This is the checklist/main points to memorise for Economics Year 11 Final Exam. Of course, I have removed many extra details which you can access in the specific sections. As well as that, there are very big parts that would be too hard to summarise so there may be some sections of the course missing. This is what I think are the MAIN points that should be memorised. Good luck with your exam!
Non Price Factors
- Discuss the non-price factors affecting demand
- Tastes and Preferences
- Expectation of Consumers
- Price of Related Goods
- Income [Disposable]
- Demographic Factors
- Discuss the non-price factors affecting supply
- Technology
- Expectation of Producers
- Price of Other Goods
- Input Prices
- Government Regulations
Determinants of Price Elasticity
- Explain the determinants of price elasticity of demand
- Time
- Availability of Substitutes
- Proportion of Income
- Luxury or Necessity
- Definition of Market
- Explain the determinants of price elasticity of supply
- Time
- Ability to store inventory
- Nature of Industry
Common Property Resources & Public Goods
Private Goods
- Rival and Excludable
- E.g. Clothing, food, stationary
Club Goods
- Non-rival but Excludable
- E.g. Gyms, Concerts, Movies
Common Property Resources
- Rival but Non-Excludable
- E.g. Fish in the ocean
- Leads to tragedy of the commons
- Refers to the over-consumption of common property recourses, e.g. Over fishing
- Occurs as the resource is readily available and there are no restrictions on consumption
- However, once consumed the resource is not available to any other party.
Public Goods
- Neither Non-rival nor Non-Excludable
- E.g. National Parks
- Leads to free rider effect
- Free riders enjoy the benefits of the consumption of a resource without paying for the cost of provision
- This can lead to over-consumption and rapid damage of a public resource
Definitions :0 (For Economic Indicators)
Economic Growth: An increase in the capacity of an economy to produce goods and services over time.
- Potential Growth: The rate of increase in the capacity of the economy to satisfy the needs and wants of people in an economy
- Actual Growth: The rate of change in real gross domestic product over a given period of time.
Inflation: Persistent and appreciable rise in the general or average level of prices over time.
- Measured by Consumer Price Index (CPI): Weighted index based on proportion of income spent on particular items
- Measures changes in the price of a basket of goods and services bought by households from 1 quarter to the next
Unemployment: Refers to the people who are willing and able to work but cannot find a job.
- (Number of People who are unemployed / Labour Force) x 100
- Labour Force Participation Rate
- (Labour Force / Working Age Population) x 100
Economic Growth
The Benefits, Costs and Limitations of Economic Growth
Benefits:
- Fiscal Dividend
- Rising income means higher taxation which can be used on public & merit goods
- Lower Unemployment
- Stimulates labour as more jobs are available
- Improved Efficiency
- Machinery can be employed to increase efficiency and therefore quality can increase
Costs:
- Inflationary Pressure
- When all resources are employed and the economy is working at full capacity
- Structural Unemployment
- When people want new types of goods & services or new inventions are made
- Environmental Degradation
Limitations:
- Doesn’t describe income distrubution
- Non-market distribution is not accounted for -> Black Market, Private, Volunteer
- Ignores Externalities
Determinants of Economic Growth
Potential Growth:
- Population Growth
- Labour Force Participation
- Multi-Factor Production
- Rising Labour Productivity
Actual Growth:
- Consumption
- Investment
- Government Expenditure
- Exports
Nominal GDP vs Real GDP???
Inflation
Demand Pull Inflation
- Excess of aggregate demand over aggregate supply at the full employment level of output and is caused by an increase in aggregate demand.
- Rise in the general price level resulting from an excess of demand over supply
- “Too much money chasing too few goods”
- Will also push wage prices up with higher demand for labour
Cost Push Inflation
- Caused by a fall in aggregate supply, in turn resulting from increase in wages or prices of other inputs
- Rise in production costs are passed on to consumers who have to pay higher prices for final goods and services
The Benefits, Costs and Limitations of Inflation
Benefits:
- Maintain low real interest rates
- Creates confidence about growth of economy
Costs:
- Reduces Real Income
- International Competitiveness: Bad for exports -> Good for Imports
- Uncertainty for Decision Makers
- Increase in Income Equality
Limitations:
- Only reports price movements in metro areas
- Doesn’t account for quality of goods & services
Unemployment
Cyclical Unemployment
- Follows the cyclical movements of the business cycle
- Derive from the demand for final goods and services and follows fluctuation of the business cycle
Structural Unemployment
- When there is a mismatch of available and required skills in a sector of the economy
Frictional Unemployment
- Unemployment that occurs due to the job search that occurs when in transition between different jobs
Impacts of Unemployment
- Lower Levels of Aggregate Expenditure, Investment, and Business Confidence
- Higher Welfare Payments
- Opportunity Cost: Potential expenditure on infrastructure, health, or education
- Increased Social Problems
Government Policy Objectives
Sustainable Economic Growth
- Stable economic growth that can be sustainable over the long term (maintained for future generation)
- Economic growth refers to the growth in the production capacity over time
Price Stability
- Where prices are stable and not fluctuating.
- Requires low inflation rate
Full Employment
- Refers to when everyone who is willing and able to work can find employment
- This means that cyclical unemployment is zero
- A person is considered to be employed when they are willing and able to work and in paid work for at least an hour a week
Equitable Income Distribution
- Promotion of the welfare of all Australians
- Achieved through measures to improve vertical equity like the progressive tax system
Income & Wealth
Income: Receipt of spending power by persons, and is the flow of funds.
- Productive Income: A reward to the factors of production.
- Non-productive Income: Received from the government by persons as cash social service benefits such as pensions.
Wealth: Stock of assets held minus the liabilities.
Types of Income
- Private Income: Income earnt as an employee/self-employed person
- Gross Income: Private income plus government transfer payments
- Disposable Income: Gross income minus tax
- Final Income: Disposable income and any indirect government benefit.
Factors of Income Distribution
Personal Traits
- Personalities and Talents
Occupational Conditions
- Training, Education and Responsibilities
Opportunities
Other Factors
- Sickness, Disabilities, Age and Luck
Taxes
Just go to the tax page :) Too much to write