Circular Flow
Name the five sectors of the circular flow of income model.
Consumers (households), businesses (firms), financial institutions, government, and the overseas sector.
What is the business cycle?
The cyclical fluctuations in the general level of economic activity — periods of expansion (booms) and contraction (recessions/depressions).
State the law of demand.
As the price of a good or service increases, the quantity demanded decreases — and vice versa.
Define a market.
A market exists in any situation where buyers and sellers come together to exchange goods and services. It can be physical, spread across locations, or have no physical location.
How did Aboriginal and Torres Strait Islander peoples trade with each other?
They used bartering — swapping or exchanging one good or item for another, rather than using money.
What are the three leakages from the circular flow of income?
Savings (S), Taxation (T), and Imports (M).
Define a recession.
A recession is where an economy gets smaller (contracts) for a period of six months or longer.
State the law of supply.
As the price of a good or service increases, the quantity supplied increases — and vice versa.
What is the labour market?
The labour market is the buying and selling of labour — where employers (buyers) seek workers (sellers) to fill job vacancies.
Name THREE goods that were commonly traded by Aboriginal and Torres Strait Islander peoples.
Any three of: stones, shells (pearl/baler/trochus), ochre, stone axes, ceremonial items, food (fish, yams, turtle eggs), snake skins, mats, spears, wood carvings.
What are the three injections into the circular flow of income?
Investment (I), Government expenditure (G), and Exports (X).
List three key features of a BOOM.
Any three of: income/production at highest levels; full employment; high wages; businesses at full capacity; high interest rates; rising inflation rate.
What is market equilibrium?
The point at which the demand and supply curves intersect — where buyers and sellers agree on a price and quantity.
What is the Australian Securities Exchange (ASX)?
The ASX is Australia's stock market — where shares in over 2000 public companies are bought and sold.
How was it possible for trade routes to span thousands of kilometres across Australia?
Individual traders did not travel the entire distance. Goods, stories and ideas were passed from one community to the next along the route, like a relay.
What happens to the economy when injections are greater than leakages?
The economy grows and expands — economic growth occurs.
List three key features of a RECESSION.
Any three of: income/production at lowest levels; high unemployment; low inflation; falling wages; low consumer demand; many bankruptcies; low interest rates.
Give TWO reasons why demand for a product might increase.
Any two of: rise in consumer income; change in tastes (e.g. becomes fashionable); increase in population; substitute good becomes more expensive; complementary good becomes cheaper; expectation of future price rise.
What is a share in a company?
A share is a unit of ownership in a company. Businesses sell shares to raise money for investment, and buyers hope the share value will increase.
What is Wilgie Mia and why is it significant?
Wilgie Mia in Western Australia is the largest and deepest underground ochre mine in Australia, in operation for over 3,000 years. Red, yellow, white and black ochre was mined for ceremonies and trade.
What is the role of financial institutions as intermediaries in the circular flow? Name the Australian body that regulates this sector.
They receive savings from individuals/businesses and lend that money to borrowers. ASIC (Australian Securities and Investments Commission) regulates the financial sector.
What is the main cause of a recession, and why did Australia experience a Great Depression in the 1930s?
Recessions are caused by a lack of spending. The Great Depression spread from the USA after the 1929 Wall Street crash — businesses failed, unemployment hit 32% in Australia in 1932.
Give TWO reasons why the supply of a product might decrease.
Any two of: decreased efficiency; increase in cost of production; unfavourable climatic conditions (e.g. drought); decrease in the number of suppliers.
What is the role of financial markets, and name TWO examples of online job boards used in Australia's labour market?
Financial markets act as intermediaries between savers and borrowers in an economy. Online job boards include SEEK, Adzuna, Jora, and Australian JobSearch (any two).
Name TWO modern ways Aboriginal and Torres Strait Islander peoples use their cultural knowledge in contemporary markets.
Any two of: art and craft businesses; cultural tourism; land management enterprises; finance; mining; commercialisation of cultural practices.