✨ Economics Assessment 2✨

Fiscal Policies

The use of government spending and taxation to influence economic activity, resource allocation, and income distribution.

Discretionary Fiscal Policy

Non-discretionary Fiscal Policy

Surplus

Deficit

Monetary Policy

Role of the RBA

Objectives of the RBA

Transmission Mechanism

Progressive Taxation

A tax rate that increases as taxable income increases. It imposes higher-income earners with higher tax rates than lower-income earners.

Advantages of Progressive Taxation

Reduces income inequality, funds important government initiatives, and lower tax burden for low-income earners.

Disadvantages of Progressive Taxation

Discourages high-income earners and investment and potentially disincentives hard work and innovation.

Direct Tax

Tax that is determined by a person’s income, wealth, and assets. The burden of direct taxes cannot be shifted to other people by the taxpayer.

Indirect Tax

Imposed tax on expenditures of goods and services consumed. The burden of indirect tax can be shifted to a party other than the one on whom the tax is levied.

Price Stability

A concept in which there is a gradual and sustainable rise in the general price of goods and services in an economy without the experience of significant deflation or hyperinflation. 

GDP - Economic Growth

The measurement of the total value of all goods and services Australia produces over a year.

Unemployment

The percentage of people in the labour force who are unemployed.

Leading Indicators

A measurable set of data that may help to forecast future economic activity. They can be used to predict changes in the economy before the economy begins to shift in a particular direction.

Lagging Indicators

A measurable factor that changes sometime after its correlated economic, financial, or business variable changes. They can clarify and confirm a pattern that is occurring over time.

Coincident Indicators

A measurable factor that changes/occurs at approximately the same time as the conditions they correlate to.They are used primarily for real-time monitoring and assessing the current state of the economy.