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Economics
The study of how society uses its limited resources. Economics is a social science that deals with producing, distributing, and consuming goods and services.
Supply
The total amount of goods and services available for consumption.
Demand
The desire consumers have for a good or service.
Goods
Things that you can see or touch. (Products and stock)
Services
Activities that are consumed at the same time they are produced.
Scarcity (The Economic Problem of Needs and Wants)
Scarcity is the problem of unlimited wants and needs versus the amount of limited resources we have. It involves having to choose between alternative uses of a resource.
Opportunity Cost
Opportunity cost is the “lost’ alternative use to which the economic resources could have been allocated.
Eg. You choose to use water to wash clothes, so it cannot be used for drinking.
What is chosen: (what you ‘go for’) provides utility.
What is not chosen: (the utility you ‘forego’) is opportunity cost.
Resources
Factors of Production
Land
Natural resources available to be used for production (e.g. - coffee beans)
Labor
The human input into production (i.e.- workers’ skills and efforts)
Capital
Goods used to make other products (e.g. - technology, vehicles)
Natural Resources
Raw materials produced by nature. Many natural resources are non-renewable.
Human Resources
People who contribute physical and mental energy (human skills and efforts) to the production process.
Capital Resources
Tools, equipment, and buildings that are used to produce goods and services.
Firms
The productive sector (service or industry businesses and agriculture) employs resources (such as labor and inputs) and uses them to create goods and services (output).
Households
The consumers of the products and services produced by the Firms. Households provide Firms with the resources (such as labour) that they require. They also provide resources to Firms and earn income (such as salaries and wages) in exchange Firms produce goods and services that they sell to Households.
Financial Sector
Banks and financial institutions accept deposits and use that money to lend to businesses, particularly for expansion, such as purchasing new equipment or moving to larger premises. This spending is called investment. By pooling the savings of many depositors, these institutions provide substantial funds for business growth. They play a crucial role in the economy by channeling savings into investments, which helps businesses grow, create jobs, and boost consumer spending.
Government
Taxation Impact: Tax levels affect consumers' spending power. High taxes can reduce consumer spending, slowing business growth and job creation.
Welfare Support: Tax revenue funds welfare payments, like pensions and unemployment benefits, which boost consumer purchasing power, increasing income for businesses and creating more jobs.
Public Services: The government provides essential services, such as schools and hospitals, funded by taxes from households and businesses.
Infrastructure Investment: Government spending on infrastructure, like roads and schools, supports businesses that undertake these projects, fostering growth and job creation.
Overseas Sector
Australia is an open economy that engages in international trade, exporting goods and services while also importing products from around the world. This trade impacts our market system in several ways:
Market Growth: With a relatively small population, international demand for Australian goods can help local businesses grow and create jobs.
Efficiency and Imports: Some products, especially sophisticated machinery, are more efficiently produced overseas, allowing Australian factories to lower production costs through imports.
Competition with Imports: Imported goods can be cheaper than local products, challenging local producers and sometimes leading to business closures. For instance, the Australian motor vehicle industry has struggled against lower-priced imports, resulting in job losses, even as consumers enjoy lower car prices.
Households and Firms Model
Economic Performance Indicators
GDP (Rate of economic growth)
Unemployment rate
Inflation
Economic Growth Linked with GDP
The country can produce more as the Productive Sector invests in machinery and people.
Incomes rise, giving us more spending power (consumer spending).
Our (Households) increased spending encourages firms to produce more
Hence the economy grows.
Growth in the economy determines the number of jobs available, it therefore has a direct effect on employment levels and the spending power and economic well-being of households.
A statistical measure known as gross domestic product (GDP) is Australia's primary measure of economic growth.
Gross Domestic Product
The monetary value of final goods and services produced in a country in a given period.
Difference between GDP and GDP Per Capita
GDP focuses on total economic output, while GDP per Capita focuses on average output per person, useful for comparing living standards.
High Real GDP per Capita
Countries with higher real GDP per capita, typically have happier people, a higher life expectancy, and a higher HDI (Life expectancy, education, and standard of living.) However, GDP per capita misses the distribution of income.
Limitations of GDP
Income Distribution: This does not show how income is distributed among the population, potentially masking inequality.
Non-Market Activities: Excludes non-market work like household labor and volunteer work.
Environmental Impact: Ignores environmental costs and degradation.
Quality of Life: Does not measure factors like health, education, and overall well-being.
Economic Problems: Can obscure underlying issues such as high unemployment or debt.
Informal Economy: Misses economic activities in the informal or black market.
Short-Term Focus: Can reflect short-term economic changes without indicating long-term health or sustainability.
Unemployment Rate
The unemployment rate is an important indicator of the economy. In Australia, it is measured using the Labour Force Survey. It is a measure of the percentage of the labor force that is currently without work but is actively seeking employment.
Structural Unemployment
Outdated job that workers' skills need to match.
Cyclical Unemployment
When an economy is poor, and employees are laid off.
Seasonal Unemployment
When businesses slow/shut down due to seasonal changes (Snow plowing).
Frictional Unemployment
When a worker moves from one job to another or spends time trying to find a job.
Underemployment
The total number of people in an economy who are unwillingly working in low-skill and low-paying jobs or only part-time because they cannot get full-time jobs that use their skills. They also include people who are discouraged and have stopped searching for employment.
Consequences of Unemployment in an Economy
Low unemployment is key to economic stability. High and long-term unemployment can cause stress in a country in three areas:
Individuals: Unemployed people cannot fulfill their financial obligations and become mentally stressed and even homeless.
Economic Efficiency: Workers can be forced to take less skilled jobs, and accept working fewer hours than they would like - Underemployment
Socio-political stability can be threatened if unemployment remains high, and citizen dissatisfaction can rise to civil unrest, protests, and worse.
Inflation
The sustained increase in the general price level over some time.
It measures the purchasing power of money
If inflation rises this means prices are rising and so your purchasing power falls
Measuring Inflation (CPI)
The CPI (Consumer Price Index) in Australia measures inflation by tracking the cost of a fixed basket of goods and services that households regularly buy. It reflects changes in the total price of this basket from quarter to quarter.
Types of Inflation
Primary Industry
Businesses that extract something. Eg. coal, oil, stone, fish, and ore. The location of these businesses usually depends on where the resources being extracted are found.
Secondary Industry
Businesses that construct or manufacture something. Their location is influenced by government support and the existence of a suitable labor force.
Tertiary Industry
The service sector that supports the other two industries. Services include transport, finance, insurance, training and advertising. Their location will be influenced by the services required by firms in the other two industries.
The Business Cycle
It is the fluctuations in economic activity in an economy over some time. It is usually examined in terms of expansion or growth and recession or contraction of the economy.
Recession
Two consecutive quarters of negative economic growth in real GDP.
Expanding
There is growth in economic activity and employment and production increases.
Contracting
Contractions occur when consumers spend less, businesses produce less, and GDP falls.
Government Intervention Recessions
The government will develop policies and measures to support the economy. Eg. Infrastructure projects, and incentives for businesses to invest and employ people.
Government Intervention Growth Periods
The government needs to manage interest rates and inflation to prevent the economy from overheating (expanding too fast so a crash happens).
Why do changes occur?
Several reasons, and sometimes there is excessive spending or rapid expansion before confidence declines and economic activity reduces as well.
Boom/Expansion
High confidence
High levels of demand create inflation
High capacity utilisation
Low employment
Increased wages
Businesses invest and expand
Business start-ups
Recession
Demand falls
Business confidence falls
Firms reduce investment
Firms reduce levels of output
Unemployment rises
Fewer business start-ups & more business closures
Trough/Depression
Low demand
Low business confidence
Low levels of production
High unemployment
Little investment
Business closures and few start-ups
Recovery
Rising demand and sales
Cautious but increasing business confidence
Unemployment begins to fall
Investment opportunities are considered
Production begins to increase
When and where did the Day of Mourning occur?
When: 26th January 1938
Where: Sydney, Australia
Who organised the Day of Mourning?
Who: Organized by Jack Patten and William Cooper, Political organisation (Australian Aboriginal Progressive Association).
What was the Day of Mourning?
The Day of Mourning, held by Aboriginal Australians marked the 150th anniversary of the First Fleet's arrival and aimed to highlight the injustices faced by Indigenous people. They held a conference and underlined key issues including mistreatment by the Aboriginal Protection Board and the forced removal of children. The event produced a 10-point plan demanding equal rights, including citizenship and property ownership, and concluded with a symbolic walk to La Perouse where wreaths were released into the sea.
This protest followed the formation of the Australian Aboriginal Progressive Association. The Day of Mourning became the first national gathering of Indigenous Australians to protest their treatment.
Effects and Impacts of the Day of Mourning
Promoted future advocacy
Drew attention to the injustices Aboriginal people faced
Contributed to the 1967 referendum
National Sorry Day
Increased formation of groups advocating for rights
When and where were the Stolen Generations?
When: The policies leading to the Stolen Generations began in the late 19th century and continued until the 1970s.
Where: All across Australia
Who was involved in the Stolen Generations?
Government Agencies: Various Australian federal and state governments, including child welfare and social service agencies.
Indigenous Communities: Aboriginal and Torres Strait Islander families, many of whom were directly affected by the removal of their children.
What were the Stolen Generations?
The Aborigines Protection Act 1909 gave the authorities license to ‘provide for the custody, maintenance, and education of the children of aborigines’. “Mixed-race," were forcibly taken from their families under government policies aimed at assimilation.
The removals led to a profound disconnection from family, culture, and community, resulting in lasting trauma for individuals and their communities. Once they had been removed, many Indigenous children were sexually exploited or physically abused and were denied any contact with their families.
Effects and Impacts of the Stolen Generations
The National Apology delivered by Kevin Rudd in 2008.
Increased Advocacy
Ongoing Dialogue
Contributed to the 1967 referendum
When and where did the Bringing Them Home Report take place?
When: The Bringing Them Home Report was commissioned in 1995 and completed in April 1997.
Where: The inquiry took place across Australia, with public hearings in various states and territories to gather testimonies from those affected by the policies of removal.
Who conducted the Report?
Who: The report was conducted by the Human Rights and Equal Opportunity Commission (HREOC), led by Commissioner Sir Ronald Wilson.
Why was the report commissioned?
The report was commissioned to investigate the forced removal of Aboriginal and Torres Strait Islander children from their families, known as the Stolen Generations. It aimed to address the impacts of these policies and to provide recommendations for reparations and healing.
What was the process of the Report?
Inquiry Process: The HREOC conducted a comprehensive inquiry into the policies and practices that led to the removal of Aboriginal and Torres Strait Islander children from their families.
Testimonies: Many Indigenous Australians shared personal stories of loss, trauma, and cultural disconnection.
Documentation: The report compiled historical data, government policies, and the impact on individuals and communities.
What suggestions did the Report recommend?
A National Sorry Day
Establishment of a Stolen Generations Compensation Fund: Financial compensation for those who were forcibly removed from their families.
Support for Healing Programs: Development of programs to assist individuals and families in healing from trauma associated with removal.
Changes to Government Policies: Recommendations for policy reforms to prevent further removals and to promote the rights of Aboriginal and Torres Strait Islander peoples.
Access to Records: Ensuring access to personal records for individuals to trace their family history.
Effects and Impacts of the Bringing them Home Report
Reconciliation Initiatives
Increased Advocacy
Cultural Revitalization
Educational Programs
When and where did the Freedom Rides take place?
When: February 1965
Where: The Freedom Ride traveled through rural New South Wales, specifically visiting towns like Walgett, Moree, and Bourke.
Who was involved with the Freedom Rides?
Who: The ride was organized by a group of students from the University of Sydney, led by Charles Perkins, who was one of the first Indigenous Australians to graduate from university. The participants included both Indigenous and non-Indigenous students.
What were the Freedom Rides?
The journey was intended to be a ‘study tour’ of race relations in Australia, and the poor living conditions that Aboriginal Australians endured. They revealed the segregation in public facilities, eg. Morree pool and cafes. Charles tries to gather children and attempted to gain entry in the pool. It lead to hostile fights and arrests.
They faced significant hostility in some areas, including protests and violence, but they also drew media attention to the issues at hand. forcing Australians to confront the racial tensions and inequity that were still rife in many parts of the country.
Effects and Impacts of the Freedom Rides
Led to the 1967 referendum
Gained worldwide media attention
Protests and advocacy for land rights
Encouraged activism and social justice
When and where did the referendum take place?
When: May 27, 1967
Where: Nationwide across Australia
Who was involved with the 1967 Referendum?
Who: Harold Holt, Joe McGinness, Bill Onus, Doug Nicholls, Kath Walker
What was the Referendum?
The referendum planned for 27 May 1967 would put two proposals to the Australian people:
that Aboriginal people should be counted in the census
that Aboriginal people should be placed under the jurisdiction of the Commonwealth, not state governments so that laws affecting them could be implemented consistently and fairly across Australia.
Both proposals received overwhelming bipartisan support, with a staggering 90.7 per cent of votes in favour.
Effects and Impacts of the Referendum
Legislative changes
National apology
Perception changes
Less institutional discrimination
1992 Land rights movement
When and where did the Wave Hill Walk-off take place?
When: 1966
Where: Wave Hill cattle station in the Northern Territory;
Who was involved in the Wave Hill Walk-off?
Vincent Lingiari, Gough Whitlam
What was the Wave Hill Walk-off?
The Gurindji people's struggle for equality and land rights began with their "walk-off" from the Wave Hill cattle station in 1966, led by Vincent Lingiari. Around 200 Aboriginal stockmen protested against poor wages and working conditions on their traditional land, earning only one-fifth of what non-Aboriginal workers received. Despite previous unsuccessful strikes, this time they garnered support from unions and the media, notably through writer Frank Hardy.
Lingiari's demands included better pay, education, clean water, and self-management of their cattle station. After a failed petition for land return in 1967, Lingiari and the Gurindji continued their protest, which gained national and international attention and put pressure on the government.
Effects and Impacts of the Wave Hill Walk-off
National attention
Pressure on the government
In 1975, Prime Minister Gough Whitlam officially returned leasehold title of the land to the Gurindji, symbolically handing over the earth to Lingiari as a testament to their hard-won rights. Lingiari famously responded, "We're all mates now," marking a significant victory for the Gurindji people after nine years of struggle.
United Nations Declaration of Human Rights and its influence on the U.S Civil Rights Movement
In 1948, the International Community recognised the rights of all peoples by creating the United Nations Declaration of Human Rights.
This inspired the U.S. Civil Rights Movement of the 1950s and 1960s, where key figures and groups protested injustices and segregation.
This influenced Indigineous Australians to adopt similar strategies.
Accounting
The collecting, recording, and reporting of financial information to assist business owners in decision-making.
The Accounting Process
Collecting Source Documents: Paper that provides evidence of transactions. Eg. Receipts, invoices, cheque butts.
Recording: Recording transitions in records such as journals or stock cards.
Reporting:
A statement of receipts and payments to report on the cash the firm has received and paid>
Income Statement to report on the firm's revenues and expenses over a period.
Balance Sheet to report on the firm's assets and liabilities.
Advice: Using the information, accountants should be able to make suggestions on an appropriate course of action.
Accounting Equation
Assets = Liabilities + Owner’s Equity
Owners Equity = Assets - Liabilities
Assets
Possessions of the business that add value.
Current Asset Examples
Cash
Stock
Debtors
Non-Current Asset Examples
Vehicles
Machinery
Furniture
Premises
Fixtures & Fittings
Non/Current Assets:
Current: Within 12 months
Non-Current: More than 12 months
Liabilities
Debts in the form of cash that leave the business.
Current Liabilities:
Creditors
Bills
Wages/salaries
Rent
Non-Current Liabilities
Long-term Loans
Mortgages
Leases
Employees
Non/Current Liabilities
Owners Equity
The value of assets that an owner owns.
Debtors
A body that owes the business. Eg. Customer
Creditor
A body that the business will owe. Eg. Supplier
Financial Institution
An institution that provides banking and other services.
Total Equity Equation
Owners Equity + Liabilities = Total Equities
Note 
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