Key Economic Terms & Performance

• Key economic terms and their effects on economic performance.

Gross Domestic Product (GDP)

• The total value of all goods/services produced within a country during a specific period.
• Gross Domestic Product (GDP) is usually measured annually or quarterly.
• GDP is a key indicator of economic performance

Productivity

• The efficiency with which goods and services are produced.
• Productivity is typically measured as output per worker or per hour worked
• Higher productivity leads to economic growth.

Inflation

• The rate at which the general price level of goods and services rises over time.
• Inflation reduces the purchasing power of money.
• Inflation is commonly measured by the Consumer Price Index (CPI).

Living Standards

• The overall quality of life of individuals in a country.
• Living Standards are measured by factors such as income, healthcare, education, and access to necessities

Labour Force

• The total number of people who are employed or actively seeking employment in an economy.
• The Labour Force includes both full-time and part-time workers.

Unemployment Rate

• The percentage of the labor force that is actively seeking but is unable to find work.
• The Unemployment Rate is a key indicator of economic health.

Causes of Living Standards

• Economic growth, income levels, access to healthcare and education, employment rates, government policies all contribute to living standards.

Effects of Living Standards

• Higher living standards lead to better quality of life, improved health, and increased economic stability.
• Lower living standards can result in poverty, poor health, and social unrest.

High Inflation Rates

• Increased demand for goods and services, higher production costs, and excessive money supply can cause high inflation rates.
• Decreased purchasing power, higher cost of living, and reduced savings are effects of inflation.

Growing GDP

• Increased consumer spending, higher productivity, and technological advancements can lead to growing GDP.
• More job opportunities, higher wages, and improved living standards can be effects of growing GDP

Rising Unemployment Rate

• Economic downturns, automation, and outsourcing of jobs can cause a rising unemployment rate.
• Lower income levels, increased poverty, and reduced consumer spending can be effects of a rising unemployment rate

Measuring a Country's Living Standard

• GDP per capita
• Human Development Index (HDI)
• Life expectancy
• Literacy rates
• Unemployment rate
• Inflation rate
• Income distribution (Gini coefficient)
• Access to healthcare
• Quality of infrastructure
• Environmental sustainability

Cyclical Unemployment

• Caused by economic downturns or recessions when businesses reduce their workforce due to decreased demand.

Structural Unemployment

• This occurs when workers' skills no longer match available jobs, often due to technological changes

Seasonal Unemployment

• Happens in industries with seasonal demand, like agriculture and tourism

Frictional Unemployment

• Short-term unemployment when workers are between jobs or entering the workforce for the first time.

Recession

• A temporary economic decline lasting at least two consecutive quarters.
• Recession is characterized by lower GDP, reduced consumer spending, and higher unemployment.

Depression

• A prolonged and severe economic downturn lasting years.
• Depression presents with massive unemployment, widespread business failures, and a deep drop in GDP.

Strengths of Australia's Economy

• Australia has strong trade relationships, high standard of living, a stable financial system, abundant natural resources, and low unemployment.

Weaknesses of Australia's Economy

• Australia faces dependence on resource exports, housing affordability issues, climate-related risks, and income inequality

Australian Economy Compared to other countries

• Australia has a relatively strong and stable economy, but faces challenges such as reliance on global markets and climate change impacts.

Definitions of GDP, productivity, inflation and standards of living and their effects on economic performance. GDP measures goods/services produced within a country. Productivity measures efficiency. Inflation is the rise in price levels.