General
What is the main purpose of the Reserve Bank of Australia?
to maintain economic stability by managing cash rate
This indicator measures the total value of all goods and services produced in AUS
GDP
i am the policy that adjusts the cash rate
monetary policy
inflation causes the purchasing power of money to...
decrease
what is GDP
Gross Domestic Product
Which level of government is responsible for setting tax rates?
federal
This indicator measures the change in price of a 'basket' of goods and services
Consumer Price Index (CPI)
name a public good that is provided by AUS Gov.
public parks, public hospitals etc.
how does high unemployment affect household spending?
define fiscal policy
a government policy that outlines how the government will make their money and how they are intending on spending moeny
Name one way the Aus. government aims to achieve sustainable economic growth
infrastructure, education,
how might a falling GDP growth rate influence gov. decisions?
may prompt the gov. to increase spending and cut tax to encourage spending
how does gov. spending on infrastructure help boost employment?
creates more job opportunities, leading to more income and spending
why might a business delay investing when interest rates are high?
higher borrowing cost = projects are more expensive, decreasing profit
define cash rate
interest rate set by the Reserve Bank for overnight loans between banks, influencing other interest rates
explain how globalisation can create both opportunities and challenges for AUS businesses
opportunities: access to larger market, cheaper resources
challenges: increased competition, reliance on overseas supply chains
this indicator measure the rate of people without a job
unemployment rate
how does rising inflation lead to increased wage demands
increase in pay is necessary to keep up with rising inflation
define living standards in an economic context
a measure of wealth, comfort and access to goods and services
analyse how global events, like a pandemic, can affect supply and demand
reduced production, ultimately decreasing consumer spending
why is using multiple indicators better than relying on one to assess economic performance?
provides a more accurate statement on the health of the economy
analyse the potential benefits and drawbacks of using tax cuts to stimulate economic growth
benefits: boosts spending, encourages growth
drawback: reduce gov. revenue, risk of inflation (demand goes too high)
evaluate how high interest rates can reduce inflation but slow economic growth
reduce borrowing and spending, lowers demand and inflation, slower growth, higher unemployment