Economic Indicators
What does GDP measure?
The total value of all goods and services produced in a country within a year.
What does it mean when GDP growth is high?
The economy is expanding, businesses are producing more, and employment levels are likely increasing.
How does inflation affect the cost of living?
It increases the prices of goods and services, reducing purchasing power.
What does a rising unemployment rate indicate?
More people are losing jobs, which may signal a weakening economy.
What is the role of the Reserve Bank of Australia (RBA)?
To manage monetary policy, including setting interest rates to stabilize inflation and economic growth.
What is the unemployment rate?
The percentage of people in the labour force who are actively looking for work but do not have a job.
What is Australia’s current GDP growth rate?
0.8%
What is Australia’s current inflation rate?
2.4%
What is Australia’s current unemployment rate?
4%
How does the RBA influence borrowing and spending?
By raising or lowering interest rates, which makes borrowing more expensive or cheaper.
What is inflation?
The rate at which the general level of prices for goods and services rises over time.
What happens when GDP growth slows down?
Economic activity decreases, businesses may cut jobs, and unemployment may rise.
What might happen if inflation falls too low?
Economic growth may slow down, and businesses may reduce production and jobs.
What is underemployment?
When workers have a job but work fewer hours than they want or are overqualified for their role.
What happens when the RBA lowers the cash rate?
Borrowing becomes cheaper, increasing spending and investment.
What is the cash rate target, and who sets it?
The cash rate target is the interest rate set by the Reserve Bank of Australia (RBA) that influences borrowing and lending rates in the economy.
How did COVID-19 impact Australia’s GDP growth?
It caused GDP to decline significantly due to lockdowns and reduced economic activity.
Name one factor that causes inflation to rise.
Increased demand for goods, rising wages, or supply chain disruptions.
How do interest rate increases affect unemployment?
Higher interest rates slow business investment, potentially leading to job losses
How does the cash rate affect the Australian dollar?
Higher interest rates attract foreign investors, strengthening the AUD, while lower rates weaken it.
If inflation rises too high, what action might the RBA take?
The RBA may increase interest rates to slow down borrowing and spending, which helps reduce inflation.
How does government spending influence GDP growth?
Increased government spending boosts demand and job creation, leading to higher GDP growth.
What does the RBA target as an ideal inflation range?
Between 2-3% to ensure economic stability.
What government action might reduce unemployment?
Government job creation programs, tax cuts for businesses, or infrastructure spending.
What economic conditions would lead the RBA to raise interest rates?
High inflation, strong economic growth, and excessive consumer spending.