers eventually find out which businesses are acting responsibly, and which are not. Customers can react and stop buying a business’s product if they learn that the business is exploiting employees, accepting bribes or polluting the environment. At the same time, customers will reward socially responsible businesses by purchasing more of their products. Acting in a socially responsible way may cost money in the short term, but in the long run it turns out to be in the company’s own interest.
innovation
Either adding a new product to an existing product line, or significantly improving an existing product or process the process of creating a new or significantly improved product, service or process (way of doing something.
entrepreneur
A person who is willing to take a risk and has the qualities required to turn an idea into a successful businessC
Causes of the Great Depression
Stock Market Crash of 1929, Banks Failing with $7 Billion Worth of Assets, Extremely Low Consumer Confidence, Collapse of World Trrade and Collapse of Money Supply
Injections
Putting money into the economy
Leakages
Taking money out of the economy or unutilised money (savings)
Note
Flashcard