Chapter 5
A measure which looks at the ability of individuals to access goods and services.
What are material living standards?
Original GDP figures that have manipulated to remove seasonal variations.
What are seasonally adjusted figures?
The lowest rate of unemployment that it is possible to achieve before inflation starts accelerating
What is the natural rate of unemployment / NAIRU (non-accelerating inflation rate of unemployment)?
A fall in the rate of inflation.
What is disinflation?
A decrease in this AD factor (controlled by the RBA) caused a growth in demand inflationary pressures in 2019.
What are interest rates?
This curve is initially horizontal (perfectly elastic), then upward sloping (relatively elastic) and finally vertical (perfectly inelastic).
What is the shape of the Keynesian Aggregate Supply curve?
Quarterly growth rate x 4
What is annualised growth?
A type of unemployment caused by insufficient levels of AD in the economy.
What is cyclical unemployment?
(Current year CPI - Previous year CPI / Previous year CPI) x 100
What is annual inflation rate?
A stimulus measure used by the Australian government to increase disposable incomes in 2020.
What is the JobKeeper program?
The injection that flows from the financial sector to the business sector.
What is the investment flow?
Growth in real income, lowering unemployment rate, govt. can provide more essential services.
Why does Australia purse economic growth / what are the benefits of economic growth?
(Labour force / working age population) x 100
What is participation rate?
It can have negative effects on growth and employment as households delay consumption in the expectation of lower prices in the future.
What is a consequence of deflation / Why is deflation undesirable?
One of the main AD factors causing a huge reduction in real GDP over 2020.
What is consumer and business confidence?
The phase of the business cycle characterised by slowdown of economic growth, overvalued assets, high interest rates and injections falling relative to leakages.
What is the contraction / downturn phase?
A series of GDP statistics used to get an estimate of real GDP or the actual level of production.
What is chain volume measure of GDP?
The proportion of the labour force consisting of unemployed and underemployed individuals
What is underutilization rate?
It captures price movement of all goods and services in the economy.
What is headline rate of inflation?
The average value of the AUD compared to a weighted basket of foreign currencies of Australia’s trading partners.
What is the Trade Weighted Index?
A factor that is both an AD and an AS factor.
What are exchange rates?
An increase in unemployment caused when output increases due to greater productivity therefore removing the need to hire more labour.
What is jobless growth?
An effect that occurs when an initial fall in spending/incomes leads to a cascading effect on the economy and leads to a bigger final fall in real GDP.
What is the negative multiplier effect?
The type of inflation that may be caused due to stronger consumer and business confidence in the economy.
What is demand inflation?
An AS factor that helped Australia come out of recession in 2020, since it caused average costs to fall
What is labour productivity growth?