Economics

Opportunity cost

The value of the second best alternative.

Employed

A person who is working and has been paid for one hour or more in their job, business or firm.

Unemployed

Someone who is willing and able to work but cannot find a job.

Not employed

Someone who is not willing to work and not actively looking for one.

Underemployed

A person who is a part time or casual worker and they work for less than 38 hours a week, but would like to work more.

Labour Force

Represents all potential workers in Australia.

Structural Unemployment

Occurs because of structural changes within the economy caused by changes in technology or the pattern of demand for goods and services.

Cyclical Unemployment

Occurs with changes in economic activity over the business cycle.

Frictional Unemployment

Represents the people who are temporarily unemployed as they change jobs.

Seasonal Unemployment

Occurs at predictable and regular times throughout the year due to seasons.

Inflation

A persistent and appreciable rise in the general level of prices of goods and services.

CPI

Measured by calculating the average percentage price increases of a ‘basket’ of consumer items typically used by Australian households.

Demand pull inflation

Occurs when the total demand is greater than the total supply.

Cost push inflation

Occurs when rising costs of production are passed on to consumers.

Economic growth

The increasing capacity of the economy to satisfy the wants of its members.

GDP

The total dollar value of all final goods and services produced over a specific time period.

Natural Resources

Resources produced by nature including plants, water resources and landscapes.

Infrastructure

Includes buildings, machinery, energy provisions, and transportation and communication networks.

Leakage

Money flowing out of the economy.

Injection

Money flowing into the economy.

Business cycle

An economic model showing fluctuations in the level of economic activity over time.

Boom

The peak of the business cycle where economic activity is above average.

Downswing

When economic activity is decreasing.

Recession

Occurs when economic growth decreases for two or more quarters (six months or more) in a row.

Upswing

The phase where the level of economic activity is increasing.

Trough

Occurs when production reaches its lowest level, involving negative rates of economic growth.

Productivity

Measures what can be produced (output) from a given amount of resources (input).

Labour Productivity

Measures the amount of goods and services that a worker can produce in a given amount of time.

Capital Productivity

Measures the amount of goods and services produced using a fixed amount of capital in a given amount of time.

Wealth

A stock of assets accumulated over time through savings, investment, and inheritance.

Income

The flow of income payments (salaries and wages).

Lorenz Curve

An effective way of showing the distribution of income within and between countries.

Gini Coefficient

Examines how the distribution of income varies between sectors of the population.

Economic Indicator

A key statistic that indicates the direction of an economy.

Standard of Living

Refers to the amount of wealth, comfort, and necessities that a particular individual, society, or country has.

Unemployment target rate

4-4.5%

Current Unemployment

4%

Target rate for inflation

2-3%

Current Inflation

2.4%

Target rate for economic growth

3-3.5%

Current economic growth

0.8%