Economics, Fiscal and Monetary Policy, and Market Performance

Vocabulary practice flashcards covering macroeconomic indicators, fiscal policy, taxation, monetary policy, government wealth redistribution, and business productivity.

Economic Performance

A measure of how well an economy is performing based on whether it is achieving its economic objectives, assessed using indicators such as unemployment, inflation, and economic growth.

Standard of Living (SOL)

The total amount of wealth, comfort, material goods, and necessities possessed by a particular individual, society, or country.

Fiscal Policy

The government's use of its budget—specifically revenue collection and expenditure—to influence the economy and achieve economic objectives.

Budget Deficit

A budget outcome that occurs when government expenditure exceeds government revenue; typically implemented during an economic downturn to stimulate employment, income, and economic growth.

Budget Surplus

A budget outcome that occurs when government expenditure is less than government revenue; typically run during strong economic periods to pay off debt or save funds for future downturns.

Direct Tax

A tax paid straight to the government by the individual or institution upon whom it is levied, such as personal income tax.

Indirect Tax

A tax collected by a third party on behalf of the government, such as the Goods and Services Tax ($\text{GST}$) or tariffs, where the economic cost is shifted onto consumers.

Personal Income Tax

A direct, progressive tax levied on individuals' salaries, wages, dividends, and interest, where individuals pay a higher percentage of tax as their earnings rise.

Company Tax

A direct tax applied to company profits, currently levied at $30\%$ for large corporations and $27.5\%$ for small businesses.

Goods and Services Tax (GST)

A $10\%$ indirect tax levied on the purchase price of almost all goods and services sold in Australia, collected by businesses and passed on to consumers.

Disposable Income

The amount of income remaining for an individual after subtracting personal income tax payable ($\text{Disposable Income} = \text{Income} - \text{Tax Payable}$).

Average Rate of Tax (ART)

The proportion of total income paid in tax, calculated using the formula $\text{ART} = \frac{\text{Total Tax Paid}}{\text{Income}} \times 100$.

Externalities

The unintended positive or negative side effects of producing or consuming goods and services, which governments attempt to manage by holding producers or consumers accountable for costs.

Sugar Tax

A targeted tax applied to foods and beverages with added sugar designed to reduce consumption and encourage manufacturers to lower sugar content; proposed but not introduced in Australia.

Tobacco Tax

An excise tax on tobacco products collected from manufacturers and retailers to discourage use and curb public healthcare costs; it is increased twice a year and comprises the largest portion of retail price in Australia.

Monetary Policy

Actions undertaken by the Reserve Bank of Australia to alter the cash rate in order to influence interest rates and meet national inflation targets.

Reserve Bank of Australia (RBA)

Australia's government-owned central bank that sets the official cash rate to control inflation and stabilise the economy, operating independently of political parties.

Cash Rate

The official interest rate set by the Reserve Bank of Australia that commercial banks pass on to consumers and businesses; it shares an inverse relationship with inflation and economic activity.

Expansionary Monetary Policy

A policy approach where the Reserve Bank of Australia lowers the cash rate to reduce interest rates and borrowing costs, stimulating consumption, business investment, and economic expansion.

Contractionary Monetary Policy

A policy approach where the Reserve Bank of Australia raises the cash rate to make borrowing more costly, intentionally cooling down spending, investment, and inflation.

Transfer Payments

Government welfare payments reallocated from taxation revenue to low- or zero-income recipients to ensure basic survival and reduce income inequality.

Age Pension

An Australian income support payment available to eligible citizens aged $67$ who satisfy asset/income thresholds and have resided in Australia for $10+$ years; relied on by $70\%$ of Australians aged $65+$.

JobSeeker

An Australian income support and unemployment benefit payment provided to individuals without work while they actively search for employment.

Medicare

Australia's universal public health insurance system that provides free or subsidised medical treatments, funded through a dedicated Medicare levy on personal income tax.

Minimum Wage

The lowest legally allowable rate of pay that employers can provide to their workers, set at an hourly rate of $\$24.10/\text{hr}$ before tax in $2025$.

Productivity

A measure of efficiency calculated as output produced per unit of input; higher productivity involves producing more output using the same amount of inputs.

Output

The total volume or quantity of goods and services produced within an economy or business, which can rise simply by deploying additional inputs without increasing efficiency.