Economic Functions of the Australian Government & Policy Influences

Vocabulary practice flashcards covering macro and microeconomic functions of the Australian Government, taxation, budget roles, GBEs, and policy influences.

Macroeconomic Policy

Government intervention using monetary and fiscal policies to influence aggregate demand across the entire economy.

Microeconomic Policy

Government action directed towards specific industries or locations through changes in taxes, spending, or regulation to improve productivity and aggregate supply (AS).

Reallocation of Resources

An economic function where the government uses taxation, spending, and assistance to alter how resources are distributed across different goods, services, and industries.

Redistribution of Income

Government intervention using taxation and social welfare transfer payments to reduce income inequality between high and low income earners.

Direct Taxes

Taxes levied directly on the entity or individual that pays them, which cannot be passed on to another party (e.g., personal income tax and company tax).

Indirect Taxes

Taxes levied on producers of goods and services that are passed on to consumers through higher prices (e.g., GST and excise duties).

Progressive Tax

A tax system where both the average rate of tax (ART) and marginal rate of tax (MRT) rise as taxable income increases.

Proportional Tax

A tax system where the average rate of tax (ART) and marginal rate of tax (MRT) remain constant regardless of the level of taxable income.

Regressive Tax

A tax system where both the average rate of tax (ART) and marginal rate of tax (MRT) fall as taxable income increases, placing a higher relative burden on lower income earners.

Average Rate of Tax (ART)

Total tax paid divided by total taxable income.

Marginal Rate of Tax (MRT)

The rate of tax applied to the last or additional dollar of taxable income earned within a particular tax bracket.

Stabilisation of Economic Activity

The counter-cyclical use of fiscal and monetary policies to reduce the intensity of economic booms and busts in the business cycle.

Structural Unemployment

A long-lasting form of unemployment resulting from fundamental structural changes and shifts in an economy's industries.

Aggregate Supply (AS)

The total volume of final goods and services that businesses in an economy plan to sell at a given price level within a given timeframe, represented as $AS = C + S + T$.

Government Business Enterprises (GBEs)

Government-owned commercial entities that provide essential public goods, services, and economic infrastructure.

Corporatisation

The process of structuring Government Business Enterprises to act like private enterprise companies to improve operational efficiency and profitability.

Privatisation

The process of selling publicly owned Government Business Enterprises to the private sector.

Australian Competition and Consumer Commission (ACCC)

The statutory authority that enforces the Competition and Consumer Act 2010 to regulate anti-competitive behavior and protect consumer rights.

Business Council of Australia (BCA)

A key business interest group representing major corporations to lobby the government on tax reform, deregulation, and industrial relations policies.

Australian Council of Trade Unions (ACTU)

The peak trade union organization in Australia that advocates for worker interests, higher wages, and improved working conditions.