Key Concepts in Economics
What is inflation?
A general increase in the price of goods + services
The process of transforming raw materials into finished products
A type of card that allows you to borrow money to make purchases but must be repaid later.
A credit card.
What is a mortgage?
A type of loan used to buy a house.
The term for a person who starts, operates and assumes the risk of a business venture.
What is the budgeting term for expenses that change month-to-month?
Variable expenses
What is Australia's largest supermarket chain by market share?
Woolworths
What does CPI stand for?
What is it used for?
Consumer Price Index
Used to measure inflation (increases in the price of goods + services)
Taxes on imported goods, often used to protect domestic industries.
Tariffs
Name the 4 P's of marketing
Price, Product, Promotion, Place
What is the term used to describe Australian retirement funds?
Superannuation
The term for the money a business has left over after you deduct expenses from revenue.
Profit
What is the budgeting term for money left over after paying all expenses?
Disposable income
Who is Australia's largest trading partner by imports and exports?
China
Explain the difference between 'micro' and 'macro' economics.
'Micro' - choices of individuals and businesses - budgeting, spending, saving.
'Macro' - economics at a higher/government level, e.g. GDP, unemployment rates, etc.
What is supply?
Explain the law of supply
Supply: The number of goods and services available
Law of supply: As the price of a good/service increases, the quantity supplied generally increases.
Explain the difference between monetary and fiscal policy
Monetary - adjusting interest rates, actions carried out by the RBA
Fiscal - government policy related to the economy
What the is the name for the part of a business responsible for hiring, training and managing employees?
Human Resources (HR)
A type of business where the owner and business are legally the same entity.
Sole trader
What does HISA stand for?
High Interest Savings Account
Which government agency is responsible for forecasting and monitoring Australia's economic growth and financial trends?
The Australian Treasury
What is the difference between people who are unemployed and who are not in the labour force?
Not in the labour force are people who are not looking for work.
To be counted as unemployed, you must be looking for work within the last week.
When a country imports more goods and services than it exports, this is known as:
A trade deficit
A type of organisation that is funded by donations and focuses on charitable work.
A not-for-profit organisation.
Explain how the cash rate affects interest rates.
Cash rate is the interest rate charged on loans between banks. If this rate goes up, banks put up their consumer interest rates to cover their costs.
The money a business earns from its sales
Revenue
The Australian government has a scheme that helps people use some of their retirement savings to buy a house. What is this scheme called?
First Home Super Saver Scheme (FHSSS)
What is the name for the business model that involves selling directly to customers online without holding any inventory?
Explain two different types of unemployment and give an example of each.
Frictional - moving between employment sectors or in/out of labour market
Structural - caused by changes in society or the way businesses are structured
Cyclical - caused by downturns in the business cycle
Name the 5 Sectors of the Economy 'in order'
Households
Firms
Financial Institutions
Goverment
Overseas/Foreign Sector
What is a 'partnership'?
A legal structure where two or more people share ownership and responsibility for a business.
Explain how increases in interest rates are intended to decrease inflation.
Interest rates affect people who have debt, making them have less disposable income > as their debt becomes more expensive.
The lack of disposable income decreases aggregate demand for goods/services -> less demand = prices stabilise
What are the three main types of resources a business uses?
Land, Labour and Capital
Capital = the tools & buildings used to produce goods & services
What is the full name given to the Australian marketplace where you can buy and sell shares?
Australian Securities Exchange (ASX)
What is a 'monopoly'? Why is it bad for consumers?
A company that is the only supplier of a good or service in a market.
Bad for consumers = No competition/alternatives means these companies can set their prices as high as they like.