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ECONOMICS - Coggle Diagram
ECONOMICS
CONCEPTS
SCARCITY - Situation of having limited resources, but unlimited needs and wants.
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SPECIALISATION AND TRADE - Countries will specialize in types of product in order to have extra that they can trade for things they need because it might be more efficient or more cost-effective.
INDEPENDANCE - Independence refers to how individuals, businesses and governments rely on each other.
KEY INDICATORS OF ECONOMIC ACTIVITY - Economics investigate many different indicators to build up a picture of the Australian economy is performing. Some of the key indicators include: Economic growth rates (GPD), unemployment rates, inflation rates.
ECONOMIC GROWTH -
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If it grows faster than "speed limit", people may be worse off through high inflation.
It is also harmful if the economy grows too slowly, because people lose their jobs and business struggle to make profits
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INFLATION - Inflation is an increase in the prices of goods and services that households buy. It is measured as the change in those prices over time.
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If inflation is too high, then prices might rise higher than incomes. This means people can afford fewer goods and services than before, making them worse off.
SOME REASONS HIGH INFLATION COULD OCCUR: The economy grows faster than its speed limit, Demand for goods and services could exceed what businesses can supply and businesses may increase wages if it is difficult to find workers. Both of these factors will lead to higher prices.
RECESSION AND DEPRESSION: A recession is two quarters of a negative GPD growth. A depression is more severe and lasts for 2 years.
UNEMPLOYMENT: Unemployment occurs when someone is available and actively looking for work, but does not have a paid job.
UNEMPLOYMENT RATE: Measures by the unemployment rate, which is the share of people in the labor force who are unemployed.
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CURRENT FIGURES:- Australia’s current unemployment rate is 4.6%, down from 6.8% last year. Natural/” good” unemployment is within 4.5-5.5%.
CAUSES OF UNEMPLOYMENT
CYCLICAL:- It is caused by economic downturn. (Ex – slow or negative GPD growth, such as during the Great Depression.)
- It is largely unavoidable, but temporary.
STRUCTURAL:- This type of unemployment occurs if the way goods/services have produced changes, such as due to technology. The skills end training of those workers does not match the current labor market. This also occurs when jobs are offshored. This is longer lasting and harder to fix. Can be solved by training or relocating.
FRICTIONAL: Frictional unemployment occurs when someone is looking for a new job, whether they quit or were fired. Generally short term (less than 1 month).
SEASONAL: This type of unemployment occurs when a job ends at a time of year, such as fruit pickers or tourism jobs, leading to low labor demand.