Commerce Notes Review: Economic Concepts, Business Structures & Workplace Legislation

Flashcards testing all key topics from the Commerce notes including superannuation, business legal structures, inflation, economic indicators, unemployment, business cycles, corporate social responsibility, trade unions, demand and supply, and workplace legislation.

What is the business cycle?

The cyclical fluctuations in the general level of economic activity over time.

How is Corporate Social Responsibility (CSR) defined?

When businesses consider the interests of stakeholders, society, and the environment when making economic and business decisions.

What is a depression in an economy?

A severe contraction in the level of economic activity resulting in many business failures, high and sustained levels of unemployment, and sometimes falling prices.

What is the definition of an economy?

All activities undertaken for the purpose of production, distribution, and consumption of goods and services in a region or country.

What is the difference between exports and imports?

Exports are goods and services sold by local businesses to overseas customers, whereas imports are goods and services purchased by local consumers from overseas businesses.

What is inflation and how does it affect money?

Inflation is a general rise in prices across all sectors of the economy, causing money to lose its purchasing power.

How is interest defined in finance?

Interest is the price that must be paid in order to use somebody else’s money.

What are investments in a business context?

The use of money to purchase equipment or premises for the establishment of a new business or the expansion of an existing business.

What is the labour market?

The buying and selling of labour.

What does the Law of Demand state?

It states that the quantity of a good or service demanded varies inversely to price.

What does the Law of Supply state?

It states that the quantity of a good or service supplied varies directly with price.

What is a market?

Where the exchange of goods, services, or resources between buyers and sellers occurs.

What is a recession?

A relatively mild contraction in the level of economic activity resulting in reduced spending, rising unemployment, and a slow rate of economic growth.

What is taxation?

The system or process where a government requires people to pay mandatory financial charges.

What is superannuation, and what is the required guarantee rate in Australia?

Superannuation is money put aside by an employer from earnings into a special fund to support retirement. In Australia, the superannuation guarantee (SG) rate requires employers to pay a minimum of $12\%$ of an employee's before-tax salary/qualifying earnings.

If an employee earns \\$60{,}000 in qualifying earnings, how much superannuation must their employer pay over the year?

The employer must contribute \\$7{,}200 over the year, calculated as $\\$60{,}000 \times 12\% = \\$7{,}200$.

At what age can individuals access their superannuation fund?

An individual can access their superannuation once they reach the age between $55$ and $60$, or automatically at age $65$.

What are the main advantages and disadvantages of superannuation?

Advantages include investment growth, higher retirement income, and reduced reliance on the age pension. Disadvantages and limitations include restricted access to funds until reaching eligible age, investment risks, and inflation.

Why is superannuation especially important for young people?

Starting superannuation contributions early gives the investments a longer time to grow in size and significantly increase retirement savings.

What is a Sole Trader?

A simple business structure where the business is owned and run by one person with no legal separation between the owner and the business.

What is a Partnership business structure?

A formal business structure shared by two or more people who split profits, losses, and responsibilities.

What is a Limited Liability Company (LLC)?

A flexible business structure that protects its owners from personal liability for the company's debts or legal disputes/lawsuits.

What is a Nonprofit Organisation?

An entity operated for charitable, educational, or social causes rather than personal profit.

How do C-Corporations and S-Corporations differ?

A C-Corp is a standard legal structure where the company is taxed separately from its owner, whereas an S-Corp is a special tax election that allows profits to pass directly to the owners' personal tax returns.

What is a Trust Organisation?

A legal arrangement where a trustee holds and manages property, money, or assets on behalf of beneficiaries, rather than being a separate corporate entity itself.

How is inflation measured in an economy?

Inflation is measured using the Consumer Price Index (CPI), which tracks changes in the prices of a basket of goods and services purchased by households.

What causes demand-pull inflation?

Demand-pull inflation occurs when the overall demand for goods and services increases faster than businesses can supply them, driving prices up ($\text{Demand} \uparrow \rightarrow \text{prices} \uparrow$).

How can the government manage high inflation?

A primary way the government manages inflation is by increasing interest rates.

What is Gross Domestic Product (GDP)?

Gross Domestic Product (GDP) is the market value of final goods and services produced within a country over a particular time period.

Under what conditions is a person considered unemployed?

A person is unemployed when they are willing and able to work and actively looking for work, but cannot find a job.

What are the major causes of unemployment?

Unemployment can be caused by economic downturns, technological change, changes in consumer demand, business closures, skills mismatch, and seasonal changes.

How can governments help reduce unemployment?

Governments can reduce unemployment by investing in infrastructure, supporting job creation programs, providing education and training, and helping workers develop new skills.

What is the difference between an Employment Award and an Enterprise Agreement?

An employment award is a legal document setting minimum pay rates and employment conditions for an entire industry or occupation. An enterprise agreement is negotiated directly between an employer and a group of employees to set agreed workplace conditions.

What is the primary objective of Work Health and Safety (WHS) laws?

WHS laws are designed to protect workers and other people from risks arising from work by requiring safe equipment, hazard identification, and a safe working environment.

Based on this economic diagram, what stage of the business cycle represents the lowest point of economic activity?

The Trough is the lowest point of the business cycle where economic activity, production, consumer spending, and business investment reach their lowest level before recovery begins.

What occurs during a Boom in the business cycle?

During a boom, economic activity is strong, production increases, employment levels are high, business profits and investments increase, and demand for goods and services is high.

What are the three main categories of Corporate Social Responsibility (CSR)?

1. Environmental CSR: Considering and reducing impact on the environment (e.g., recycling waste).
2. Social CSR: Considering the wellbeing of employees, communities, and society (e.g., safe working conditions).
3. Ethical CSR: Making decisions that are fair, honest, and morally responsible (e.g., honest advertising).

How do Coles and Nike practice Corporate Social Responsibility (CSR)?

Coles demonstrates CSR by reducing single-use plastics to minimize environmental impact. Nike demonstrates CSR by using recycled materials in some products to reduce waste and raw material usage.

What is a Trade Union, and what is its main advantage for workers?

A trade union is an organisation that represents workers and negotiates with employers to improve wages and conditions. Its key advantage is giving workers greater collective bargaining power than negotiating individually.

On a supply and demand graph, what is the equilibrium point?

The equilibrium is the point where the quantity demanded equals the quantity supplied (the intersection of the supply curve $S$ and demand curve $D$).

What is the Fair Work Act 2009?

The Fair Work Act 2009 is Australia's main national workplace legislation, establishing rules around workplace rights, awards, minimum standards, and protection from discrimination.