Main Terms

• Economy - activities undertaken for the purpose of production, distribution and consumption of goods and services in a country
• Economic system - the means by which societies or governments organises and distribute available resources, services and goods across a country
• Economic Growth - Measured by adding up injections to the economy and comparing them to the leakages. When leakages are less than injections, economic growth occurs (economy expands)
• Economic decline - Leakages are greater than injections = economy will decline (contracting/shrinking)
• Equilibrium = when an economy finds stable prices although they may fluctuate
• Sectors rely on each other to function in an economy.
• Household sector - provide labour and consume goods and services produced by businesses
• Financial - connects to savers and investors, allowing businesses to grow and households to manage their finances.
• Government - regulates and supports all sectors through policies and spending
• Overseas - connects the domestic economy to overseas markets
• Governments' role in the economy:

  • makes laws that regulates businesses and protects consumers
  • oversees the financial sectors through the ASIC, ensuring fair practices in areas like share and credit
  • keeps the economy stable by controlling taxes (money leaving the economy) and spending money (money entering the economy)

  = it can slow down or speed up the economy when needed.
• The Australian Securities and Investment Commission:

  • independent government agency that regulates the financial sector
  • regulates key laws - The Corporation Act 2001 & The National Consumer Credit Protection Act 2009