Economicsss

What is macroeconomics?

Study of the performance of the economy as a whole, focusing on changes in total production, employment and prices.

What are the economic indicators?

Economic growth/GDP, inflation, unemployment

what is economic growth?

An increase in the real output of goods and services produced in a country overtime

What is Gross Domestic Product?

The total value of finished goods and services produced in a country in a single year.

What is the target growth rate for GDP in Aus and why?

3-4%- above 4% is too fast of growth, being unsustainable; below 3% is too slow of growth, making Aus fall behind

What’s the different between real GDP and GDP

Real GDP excludes the affect of changes in prices (inflation)

Why is GDP per capita used?

It is a country’s GDP divided by its population, giving a dollar value for each citizen. It gives a clearer picture of the wealth of the people.

What are some positives of using GDP?

It is a standardised measurement which allows easy comparison between countries; easy to judge change in GDP and track growing in GDP; tool to provide advice to gov.

What are the negatives to using GDP?

Only an economic indicator so it doesn’t show wealth distribution or quality of life; only accounts for legal goods and services, not the black market; can be manipulated to gain increased aid

Long term growth potential is determined by?

Population, productivity and participation

What is population in general terms?

The number of people in the working age population.

What is participation in general terms?

The population of people working out of all the people that can work.

What is productivity in general terms?

The amount of output produced per worker

What is capital deepening?

Rising stock of capital equipment per worker- higher capital:worker ratio

What is the participation rate?

The proportion of the working age that is in the labour force.

What is unemployment?

When people who are willing and able to work have not held a paid job for at least 1 hr/week

What is the unemployment rate?

The proportion of the labour force that is willing and able to work, but had not held paid for for over 1 hr/week.

What are the three types of unemployment?

Cyclical, structural and frictional

What is frictional unemployment?

Leaving a job to find one that could offer more benefits (better pay, more opportunities, etc); naturally occurring

What is structural unemployment?

Changes in the economy (new tech) flow through the labour market as changed demand for knowledge/skills; displaced workers need to retrain.

What is cyclical unemployment?

Follows the business- more workers needed when supply/demand is up and vice versa.

What types of unemployment are voluntary?

Frictional