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Economics and business - Coggle Diagram
Economics and business
key concepts
Scarcity-the economic problem of having unlimited needs and wants, but limited resources available.
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o Entrepreneurship- management resources such as the skills or talent to bring the resources together.
Making Choices- to make a good decision, we must consider our options
We must make the following economic decision
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Specialisation and trade- refers to the way an individual, business, or entire country can focus on the production of a particular good or service to develop a more efficient and competitive production process
Interdependence- refers to the way we reply on others to satisfy our needs and wants 
Allocation and markets- allocation refers to the way distribute our scare resources among producers and consumers. The exchange of goods and services among buyers and sellers is referred to as a market.
Economic performance and living standards- economics measure how well an economy is doing (economic performance).
Some key indicators of economic performance include:
oGross domestic product (GDP)- total value of goods and services produced in a country over a year.
oInflation- the general increase of people who are unemployed out of all people who can work.
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o Non-material living standards are harder to include things that may contribute to our happiness, such as freedom, low crime levels, access to facilities or free elections.
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Economic performance
importance of GDP, if GDP increases the economy is growing. When the economy grows more goods and services are produced and more people are able to spend on a wider range of goods and services improvement in living standards.
Gross Domestic Product is the total value in Australia dollars, of all produced in Australia over a year.
Cause of change
Recession: when the economic growth falls from two or more quarters in a row (6 or more months)
Depression: closed as an extreme recession lasting 2 or more years
-economic growth falls
-Decreases in available credit
-Increase in unemployment
-Drecrease in living standards
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Importance of GDP: rising prices mean consumers must pay more for goods and services if they want to continue to maintain their standards of living.
Inflation-occurs when there is an increase in the general level of prices paid for foods goods and services over a certain period of time.
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Rising prices means consumers must pay more for g&s if they want to continue to maintain their standard of living.
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Cause of change: stronger demand can lead to shortages of goods and services therefore increasing prices due to,
consumers feeling confident about their future income and employment.
Business feeling confident about their furture
Trading partners such as China performing well increases export demands
Low interests rates encourage customers to borrow more
unemployment
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Labour force refers to all the eligible workers. Everyone who has a job plus those who are looking for one.
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measuring unemployment
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Unemployment rate will never be 0 as people are always changing jobs and machines will always replace labour. Anything 5-6% is generally acceptable.
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•Increase government expenditure: large proportion of labour force unemployed, means government spending on welfare will increase.
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types of unemployment
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types of unemployment
Frictional- refers to time spent waiting for a new job. its the time period between finishing one job and starting another. this type of unemployment is usually voluntary and of the shortest duration
Cyclical- also known as demand-deficient unemployment, it is common during recession phase, during when economic growth, consumers are not buying as many goods and services, firms/businesses respond by cutting down production and firing workers.
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Hard-core- includes those regarded as being virtually unemployable, this my be chronically ill, have disability, unskilled, unqualified, inexperienced or distinterested
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