Economic Basics
What is GDP?
Gross Domestic Product - measures the total value of goods and services produced within a country.
What is the peak phase?
The phase of the business cycle when the economy reaches its highest point.
What is fiscal policy?
A policy using government spending and taxation to influence the economy.
What are material living standards?
Access to healthcare, education, income and good - physical things you can use.
What is economic management?
This occurs when governments try to balance inflation control with job creation.
What is the expansion phase?
When GDP increases and unemployment falls (one of the four phases of the business cycles)
The type of unemployment that happens because these jobs only exist at certain times of the year.
What is social welfare?
Payments made by the government to help people in need, such as unemployment benefits.
What are non-material living standards?
Feeling safe, happy and free - things you can feel but not touch.
What is a recession?
When the economy slows down and GDP decreases for 2 consecutive quarters.
What is unemployment?
When people are actively seeking work but cannot find a job.
What is GDP per capita?
A measure of the value of goods and services produced per person over time.
What is progressive taxation?
A taxation system that takes a larger percentage of income from higher earners than from lower earners.
What is GDP and why is it a limited as a measure of living standard?
This economic measure shows a country’s production value but fails to capture quality-of-life factors like health, leisure, and environmental wellbeing.
What is scarcity?
Limited resources and unlimited wants.
What is inflation?
An overall increase in the price level of goods and services.
What is interdependence?
Describes how households and businesses rely on each other in the circular-flow model.
What is a budget surplus?
What are the differences in income distribution and living standards?
This concept helps explain why an Australian household might enjoy higher access to services and goods than one in a developing country.
What is opportunity cost?
What is a budget deficit?
When the government's spending exceeds government revenue.
The percentage of people in the labour force who are jobless but looking for work.
What is tightening fiscal policy/contractionary policy?
One way the government might respond to high inflation by decreasing spending or increasing taxes.
What is income redistribution policy?
Governments use this type of policy—such as progressive taxation and welfare payments—to narrow the gap between rich and poor citizens.
What is the economic trade-off between growth, unemployment, and inflation?
This economic principle shows how increasing production can lower unemployment but may also raise prices, creating a trade-off between growth, jobs, and inflation.