Definitions
What is GDP
the total monetary value of all finished goods and services produced within a country's borders during a specific period, like a year or a quarter. It is the most common measure of a country's economic size and health, tracking economic activity, income, and changes in the standard of living over time.
What is income?
Income is a form of compensation or benefits received for work performed or from investments. Money earned from an employer and dividends/interest are all forms of income. Gross income is money received before deductions while net income is take-home pay after all deductions.
What is an asset?
Assets are items of economic value that are owned by an individual or a business, including both physical possessions and non-physical resources. They can be tangible things like cash, property, and equipment, or intangible things like intellectual property, brand names, and patents. Assets are crucial because they form the foundation for operations and can be used to generate future economic benefits.
What is a mortgage
A mortgage is a loan used to purchase a home, where the property itself serves as collateral for the lender. It's a legal agreement that allows a borrower to repay the loan, which includes the principal amount and interest, over a set period of time. If the borrower fails to make payments, the lender has the right to take possession of the property to recover the debt.
What is Living Standard?
What is a superannuation
regular payment made into a fund by an employee towards a future pension.
What is Recession?
A recession is a significant decline in economic activity that lasts for more than a few months, affecting production, employment, and income. While the common definition is two consecutive quarters of negative GDP growth, a more comprehensive view, like the one used by the National Bureau of Economic Research (NBER), considers a wider range of indicators such as household spending, business investment, and unemployment.
Name a few ways to legally reduce tax, and what is illegal.
Tax minimisation (legal)
Claim legitimate work expenses
Donate to charity
Salary sacrifice into super
Tax evasion
Hiding income
Claiming false expenses
Not lodging tax return
What is rental yield?
Rental yield is a percentage that measures the income generated from an investment property relative to its value. It's calculated in two main ways: gross rental yield, which is the annual rent divided by the property's value before any expenses, and net rental yield, which is a more accurate measure that subtracts all property-related expenses from the annual rent before the calculation. A higher rental yield indicates greater profitability.
The Gini coefficient is a measure of economic inequality, ranging from 0 to 1, that quantifies how income or wealth is distributed within a population. A score of 0 indicates perfect equality (everyone has the same income), while a score of 1 indicates perfect inequality (one person holds all the income or wealth).
What is the trade cycle? (Correct order)
What is the definition of equity? (business terms)
the value of the shares issued by a company.
A college student wants to buy a gaming PC for 2500 dollars. Should he get a loan to pay it off, or should he save up for long term? And if so, why?
He should save up for long term as he is a college student, and spending 2500 on a gaming pc is very stupid and not an ethical financial decision for long term.
What is Allocation and give an example
Allocation refers to how an economy decides to use its limited resources to produce goods and services that satisfy needs and wants. Every society must best use source resources.
Example: Land, labour, capital and enterprise.
What is foreign investment?
Foreign investment is when capital flows from one country to another for the purpose of buying domestic assets, either through a direct, long-term ownership stake (Foreign Direct Investment) or a less-than-10% stake in securities like stocks and bonds (Foreign Portfolio Investment). It is a key component of the global economy, bringing capital, technology, and jobs, but can also raise concerns about a country's sovereignty and economic independence.
what are Capital flows?
Capital flows refer to the movement of money across national borders for investment, trade, and financing purposes. These flows can be positive (inflows) or negative (outflows) and include investments like foreign direct investment (FDI), portfolio investments, and loans. They are a critical component of the global economy, allowing countries with excess capital to invest abroad and those with shortages to seek funding.
Major vs Minor, decide which one of these is which!
Buying a car
Buying lunch at school
Choosing a university course
Getting a phone plan
Buying
Buying a car - Major
Buying lunch at school - minor
Choosing a university course -Major
Getting a phone plan - Minor
Buying a house - Major
What is a superannuation guarantee? (SG)
The minimum of 12% payment employers must contribute.
What is the F.I.R.B?
FIRB stands for the Foreign Investment Review Board, an advisory body in Australia that examines foreign investment proposals and advises the Treasurer on their national interest implications. The board is responsible for administering Australia's foreign investment policy, which involves making recommendations on whether to approve or reject certain investments from foreign persons, especially those deemed significant or risky.
What is Fiscal policy and monetary policy?
Fiscal and monetary policies are two different sets of tools governments and central banks use to manage a country's economy, focusing on goals like price stability, full employment, and sustainable growth. Fiscal policy involves government actions related to taxation and spending, while monetary policy is managed by a central bank and involves controlling interest rates and the money supply.