inflation
what's the target rate of low and stable inflation?
2-3%
How do we measure the rate of economic growth?
GDP
what's the target rate of unemployment?
4.5-5%
One example of non-material living standard
literacy rate
Why we don't want 0% inflation?
because it means very slow growth of economic activities. Weak economic growth and high cyclical unemployment
what is GDP
GDP is the final market value of all goods and services produced in Australia over a given period of time.
what is cyclical unemployment?
prompted by slow AD, connect to business cycle.
e.g. decreased consumer confidence.
4 stages of business cycle
peak slowndown trough recovery
name 2 ways of measuring inflation rate
headline inflation and underlying inflation
explain the goal of low and stable inflation - needs to be completed.
The goal of strong and sustainable economic growth is defined as the fastest rate of growth (averaging 3% per year) in national production that is consistent with achieving a low inflation rate and other government goal
mismatch of skills
total expenditure by household, gov, and net overseas transactions on new final AU made g&s
what's the difference between inflation, disinflation and deflation?
inflation: when the price of most g&s are going up over a period of time.
Disinflation: when the rate of inflation between one period and the next is still positive but decreasing
Deflation: when inflation is negative
what are some benefits of achieving the goal of strong and sustainable economic growth?
it lowers the unemployment rate, improving economic.
it raises average incomes and purchasing power. improving living standards.
why we don't want 0 unemployment rate?
cost inflation.
increase
distortion of purchasing power
low returns on investment
2 consequences if the rate of economic growth is too high.
high inflation rate
environmental degradation
What's the formula for under-utilisation rate?
(unemployed + underemployed) รท labour force x 100
Explain relationship between material living standards and non-material living standards.
conflicting relationships & compatible relationship.