Basic Concepts
An economic system where prices are base on competition between private enterprises rather than controlled by the government
What is the free market?
Funds that manage contributions from employers and employees to provide retirement income
What are superannuation funds?
Measures the degree of optimism that consumers feel in the overall state of the economy
What is consumer confidence?
This is when the government takes action in markets to reduce negative externalities and encourage positive ones
What is government intervention?
The flow of money and goods and services between different sectors of the economy
What is the circular flow model?
Places where buyers and sellers engage in the buying and selling of financial products
What are financial markets?
The total value of all final goods and services produced in a country
What is Gross Domestic Product?
Two consecutive quarters (3 months of the financial year) of negative economic growth
What is a recession?
Transactions that put money elsewhere into the economy
What are injections?
The market type where workers and employers interact with one another
What is the labour market?
The cyclical fluctuations in the general level of economic activity
What is the business cycle?
The decrease in the level of economic activity resulting in a slowdown of economic growth
What are contractions?
This transaction type takes money out of the economy, for example, buying products from overseas businesses
What is a leakage?
Savings tied up for a fixed period, with the saver is compensated by a higher rate of interest
What are fixed deposits?
A consumer’s willingness and ability to pay a particular price for a product at a given point in time
An often-short-lived period of rapid growth of real GDP, where businesses operate at full capacity and unemployment is low
What is an economic boom?
This sector of the economy consists of individuals and families
What is the household sector?
The primary stock market in Australia, which has over 2000 companies listed
What is the Australian Securities Exchange (ASX)?
This is the point where buyers and sellers agree on a price, because the amount people want to buy is the same as the amount businesses want to sell
What is the market equilibrium?
The quantity of a good or service that businesses are willing and able to offer for sale at a given price at a given point in time
What is supply?