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Purpose of economic activity - Coggle Diagram
Purpose of economic activity
Living Standard Factors
Physical & Mental Health
Life Expectancy
Environmental Quality
Crime Rates
Access to Goods & Services
Literacy Rates
Leakages:
Reduces the level of economics activity
Taxes:
Households sectors pay taxes to the Government Sector
Imports:
The economy pays goods and services from other countries through External/Overseas Sectors
Savings:
households sectors deposit their income into the Financial Sector
Injections:
Increases the level of economic activity
Government Expenditure:
Government uses the tax revenue it receives for a number of Government spending
Exports:
Income earned from Australian goods and services sold to other countries
Investments:
Funds that are saved become available to the firms in the Financial Sectors
Business Cycle
Stage 1: Peak
- Inflation: High
Economic Growth: High
Unemployment Rate: Low eventually increasing
Interest Rates: Increase
Stage 2: Contraction
- Inflation: Decreaing
Economic Growth: Slowing Down
Unemployment Rate: Increasing
Interest Rates: Decrease
Stage 3: Trough
- Inflation: Minimum
Economic Growth: Very low or Negative
Unemployment Rate: High
Interest Rates: Very low
Stage 4: Recovery
- Inflation: Gradually increasing
Economic Growth: Increasing
Unemployment Rate: Decreasing
Interest Rates: Gradually increasing
Aggregate Demand:
Measures the total expenditure on new final Australian goods and services
AD = C+I+G+(X-M)
Factors Influencing AD:
Change in Inflation
Disposable Income
Interest Rates
Consumer Confidence
Business Confidence
Exchange Rates ( Exports)
Economic Growth (Overseas)
C - Consumption Expenditure:
The total value of all expenditure on individual and collective consumption goods incurred by resident households and non-profit institutions serving households
I - Investment:
Purchase of new equipment, plants, buildings and vehicles to expand productive capacity and productivity in business sectors
G - Government Expenditure:
G1 - Consumption
, spending on Govt services (Health, education, defence etc)
G2 - Investment
, Spending on goods that are capital in nature
this can help increase productive capacity and decrease cost of production
Aggregate Supply:
The total volume of goods and services that all suppliers have produced and supplied over a period of time
Factors Influencing AS:
Quantity of production (Input, Skilled labour, Investment)
Quality of production (land, Labour, Capital)
Cost of Production
Technology Change
Productivity Growth
Exchange Rates
Government Regulation
Climate Change