Commerce Topic 3

GDP

Gross Domestic Product

Gross Domestic Product

Total Goods and Services Sold within a Country's Economy

GDP Formula

Consumption + Investment + Government Spending + (Exports - Imports)

GDP per Capita

Real GDP divided by the Country’s Population

Unemployment

When people who have been looking for a job but don't have one

Unemployment Rte

Unemployed/Labour Force \* 100

Labour Force

Employed + Unemployed

Underemployment

Someone who is overqualified for their current job position

Frictional Unemployment

When people entering the workforce for the first time or are between jobs because they’re looking for a better job

Structural Unemployment

When people lose their jobs due to their job being removed from the economy usually due to technology

Seasonal Unemployment

When people lose their jobs because the job is temporary due to it being season-based work

Cynical Unemployment

When people lose their jobs due to a recession or due to a contracting economy

Inflation

The steady increase of prices of goods and services of a period of time. It is measured as the change of prices over time.

CPI

Consumer Price Index

Use of CPI

Measure Inflation

Calculate the CPI

Measure the 'average' retail price of a 'basket' of local and imported goods and services that represent a HIGH proportion of what Australian households are spending their money on.

4 Stages of the Business Cycle

1. Expansion
2. Peak
3. Contraction
4. Trough

Recession

When output has fallen for a period of time (6 or more months). An extended trough

Monetary Policy

The monetary policy is a macroeconomic policy which is carried out by Australia's central bank (RBA). The monetary policy is to influence the economy, whether it'd be speeding up or slowing down the economic growth

Fiscal Policy

The fiscal policy summarises the government's spending commitments and collection of taxes from households and businesses.

ABS

Australian Bureau of Statistics

RBA

Reserve Bank of Australia

Macroeconomics

the big picture of the whole economy and looks at things like economic growth, inflation, interest rates, unemployment

Microeconomics

like looking through a microscope at a particular part of the economy such as a market, business, or individual

GDP Formula

= Consumption + Investment + Government Spending + (Exports - Imports)

Monetary Policy Tool

Cash Rate Target

Fscal Policy Tool

Taxes

Economic Growth

The increase in the size of a country’s economy over a period of time

Nominal GDP

Raw Data GDP (Using Current Prices)

Real GDP

GDP Adjusted for inflation (Conveys purchasing power in constant dollars)

Use of GDP per Capita

Allows economists to determine whether consumption is well distributed across a nation's population