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Commerce Notes
Chapter 2 - The economic and business environment
The five-sector circular flow model
The circular flow of income shows the connections between the five different sectors of an economy: consumers, businesses, financial institutions,the government and the overseas sector. It also shows where money is being injected into the economy and where money is being leaked from the economy. These injections and leakages help economists calculate changes in the level of economic activity within an economy
The consumer and business sectors
People sell their resources to firms (businesses) in exchange for an income. Firms then use the resources of households to produce goods and services. This is known as production. Households will then use their income to buy various goods and services. This is known as consumption.
Consumers and businesses are interdependent on each other. This means businesses would not survive without consumers buying their goods and services, and consumers rely on businesses to provide them with the goods and services they demand to satisfy their needs and wants
The two sector model of the economy is balanced when income (Y) = consumption (C)
the financial sector
The financial sector refers to financial institutions such as banks that act as intermediaries between the savers and borrowers in an economy. They receive the savings of individuals and businesses and then lend this money to others who need to borrow money.
A choice of saving or investment is an important factor within the economy
Saving (S) - refers to putting money away for later use and is a leakage from the circular flow of income ( Leakage )
investment (I) is when money is borrowed and used to expand and grow a business ( Injection )
The Government Sector
The government sector refers to local, state and federal governments and has two significant roles in the circular flow of income
Taxation (leakage): the government collects taxes from individuals and businesses when they earn an income or profit.
Government expenditure (injection): this is when governments spend money raised through taxation on things such as infrastructure, welfare payments, education and health.
The Overseas Sector
Exports (X) refers to Australian businesses selling their goods or services to overseas individuals, businesses or governments. ( Injection )
Imports (M) refers to the buying of overseas goods or services by Australians.( Leakage )
The circular flow of income is used by economists to measure changes in the level of economic activity within an economy;
When injections are greater than leakages, economic growth occurs and the economy will expand. When leakages are greater than injections, an economy will experience economic decline.
The interdependence between different sectors of the economy
The government has a significant role in the financial protection of consumers through the regulation of the financial sector
Its main roles are: • monitoring the financial services industry • monitoring the provision of financial services such as investment advice • providing consumer protection in financial services, including shares, managed funds, superannuation, insurance, credit and deposit-taking.
The role of the financial sector in facilitating business investment
financial institutions act as intermediaries between the savers and the borrowers in an economy. Banks and other financial organisations receive deposits, and use this money to lend to others who need to borrow money
The business cycle
An economic cycle, also known as a business cycle, refers to economic fluctuations between periods of expansion and contraction.
Boom
The upside of the business cycle is growth and prosperity.The key features of a boom include:
Production, spending and employment rise.
Businesses expand, employment increases.
Interest rates are high
The rate of inflation rises sharply
Recession
Recessions are caused by lack of spending.The key features of a recession include:
Income and production are at their lowest level in the business cycle.
Unemployment is at a high level.
The inflation rate tend to stay low.
Depression
A recession spreads and economic growth is slowed. When a recession becomes widespread and long-lasting, it is called a depression.The key features of a depression include :
decline in standards of living
Unemployment rates Increase
Severe financial damage
Corporate and personal bankruptcies
Contraction
The downswing of the business cycle towards a trough is an contraction
Key features
Falling levels of production
Decreasing consumer spending
Rate of inflation may fall
Wage rates generally fall
Expansion
The upswing of the business cycle towards a peak is an expansion.
Key features
Rising levels of production
Increasing consumer spending
Rate of inflation may rise
Wage rates generally rise
Interest rates eventually rise
Demand and Supply
the interaction of demand and supply allows markets to solve the economic problem of
scarcity and the efficient allocation of resources.
Demand
As prices increase, demand for that good or service decreases. If the price decreases, the demand for that good or service increases. This is known as the law of demand.
Supply
As prices for a good or service increase, the quantity supplied will increase. If the price decreases, the supply of that good or service will decrease. This is known as the law of supply.
The price mechanism
Once the supply and demand for a good or service has been established, it is possible to plot them both on a graph. The point at which the demand and supply curve intersect is called market equilibrium.
the price mechanism refers to the forces of demand and supply in determining the price and quantity of a good or service.
Changes in demand
Increases in demand shift the demand curve to the right, moving the equilibrium point. This results in an:
• increase in price
• increase in quantity.
Decreases in demand shift the demand curve to the left, moving the equilibrium point. This results in a:
• decrease in price
• decrease in quantity
Causes of Change in Demand
Reasons for Increases in Demand
Rise in consumer income
changes in consumer tastes and preferences
a substitute good becomes more expensive
Reasons for Decreases in Demand
Fall in consumer income
changes in consumer tastes and preferences
a substitute good becomes more cheaper
Changes in Supply
Increases in supply shift the supply curve to the right. This results in an:
• a decrease in price
• an increase in quantity.
Decreases in supply shift the supply curve to the left. This results in:
• an increase in price
• a decrease in quantity.
Causes of change in Supply
Factors that cause an increase in Supply
Increased Efficiency (technology)
Fall in the cost of production
Increase in the number of suppliers
Factors that cause a decrease in Supply
Decreased Efficiency (bugs)
Increase in the cost of production
Decrease in the number of suppliers
Long - response
Accessing the law + barrier to accessing the law
how indigenous /aboriginal people access the law
Customary Trading Practices of ATSI Peoples
Chapter 4 - Law ,Society and Political Involvement
Reasons for laws:
The law has 4 main rules:
Establish boundaries of acceptable behaviour and determine which actions will not be tolerated. For example, drink-driving laws reflect society’s attitude that placing other road users at risk through intoxication is unacceptable.
Protection from the actions of others as well as our own behaviour. It does this by telling society what people cannot do. For example, we cannot commit assault, murder or robbery. We cannot drive while drunk or ride a bike without a helmet.
Freedom to do many things by telling society what people can do. For example, the law allows us to own and operate a business, drive a car, get married or divorced, or leave school.
Resolving disputes in order to stop people taking the law into their own hands. The legal system provides a police force (or service), court system and correctional centres (jails and juvenile detention centres) to enforce and administer the law.
Society also has a set of rules called laws, which everyone in the community is expected to obey. For example, motorists must obey traffic laws. The difference between a rule and a law is that the police and the courts can enforce laws. Laws, therefore, are legal rules that carry more serious penalties, and you may end up having to go to court if you break a law.
Values morals and ethics:
Our laws in Australia are sometimes very different to those of other countries. For example, in Australia it is compulsory to wear a bicycle helmet in all states and territories; Australia also has strict anti-smoking legislation, including plain packaging of cigarettes. Few other nations around the world have similar laws to these.
Our society's moral and ethical norms shape our understanding of what is good and wrong. Murder, for example, is considered a terrible crime in our society because we value human life and feel it should be safeguarded. Typically, society's moral and ethical ideals reflect the ideas, attitudes, and values of religious institutions.
Australia’s court system:
In a classroom, minor rules are decided by the teacher, while serious offenses are handled by the Year coordinator or deputy principal. For very serious offenses, the principal is sent. The court system operates under a hierarchy, with higher courts hearing more serious matters and lower courts dealing with less serious matters. Each court has specific jurisdiction and authority, making it an expert in a specific area of law. Higher courts handle serious crimes and civil cases involving large sums of money. If an individual is unhappy with a lower court's ruling, they can appeal to a higher court. The cost of a trial increases if held in a higher court.
Local court:
The Local Court, located at the bottom of New South Wales’s hierarchy, handles all criminal and over 90% of civil cases. It is a magistrate who hears cases, decides verdicts, and sets punishments. Magistrates can imprison offenders for up to two years per offence or five years. They are qualified legal practitioners with extensive experience. The Local Court handles minor civil disputes, such as property damage or injury claims, and hears summary offences like stealing, drink-driving, assault, drug possession, and indecent language.
A magistrate oversees committal hearings for indictable offences like armed robbery, manslaughter, and homicide, determining if sufficient evidence is present for trial in a higher court. They also hear bail applications, issue arrest warrants, and hear applications for Apprehended Violence Orders. The Local Court and the Children's Court are two other specialist courts on the same hierarchy.
District court:
The District Court is the middle court in the state legal system, located in Sydney and regional centres. It handles serious civil cases, motor vehicle accident cases, and criminal matters like armed robbery and manslaughter. Judges hear cases, and in some cases, a jury decides guilt. If found guilty, the judge determines the appropriate sentence. The District Court also hears appeals from the Local Court.
Supreme court:
The Supreme Court in NSW handles serious criminal cases like murder, treason, and sexual assault, as well as civil cases involving over $750,000. Headed by the Chief Justice, it is in Sydney and handles appeals from lower courts. Judges hold sessions in regional centres, known as 'going on circuit'. The Supreme Court's judgments are binding on all lower courts and can impose a wide range of sentences.
High court:
The High Court, located in Canberra, handles appeal from state or territory Supreme Courts and interprets the constitution, which governs Australia. It creates laws that affect parliaments and shifts power from states to the Commonwealth. As the highest court in Australia, its decisions are final and apply to the entire country. The court consists of seven judges, including the Chief Justice and six Justices. Most important cases are determined by a full bench, while other cases are handled by at least two justices. No jury is used in the High Court.
Specialised courts:
Children’s court:
The Children's Court handles cases involving the care and protection of children and young people, as well as criminal cases involving those under 18. It is closed to the public and media, and has personnel trained specifically for dealing with young people, like the Local Court.
Coroners court:
The Coroner's Court is a NSW Local Court responsible for investigating unnatural deaths, determining the deceased's identity, date, place, circumstances, and medical cause, and investigating around 6000 reportable deaths annually, as well as the cause of fires or explosions.
Family court:
The Family Court in Australia is a specialized court that handles complex family law issues like divorce, parenting disputes, and property division when couples separate. The court requires irretrievable breakdown of the marriage, demonstrating separation for over 12 months.
Drug court:
The Drug Court Program aims to provide long-term solutions for offenders who have been caught in the cycle of drug use and crime. It encourages individuals to break free from substance abuse, gain employment, and reduce the need to commit crimes to support the drug habit. To be referred, offenders must be eligible for the program, which includes assessment and detoxification, personalized plans, and regular drug tests. Offenders are often applauded when they report a day, week, or month without drug use or criminal activity.
Role of court personnel:
In Australia, a court is a place where a person is arrested if the police have a strong case against them. If a plea is not guilty, a trial is conducted in a courtroom using the adversarial system, where opposing sides present their arguments to an independent umpire, such as a judge or magistrate. Courts can be tense places, but decisions made in them can have a significant impact on people's lives. The main roles in a courtroom include magistrate, judge, juror, prosecutor, and defense counsel. A magistrate oversees the lowest court, where the atmosphere is informal, and they do not wear a wig or robe. After hearing the cases, the magistrate decides whether a person is guilty or innocent, and if found guilty, they decide the punishment or damages. They may also refer serious criminal offences to a higher court.
Who’s in the court:
The court proceedings are overseen by a trained lawyer, public members, media, Sheriff's Officers, and the accused. A jury, consisting of 12 people in criminal cases and six in civil cases, decides the number of damages to be paid. The defense counsel represents the accused, presenting arguments to reduce punishment if the accused pleads guilty or to convince the judge or jury that the accused is innocent. In civil cases, the defense counsel aims to convince the judge or jury that no wrong has been committed, and if successful, the accused does not have to pay damages.
The prosecutor in criminal cases must convince the jury of a person's guilt through witness questions, while a barrister in civil cases presents reasons for compensation. The witness box is where people give evidence, and the tipstaff maintains order in the court. The judge, addressed as 'Your Honour', listens to arguments presented by the prosecutor and defense counsel, and is not allowed to ask witnesses questions. When there is a jury, the judge ensures that the jury understands the proceedings and evidence presented. If a jury announces a guilty verdict, the judge decides the sentence or punishment.
How laws are made- Common Law:
Laws can be made in two ways: statute law, which is written down beforehand, and common law, which judges develop as they encounter new problems in cases. In Australia, the law combines both common and statute law. The justice system in England and Australia is based on common law. In medieval times, people were tried at various courts, with most proving their innocence through trial by ordeal or combat. Henry II decided that everyone should have the opportunity for royal justice, which was the justice of the king's court. Judges began keeping records of their decisions, referring to them when hearing similar cases.
Common law refers to the decisions made by judges in cases where there is no existing law regulating the situation. These decisions, known as legal precedents, are recorded in Law Reports for reference. Judges do not intentionally attempt to change or make a law but may attempt to resolve disputes as part of their judicial duties.
Precedent, the act of judges making similar decisions in similar cases, is a traditional practice that ensures fairness and justice in the legal system.
Courts interpret words in Parliament-made laws, often using complicated language to explain the law's meaning and cover all relevant situations. Although Parliament can change the wording of a law, a court's interpretation of a word applies as law from then on. The principle of precedent applies to interpretation, meaning that once a judge decides on a word's meaning, it becomes law and must be followed by other judges in lower courts.
How laws are made- statute law:
In Australia, laws created by parliament hold the highest status and must be obeyed by all citizens. The Federal Parliament, located in Canberra, makes laws on issues affecting the entire country. Each state and territory have its own parliament, with New South Wales Parliament making laws specific to the region. The State Parliament delegates some law-making power to local councils. Once passed, laws are binding on all courts and judges. Parliament is often referred to as the supreme law-making authority, as it can make new laws and change existing ones. Statute law prevails over common law, and no court has the power to change it. The only exception is the High Court, which can overturn a law if it is unconstitutional.
The constitution is a document that outlines the powers and restrictions of a parliament, serving as the rulebook for how a parliament operates and a country is governed. The Australian Constitution limits the powers of the Federal Parliament, while state parliaments are restricted by the state's Constitution and the Australian Constitution. State governments retain the power to make laws unless the Constitution grants it to the Australian government. Inconsistencies between Commonwealth and state legislation are resolved by the High Court. For instance, areas of World Heritage should be under state or federal control.
How a bill becomes a law:
Laws in Australia are made or changed through a series of steps. First, a proposed law is discussed in Cabinet, often under pressure from the public. If the government decides to proceed, a bill is drafted, which is then passed by the House of Representatives. The bill then goes through a second reading, where the responsible minister explains its purpose and benefits. The debate continues, with changes made during the committee stage. If the majority vote is in favour, the bill is passed through to the Senate. If the Senate decides to change something, the bill is referred to the House of Representatives for another vote. If approved, the bill is sent to the Governor-General for royal assent. If approved, the bill becomes an Act of Parliament, legally binding for all Australians.
Types of law
Administrative law:
Administrative law deals with the decisions and powers of these government departments. This law allows courts to review and change the decisions of government if necessary.
Constitutional law:
This set of laws deals with the rules by which a country is governed. It is concerned with the powers and authority of parliament; the rights of each citizen; the powers between the federal and state governments.
Contract law:
This set of laws is concerned with legal agreements between two or more people. If one party fails to carry out his or her side of the agreement, that person can be sued for breach of contract.
Family law:
This law regulates family relationships. It sets out rules about the process of getting married; who can get married; de facto relationships; divorce; custody and other aspects involving family members.
Criminal law:
Criminal laws are needed to keep the community safe from harm, to provide for an orderly society and to provide a way of dealing with a crime when it occurs. Offenders will be punished if they choose to put people and property at risk.
Industrial law:
This law is concerned with the rights and obligations of employers and employees. Much of the law deals with the legal way of resolving industrial disputes, workers’ compensation, occupational health and safety, and discrimination in the workforce.
Property law:
This law recognises two broad types of property: real property (land and buildings) and personal property (goods and services we purchase). Specifically, property law provides regulations about the sale, leasing and hiring of property.
Tort law:
The law of tort deals with situations when one person infringes the rights of another, resulting in distress or injury; for example, the mental distress caused by being bullied. The person injured may claim financial compensation from the other party for any loss suffered.
Civil law:
Civil law, a part of private law, deals with non-criminal matters and allows individuals to bring actions against others for a civil wrong. It plays a crucial role in protecting individual rights. The two main areas of civil law are tort and contract law. Tort law covers negligence, defamation, nuisance, and trespass. The plaintiff, who has infringed on another's rights, can initiate a lawsuit against the defendant. If a civil wrong is proven in court, the wronged party seeks compensation. Civil law allows individuals to bring actions against others for a civil wrong, protecting individual rights and ensuring fair treatment.
In civil cases, the judge may order the plaintiff to pay the defendant's costs or consider contributory factors, reducing damages accordingly. Juries are optional but play a crucial role in determining the outcome and number of damages. Not all civil cases end in court, as parties often reach an out-of-court settlement. In such cases, the judge may order the plaintiff to pay the defendant's costs or reduce damages accordingly.
Criminal law:
Crime involves unacceptable behaviour that requires prosecution, conviction, and punishment. From ten years of age, a person can be prosecuted for committing an offense, known as the 'age of criminal responsibility'. Indictable offences, such as armed robbery, homicide, child abuse, murder, and sexual assault, are heard in District and Supreme Courts, with the defendant's guilt determined by a judge and jury. Less serious crimes, such as minor assaults, petty theft, vandalism, and traffic infringements, are dealt with quickly and cheaply by magistrates in Local Courts.
Criminal law, part of public law, aims to protect individuals from harm and make the community feel safe. If a person commits a crime, the police force and judiciary handle it. The accused has the opportunity to present their side of the story during court cases, and if found guilty, they may face a fine, court order, or imprisonment.
Customary law:
Australia has a rich history of laws, influenced by its diverse First Nations communities. Before European colonization in 1788, Aboriginal society had oral laws passed down through word of mouth, which were based on customs and rituals and varied among the approximately 600 different First Nations groups. Early European colonists mistakenly believed that Aboriginal society had no law due to the absence of written rules, parliaments, courts, police, and prisons. However, Aboriginal peoples lived according to a complex set of customary laws that outlined the correct way of living. Elders who knew these customs administered these laws and could punish offenders.
There is no single system of Aboriginal and Torres Strait Islander law, but there are common aspects among these groups. Aboriginal law is based on kinship, which links closely to traditions and customs and outlines the correct way of living in everyday situations such as marriage, education, trade, and food sharing. The British colonists did not understand this system, making it difficult for English law and Aboriginal law to coexist.
With Captain Cook's arrival in 1770, Aboriginal law was displaced, and English law established, leading to ongoing conflict between the two legal systems.
Customary law has gained recognition over time, particularly in the context of Australia's terra nullius claim by Captain Cook and the British. The British initially did not recognize Aboriginal peoples as having legal title over land due to the absence of written laws of land tenure. However, in 1982, Eddie Mabo, a Meriam man from Murray Island, challenged this notion, leading to legal action against the State of Queensland. The High Court ruled in favour of the Islander plaintiffs, stating that the Murray Islanders of the Torres Strait were entitled to possession, occupation, and enjoyment of the lands of the Murray Islands.
The Native Title Act (1993) was the first piece of Australian legislation to recognize customary law. The integration of customary law into Australia's legal system has been a contentious topic for decades, but there is a growing awareness of the importance of First Nations Australians having a legal system that reflects their culture. Circle sentencing, introduced in NSW in 2002, aims to remove barriers between Aboriginal peoples and the legal system by making sentencing inclusive of cultural differences. By involving all relevant parties, including the defendant, victim, legal representatives, elders, and other affected parties, customary law is linked to Australia's legal system, ensuring that the sentence given fits the Australian sentencing policies.
Domestic verses international law:
Domestic laws are essential for citizens to be law-abiding citizens of their country, as they apply to their local community, state, and country. Breaking domestic laws can result in legal consequences. International law, on the other hand, focuses on setting acceptable behaviour standards for nations and their citizens when dealing with cross-border issues. It is primarily developed from treaties and conventions between countries, with the United Nations Charter being a famous example.
The United Nations is responsible for establishing and enforcing international laws, using the International Court of Justice and the UN Security Council to enforce them. When disputes relating to international law or disputes between nations or ethnicities escalate into conflict, the United Nations often deploys peacekeepers to create conditions for lasting peace. Peacekeepers provide security, political, and peace-building support to help countries transition from conflict to peace.
In summary, domestic laws and international laws are crucial for maintaining good relationships and preventing conflict. The United Nations uses various instruments, including the International Court of Justice and the UN Security Council, to enforce these laws and promote lasting peace.
Accessing the law:
The legal system's primary function is to protect people's rights, but it's only effective if everyone has equal access to the law. This means equal opportunities for all individuals to use the system, and if some are unable to access it, they are discriminated against and denied justice. The effectiveness of the legal system is influenced by whether members can access it. However, the effectiveness of the system may not be highly praised, as examples include young rape victims, parents whose daughters are murdered, and mentally ill defendants whose illness is not given due consideration in the justice system. Various factors create barriers to accessing the law.
Legal advice and representation can be expensive and difficult to obtain, often deterring people from exercising their legal rights. A lengthy trial can also hinder equal access to the law, as the saying "justice delayed is justice denied" suggests. For example, a woman who sued a tobacco company for compensation for terminal cancer died before the lengthy case was settled.
Access to the law can be limited by distance, as people must travel long distances to see lawyers, police stations, and court houses. Living in remote areas may require long travel times, which can be time-consuming, costly, and difficult to arrange.
People may not be aware of their rights or responsibilities due to limited knowledge of the law, leading to restricted access. Court procedures can be intimidating and confusing, and people may perceive the legal system as insensitive to their needs, particularly in sexual offence cases. If English is not, one's first language, understanding legal terminology and procedures can be difficult, and even finding help from a lawyer or translating legal documents may pose a problem.
In conclusion, access to the law can be limited by various factors, including financial constraints, lack of legal knowledge, and language barriers. It is crucial to address these barriers and ensure equal access to justice for all individuals.