11 economics

• Demand refers to the desire and willingness of consumers to purchase a good or service.
• The economic problem

  To make the best choice to satisfy unlimited wants with the scarce resources available
• When we satisfy a want, we lose the opportunity to satisfy another
• Production possibility frontiers (PPF’s)

  Used to determine how opportunity cost arises when choices are made. Show different combinations of goods and services that can be produced with a given amount of resources
• Opportunity cost is the cost of giving up one opportunity in order to take another one
• Terms

  • Need: essential for survival (water, shelter, food)
  • Want: not essential, but desired (car, shoes, makeup)
  • Collective want: demanded by a community (healthcare, education, transport)
• Principal focus of Year 11 Topic 1: Introduction to Economics


  • The need for choice by individuals, businesses, and governments. Their decisions determine the nature of the economy and create the diversity of economies found in the world
• ECONOMICS


  The study of how individuals and societies make decisions about ways to use resources to fulfill wants and needs
• When you choose to do one thing, its value is measured by the value of the next best choice
• The need for choice by individuals and society

  Opportunity cost and its application through production possibility frontiers
• Any point outside the curve is not attainable with the current level of resources
• Any point inside the curve suggests resources are not being utilized efficiently
• Capital goods increase productive capacity and economic growth, while consumer goods satisfy immediate wants
• Factors of production

  • Land: rent
  • Labour: wages
  • Capital: interest
  • Enterprise: profit
• What shifts the curve right

  Technological advancement: if the level of resources increases, the whole curve shifts right. If technology improves one good, it pivots. If technology improves both goods, it shifts the whole curve right. New resources available such as discovery of more resources or increase in working age population
• Economic factors underlying decision-making by

  • Individuals: spending, saving, work, education, retirement, voting, participation in the political process
  • Business: pricing, production, resource use, industrial relations
  • Governments: influencing decisions of individuals and businesses
• Capital goods


  Produced means of production or goods used to produce more goods
• Labor force


  Intellectual and physical effort used in the production of goods and services
• Capital


  Assets or resources used in the production of goods and services
• Enterprise


  The ability of entrepreneurs to take risks in organizing factors of production to produce goods and services
• Raising the country's GDP improves the standard of living
• GDP is an indicator that measures economic growth and the wealth of a country
• Gross domestic product (GDP) is the total value of goods and services produced in an economy within a given period
• Exchange of goods and services

  1. Poses the question of to whom to distribute

  2. Based on a market economy with a system of markets and prices allocating resources and allowing private property rights due to the profit motive and freedom of enterprise

  3. Money is used as an exchange for goods and services
• Prices guide decision making in an economic system
• The circular flow of income model shows linkages between sectors in the economy: Individuals or households, Businesses, Financial institutions or banks, Governments, International trade
• Leakages (Savings + Taxation + Imports) remove money from the circular flow of income, decrease aggregate income, and the level of economic activity
• Injections (Investment + Government spending + Exports) flow money into the circular flow of income, increase aggregate income, and the general level of economic activity
• Equilibrium occurs when leakages are equal to injections in the circular flow of income
• Disequilibrium occurs when there is inequality between leakages and injections
• When leakages are greater than injections, there is a downturn in economic growth; when injections are greater than leakages, there is an upturn in economic activities
• Types of income: Rent for land, Wages for labor, Interest for capital, Profit for enterprise
• Economies are examined for similarities and differences in economic growth, quality of life, employment, unemployment, distribution of income, environmental sustainability, and the role of government in health care, education, and social welfare
• The business cycle depicts the rise and fall in output over time, including upswing, boom, downswing, and recession
• Provision of employment and quality of life through the business cycle
• Fiscal policy


  A macroeconomic policy that influences resource allocation, redistributes income and reduces fluctuations in the business cycle
• Fiscal policy


  Achieved through manipulating the government's expenditures and taxation collection set out in the Budget
• The Federal budget is the main tool to execute fiscal policy as it manipulates expenditure and revenue amounts to influence economic growth
• On the 14th of May, the Honourable Jim Chalmers MP announced Australia's 2024-25 Federal Budget outlining the fiscal stance of the government for the upcoming year
• This report will focus on explaining the revenues and expenditures, the economic and fiscal strategy of the govt. and the economic outlook for Australia set against the backdrop of the global COVID19 pandemic