Economics

Trade

The buying or selling goods and services.

Imports

Goods and services purchased from other countries to be sold in Australia.

Exports

Goods and services purchased by other countries from Australia.

Tariff

A tax imposed on the imported goods or services.

Absolute Advantage

The ability of a country to produce a larger volume of goods/services with fewer inputs compared to another country.

Comparative Advantage

The ability of a country to produce a good/service at a lower opportunity cost compared to another country.

Benefits of Trade

Access to cheaper and more diverse goods, as well as higher standard of living and economic growth.

Costs of Trade

Loss of employment and exploitation of workers, as well as environmental degradation.

Migration

The movement of people from one country to another.

Opportunity Cost

The value of the next best alternative that is foregone.

Foreign Investment

The flow of money from another country to Australia for the purpose of investing.

Free Trade Agreements

Pacts between countries that make it easier to trade goods across national boundaries through removing barriers to trade (tariffs and quotas).

Linkages

Economic interactions between countries that include trade, foreign investment, and movement of people (tourism, migration, education).

Circular Flow of Income

An economic model that describes the flow of money through the economy with key sectors such as households, firms, the Government, financial institutions, and the overseas sector.

Leakages

The savings, taxes and import spending that remove spending from the circular flow of income.

Injections

The investment, government spending and export revenues that add spending to the circular flow of income.

GDP Growth

A coincidental economic indicator that provides information on the growth of Gross Domestic Product (output) in an economy. Australia's GDP growth target is 3-4%.

Inflation Rate

An economic indicator which states the percentage increase in the price level of goods and services from one year to the next. Australia's inflation rate target is 2-3%.

Unemployment Rate

The percentage of the labour force that is unemployed (labour force being people who are willing and able to work). Australia's target unemployment rate is 5%.

Fiscal Policy

Government policy that attempts to manage the economy by controlling taxing and spending.

Sustainable Economic Growth

A government economic objective that seeks to achieve stable economic growth that can be maintained over the long term.

Price Stability

A government economic objective that seeks to achieve stable prices through an inflation rate of 2-3%.

Full Employment

A government economic objective that seeks to ensure that everyone who is willing and able to work can find employment through an unemployment target rate of 5%.