Economics YR 9

Topic 1: Personal Finance

·         Common Decision-Making Strategies eg. spontaneity, agonising, procrastination, compliance, intention etc.

Spontaneity: Choosing the first option that comes to mind

Compliance: Going along with other’s expectations

Procrastination: Post-ponding until options are limited

Agonising: Accumulating so much information that becomes overwhelming

Intention: Option that’s intellectually and emotionally satisfied

Desire: Best option (regardless of risks)

Avoidance: Option to avoid the worst outcome possible

Security: The option that will bring some success and offend fewer people

Synthesis: Option with good chances of success and like the best

·         What is budgeting? Refer to personal budget

Personal Budget is a financial plan that allocates future income towards expenses, savings and debt repayments.

·         What is GDP?

(Gross domestic product): Total value of goods and services produced in the country

·         What is a pay slip? Define Gross and Net Pay? What is the difference between them?

Pay slip: A hardcopy or an online (electronically) slip that ensures employees receives the correct pay and entitlements and helps employees to keep the correct records

Gross pay: Amount of money received before taxes and deductions

Net pay: Amount of money that will finally be available to you

·         Financially dependent and independent. What is the difference between them?

Financially dependent: Relies fully on someone else for necessities

Financially independent: Has enough income to pay for one’s reasonable living expenses without having to rely on formal employment

·         What are fixed and flexible (variable expenses)? Provide examples of both types of expenses of living on your own.

Fixed (Expenses): Things that costs the same amount each purchase (Rent, car payment and mortgage payments)

Flexible (Expenses): The cost changes each purchase (Dining out, groceries, medical expenses)

·         What factors influence the decision-making process? Refer to personal and economic factors.

Values, peers, family, age, feelings, habits and risks & consequences

·         What are some risks associated when making a decision?

Personal risks, income risk, interest-rate risk

Topic 2: Australian Economy

Economy:

·         Who are the main participants in the Australian Economy? You need to discuss a minimum of three.

Worker (employee): Produces goods and services

Consumer: Purchases goods and services

Businesses: Company that employs workers

·        
What makes up the Circular Flow Model of the Economy? What are the flows?

·         What are some factors that influence “what to produce” and “how much to produce” in an economy?

-Demand

-Resources

-Government

·         What is an economic activity? How does an increase or decrease in economic activity influence overall living standards? Be able to explain both.

The economic activity that we engage in will involve numerous transactions which typically involve the exchange of money for something in return

·         What is the law of supply?

The relationship between the price of a product and the willingness to supply

·         Why is there a positive relationship between quantity supplied and price?

Producers are willing to supply more of a good at a higher price

·         What are three different factors (apart from price) that affect the supply of a good (be able to explain)?

Cost production: When production for a producer increases, the profit will decrease and they will be less willing to sell it

Technological change: Advanced technology reduces the cost of production so it’ll increase the supplies

Climate conditions: Effected due by the ability to supply the product (Environment), happens mostly in commodity markets

·         What is the law of demand?

An inverse relationship between price and quantity  demand

·         Why is there an inverse relationship between quantity demanded and price?

The more something that an item will become, less people will want to by it

·         What are three different factors (apart from price) that affect the demand of a good (be able to explain)?

Disposable income: Income available to households after tax. (When taxes increase, the disposable income will decrease)

Interest rates: (the cost of borrowing) Higher interest rates will lead to many households to a fall to how much cash they have available for spending, therefore, they’ll be a low demand

·         Injections and Leakages. How do injections and leakages influence circular flow model and why?

Injection: Putting money into the economy (Exports, investments, Government spending)

Leakage: Taking money out of the economy (Import, savings, taxation)

If leakages exceed injection, it can lead to decrease in the economy’s out and income. When injection surpass leakages, it can result in economic growth. However, they need to be balanced.