Participants in the Australian Economy
Labour
Any effort undertaken in the production of a good or service
Outline the three key questions that have to be answered based on the choices made by all participants in the economy.
•What to produce?
•How to produce?
•For whom to produce?
Define the term gross domestic product (GDP)
•Gross domestic product (GDP) is the total value of goods and services produced in an economy over a certain period of time. This figure can be determined by comparing the GDP of one year with that of the previous year. The change in GDP from year to year is expressed as a percentage.
Explain why countries trade.
Trade allows countries to access goods and services they can’t produce themselves or can’t produce at an affordable price. It also allows a country to sell excess production and build relationships with other countries.
Define globalisation
•Globalisation is the process of growing interdependence between countries. The flow of goods and services between countries, and the money flows that accompany this trade, have increased global interdependence between trading countries’ household, business, financial and government sectors.
Resources
Things that can be used by businesses including land, labour, capital and enterprise
Why are choices needed in an economy?
Choices determine how we decide what the economy is going to do in terms of production and how we produce goods and services. They also help determine who receives the result of the productive process
Who is included as part of the labour force?
The labour force encompasses the total number of all employed people plus the number of all unemployed people.
What is the difference between exports and imports?
•Imports are goods and services which are bought from other countries and exports are those which are sold to other countries.
Define imports.
Imports are goods and services produced overseas but sold in Australia
Consumer demand
Refers to the needs and wants of households
What is a market?
A market is any organised exchange of goods, services or resources between buyers and sellers.
Define inflation
•The term inflation refers to a general increase in prices in the economy.
Explain the impact of international trade on the flow of money in the Australian economy.
•When Australian consumers spend money on imported goods, that money exits our economy cycle. Therefore, it important that governments monitor the levels of imports which are allowed in domestic markets.
Identify one international organisation that oversees global markets and outline its main function.
•The World Trade Organization (WTO) is an international organisation that administers the rules of international trade and has the power to rule on international trade disputes.
Financial intermediary
An institution that simultaneously stores and lends money — a well-known example is a bank.
Identify three ways in which markets can help determine what to produce within the economy.
Established habits and experiences, changing tastes and preferences, marketing and advertising, and technological change can all help determine what to produce within an economy.
•Explain how unemployment figures are calculated.
•Unemployment measures the percentage of people in the labour force who want to work but are unable to find a job and have registered themselves as being in that position.
Explain what is meant by trade deficit.
•A trade deficit is where the value of imports exceeds the value of exports.
Identify and explain two negative impacts of globalisation on the Australian economy.
•Globalisation opens Australia up to more imports which can cost jobs in Australia.
•Can also lead to the development of larger companies which can dominate markets leading to increased prices.
Land vs Capital
•Land — all the raw materials and natural resources that go into the production of goods and services. It includes minerals dug up from the earth, food crops ready for processing, timber harvested from forests and raw fibres such as wool or cotton
Capital — all the equipment used by human labour in the process of production. For example, an accountant uses a computer, a bricklayer uses a trowel and a farmer uses a tractor
Explain how wages and prices work together to determine to whom goods and services are distributed in the economy.
Wages and prices determine to whom goods and services are sold to within an economy. If wages are low but prices are high, then only a small proportion of consumers will be able to afford particular goods and services. In order to succeed, businesses need to consider what their target market can afford.
Define economic growth.
Economic growth is the annual increase in the value of goods and services produced by an economy from one period to the next.
Explain what is meant by trade surplus.
•A trade surplus is where the value of exports exceeds the value of imports.
Identify and explain two positive impacts of globalisation on the Australian economy.
•access to more goods and services
•access to better quality goods and services.