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Economics and Business - Coggle Diagram
Economics and Business
Week 1
Scarcity
Scarcity is the economic problem of having unlimited needs and wants, but limited resources available
Capital
Manufactured resources such as equipment
Entrepreneurship
Management resources such as skills or talent required to bring the resources together
Land
Natural resources such as coal and water
Labour
Work, especially physically
Making Choices
In order to make a good economic decision, we must consider our options
Financial choices (such as how much money to save or spend)
Legal decisions (such as whether or not to take legal action over a faulty product)
Business decisions (such as what to produce or where to sell a product)
Employment decisions (such as what to produce or where to sell a product)
Specialisation and Trade
Specialisation refers to the way an individual, business, or entire country can focus on the production of a particular good or service in order to develop a more efficient and competitive production process
Specialisation in an industry allows a country to become more efficient over time as productions increase and the country is able to take advantage of economies of scale
The mass production of goods is cheaper than producing goods or services in smaller quantities
Interdependence
Interdependence refers to the way we rely on others to satisfy our needs and wants
Allocation and Markets
It also refers to the way we distribute scarce goods or services among consumers
The exchange of goods and services among buyers and sellers is referred to as a market. We often rely on price in order to determine how much we are able to produce and consume
Allocation refers to the way we distribute our scarce resources among producers
When the cost of producing or obtaining a particular resource is high, not everyone will be able to obtain it
Week 2
Economic Performance and Living Standards
Inflation
The general increase in process of goods and services
Inflation occurs when there is an increase in the general level of prices paid for goods and services over a certain period of time
Rising prices means consumers must pay more for goods and services if they want to continue to maintain their standard of living
E.g. $100 spent on goods and services in 1980 were worth $408 in 2015
Reasons for Inflation
Stronger demand can lead to shortages of goods and services therefore increasing prices
This may be due to:
Businesses feeling confident about their future
Trading partners such as China performing well increase export demands
Consumers feeling confident about their future income and employment
Major factor causing rising prices is stronger demand in the economy for goods and services
Measuring Inflation
The ABS measures inflation using the Consumer Price Index (CPI)
CPI measures the price change of a typical basket of goods and services purchased by Australian households every quarter
Economists measure how well an economy is doing (known as its economic performance) using a wide variety of methods
Unemployment Rate
The percentage of people who are unemployed out of all people who are able to work
Economists also measure living standards
The material living standard refers to our access to physical goods and services. Non-material living standards are harder to measure and include things that may contribute to our happiness such as freedom, low crime rates, access to facilities or free elections
Gross Domestic Product (GDP)
A measure of total value (in dollars) of all goods and services produced in Australia over a specific period of time
Economists hope to see an economic growth of 2% annually
Total value of gods and services produced in a country over a year
The Importance of Economic Growth
Fall in Economic Growth
Recession
When economic growth falls two or more quarters
Depression
Classed as an extreme recession lasting two or more years
Decrease in available credit
Increase in unemployment
Economic growth falls
Decrease in living standards
Week 3
H&SS Unemployment Essay Notes
Body Paragraph 1
Outlines one type of unemployment
Economic Effects
Increase government expenditure: large proportion of labour force unemployed, means government spending on welfare will increase
Loss of government revenue: less people employed means less tax revenue for the government
Social Effects
Increase in crime and drug abuse
Increase in suicide and other mental health issues
Structural Unemployment
More than five million jobs, almost 40 per cent of Australian jobs that exist today, have a moderate to high likelihood of disappearing in the next 10 to 15 years due to technological advancements, a CEDA report being released today has found
• For example: Assembly-line and factory workers
Refers to loss of jobs resulting from mismatch of skills or machines replacing labour
Body Paragraph 2
Outlines one type of unemployment
Economic Effects
GDP (Gross Domestic Product)
A measure of total value (in dollars) of all goods and services produced in Australia over a specific period of time
Economists hope to see an economic growth of 2% annually
A measure of total value (in dollars) of all goods and services produced in Australia over a specific period of time
Loss of output: the production of goods and services reduces
Its GDP was estimated at A$1.89 trillion as of 2019
Political Effects
Leads to a loss of faith in the current government
Seasonal Unemployment
This is related to occupations that are offered at particular times of the year
Examples: fruit pickers, skiing resorts and sheep shearing
Introduction
Defines Unemployment
Unemployment refers to people who are able and willing to work but due to complications are unable to.
Explains how the unemployment rate is calculated
Labour force refers to all the eligible workers. Everyone who has a job plus those who are looking for one
Unemployment rate will never be 0 as people are always changing jobs and machines will always replace labour. Anything 5-6% is generally acceptable
(Number Unemployed)/(Labour Force)x 100
States the current unemployment rate in Australia
Australia’s unemployment rate: 7.4%
5.3% in 2019
Explains why unemployment is an issue for a nation
Economic
Loss of income: no jobs mean no money and higher reliance on government assistance
Loss of government revenue: less people employed means less tax revenue for the government
Loss of output: the production of goods and services reduces
Increase government expenditure: large proportion of labour force unemployed, means government spending on welfare will increase
Political
High levels of unemployment reflect poorly on the state and federal government
Social
Increased in crime and drug abuse
Increased family tensions/breakups
Lower standard of living
Increased suicide and other mental health issues
Loss of self-esteem and confidence
Types of Unemployment
Seasonal Unemployment
This is related to occupations that are offered at particular times of the year
Examples: fruit pickers, skiing resorts and sheep shearing
Cyclical Unemployment
It is common during a recession phase
When economic growth falls two or more quarters
During wear economic growth, consumers are not buying as many goods and services
Also known as demand-deficient unemployment
Firms/businesses respond by cutting down production and firing workers
Structural Unemployment
Refers to loss of jobs resulting from mismatch of skills or machines replacing labour
For example: Assembly-line and factory workers
Body Paragraph 3
Outlines one type of unemployment
Economic Effects
Loss of income: no jobs means no money and higher reliance on government assistance
Loss of government revenue: less people employed means less tax revenue for the government
Social Effects
Lower standard of living
Leads to a loss of faith in the current government
Cyclical Unemployment/Demand-Deficient Unemployment
Firms/businesses respond by cutting down production and firing workers
Example: COVID 19
Leads to a loss of faith in the current government
Australia lost a further 227,000 jobs between April and May, resulting in a total loss of 835,000 jobs in seasonally adjusted terms since March and a 0.7% jump in unemployment to 7.1%.
It is common during a recession phase
When economic growth falls two or more quarters
Week 7
Article Analysis Essay Notes
Article: dated, newspaper named, and page number stated
The article, ‘Inflation data show how bushfires, drought and COVID-19 pushed up grocery costs,’ was articulated by business reporter, Michael Janda, of the ABC Network, ABC News, on Wednesday the 29th of April 2020 at 3:47pmAWST (Australian Western Standard Time).
Describes and explains the main issue of the article
Define the main issue
The ABS measures Consumer Price Index (CPI)
CPI measures price change of a typical basket of g+s purchased by Australian households every quarter
Inflation occurs when there is an increase in the general level of prices paid for goods and services over a certain period of time
Weighted aver 8 capital cities in Mar quart -1.9% inflation rate
Food and non-alcoholic 0.5%
“Australians have seen a rare rise in inflation, as a series of crises conspired to push up the cost of essential groceries even as many other prices hit multi-decade lows.”
Explain why it's an issue
Provide extra supporting evidence of the issue (research)
Describe the main issue in the article
Give specific examples, quotes and stats from the article
Explains the current impact of the issue on society
Explain the causes
Explain the impacts
State issue
Provide extra supporting evidence of the issue (research)
Despite above average rainfall for much of south-eastern Australia and parts of the inland northwest and Northern Territory during one or more months in 2020-to-date, serious or severe longer-term rainfall deficiencies persist over very large areas. ABM Australian Bureau of Meteorology
While the COVID-19 pandemic has and will continue to present challenges for Australia's agricultural sector, the recovery from drought dominates the outlook for 2020–21. Farm production is forecast to rebound in 2020–21, after one of the worst droughts in over 100 years (in terms of rainfall).
Bangladesh total area 147, 570km2
This follows 3 consecutive years of contraction in output. Despite a resurgence in production, the gross value of farm production is forecast to increase by only 1% to $61 billion in 2020–21 as a result of falling prices. -AGDAWE Australian Department of Agriculture, Water and the Environment
AFAC (Australasian Fire and Emergency Service Authorities Council) published on 28 February 2020 - 17 million hectares (170000km2)- burned across NSW, Victoria, Queensland, ACT, Western Australia and South Australia
Woolworths Group LTD Stock Exchange experienced a decrease in the value per stock of -$3.02AUD (7.99%) during the March quarter
Describes and explains the potential future impacts of the issue on society
Explain the impacts of the issue if it continues
Find previous example of when this has happened and the impacts it had on society
WWI, 1 US dollar: 4 Reichsmarks.
1923 1US dollar: 4 trillion Reichsmarks
Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.
Why is it a problem?
Use of Economics terminology
Week 8
Material Living Standards
Material living standards refer to our access to physical goods and services.
Material living standards of a nation is measured by the quantity of goods and services available each year as measured by GDP.
Non-Material Living Standards
Non-material living standards cannot be measured in dollar terms and are intangible.
For example:
Low levels of crime and discrimination
Preservation of the environment
Freedom of Speech
Adequate leisure time
Living Standards
The living standards of a population is measured in two ways: material living standards and non-material living standards.
The OECD Better Life Index
Includes material and non-material living standards to assess overall wellbeing.
Seeks to provide the true living standard of 40 different countries by measuring progress based on 11 criteria.
Organisation for Economic Co-operation and Development Better Life Index.
Week 9
Macroeconomic Policies
Budgetary Policy
Monetary Policy
The main focus of the monetary policy by the RBS is changing the official interest rate, which ultimately changes the official interest rate, which ultimately changes the rate of interest paid on a bank loan.
If interest rates rise, demand for goods and services may be curbed, as consumers and businesses who have borrowed money devote more of their money to paying higher interest rates on their loans rather than spending. Some may defer borrowing entirely because of higher interest rates. The opposite
Microeconomic Policies
Labour Market Reform
Labour market reform has seen a movement away from government institutions determining wages and working conditions to a system where wages and working conditions are determined directly at the enterprise level between employers and employees.
Through negotiating what is called an enterprise agreement the employer may gain improvements in work efficiency and the employee might gain better benefits and more flexibility.
Productivity Policy
Productivity measures how efficiently resources are used to produce a given level of output.
Can be increased by improving labour resources so that workers are able to produce more goods and services per hour.
Deregulation
Deregulation is the removal of government regulation (rules) in a certain area of the economy.
An example of deregulation is of telecommunications industry which saw Optus, Vodafone, AAPT and other small providers enter the market in the 1990s, resulting in price decreases and growth in mobile phone and Internet markets.
Training and Workforce Development Policy
Workforce development focuses on improving the workforce so that more can be produced. The workforce refers to the people who work or are eligible to work in a particular area, which could be a region, state, nation or in a particular industry.
Development of the workforce may focus on helping low-skilled workers access training programs to improve their knowledge and skills. Workforce development may also focus on solutions to address a shortage of workers in a particular industry.
Trade Liberation
Trade liberalisation involves opening up markets for free trade so that countries can trade without restrictions.
It is thought that the removal of these trade restrictions will promote efficiency, as Australian producers must find ways to compete on the world market by cutting costs and becoming more innovative.
Migration Policy
Human migration is the movement if people from one place in the world to another to live permanently or temporarily.
In recent years, the focus of Australia’s migration program has been on migrants to provide skills labour in areas of need in the economy. Migrants coming to Australia in recent years are mainly young (aged under 40) and of prime working age to contribute to the country’s production.
