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Economics - Coggle Diagram
Economics
Concepts
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Specialisation & Trade: Refers to the way an individual/business/country can focus on the production of a good/service.
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Allocation & Markets: Refers to how we distribute our scarce resources among producers and how we distribute goods & services among customers.
Economic Performance & Living Standards: Gross Domestic Product, inflation and unemployment rates are key indicators of economic performance.
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Unemployment
Definition: People aged 15 and above who aren't employed for at least one hour a week. The current unemployment rate in Australia is 7.4%
The unemployment rate is calculated as the number of people employed divided by the labour force multiplied by 100.
Types of unemployment
Structural: Loss of job resulting from a mismatch of skills or technology replacing labour; an example is ATMs.
Frictional: The time in between finishing one job and starting another; common in areas such as construction and hospitality.
Cyclical: Common during the recession phase of the business cycle; when the economy isn't doing well, businesses collect less profit which means they lay off workers.
Hard-core unemployment: Those regarded as "unemployable"; the chronically ill, disabled, unqualified, etc
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Effects of unemployment
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Political
Reflects poorly on the government and usually is a sign the the government isn't doing a very good job.
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Economic Growth
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GDP
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However, GDP has limitations, such as the fact that it doesn't take many economic factors into account, and alone cannot be used to accurately assess the economic performance of a country.
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Inflation
Consumer Price Index: a measure of the average change in the prices paid by consumers for a market basket of consumer goods and services.
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Causes of inflation - increased customer confidence, increased business confidence, increased demand for exports.
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Economic Policies
Macroeconomic Policies
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Types
Monetary
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Affects living standards because it changes how much money families are able to spend on goods and services
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Microeconomic Policies
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Types
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Labour Market Reform: Wages and working conditions are decided at enterprise level instead of by government institutions
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Migration
The government decides who to let live here based on criteria such as skills, health, security, age, family and humanitarian need
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Living Standards
OECD Better Life Index
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it measures factors of living standards such as education, housing and environment, income, life satisfaction, jobs, community, government and health
A tool that allows a country's performance to compare to another's according to what makes for a better life.
Types
Material
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Example: food, housing, water
Non-material
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Examples: freedom of speech, crime rate and free elections