Business Test T2 W4

• Recession


  A significant, widespread and prolonged downturn in economic growth and activity, normally over 2 quarters in a row
• Depression


  Significant economic decline showing a nation's GDP drop, unemployment rates rise and consumer confidence suffers and lasts for more than a year
• Inflation losers


  • Low to middle income earners
  • Bank services
  • Exporters
  • People who have fixed income
  • People who are on pension
• Inflation winners


  • High income earners
  • Borrowers
  • Importers
• GDP

  Gross domestic product, it measures the total monetary value of all the goods and services produced by a country over a specific time period
• Measuring GDP each quarter

  1. ABS collects data from households, companies and government agencies

  2. ABS calculates GDP in three different ways: output, expenditure and income
• Labour force

  The total number of people within a given population who are currently employed and the number of people who are unemployed and actively seeking work
• Some people don't come into the labour force category, e.g People under the legal working age, pensioners
• A recession is a significant amount of decrease in (GDP), that lasts for at least two quarters. It is a slowdown in the economy, not a complete decline. A depression is a severe drop in GDP that lasts for more than a year.
• To measure GDP each quarter, the Australian Bureau of Statistics (ABS) collects data from households, companies and government agencies. With this gained information, the ABS then calculates the GDP in three different ways, looking at separate information about output (the goods and services produced in the economy), expenditure (the money invested by a business and spending by households+government) and income (business profits, household income and government tax take).
• Deflation is where there is a decrease in price levels across the whole economy. Deflation occurs when the general level of prices falls due to decreased consumer demand or oversupply of goods and services.
• Interest rates are set by banks and financial institutions. They determine how much interest will be charged on loans and savings accounts. Interest rates affect inflation because they influence the cost of borrowing money which affects the purchasing power of individuals and businesses.
• Inflation is when there is an increase in prices across the whole economy. This means that consumers have to pay more for their products/services. Inflation can be caused by factors such as increased demand or supply shortages.
• Unemployment causes:

  • Business may hire more people
  • Lack of experience
  • Not enough employers
• Inflation rises when there is a stronger demand in the economy for goods & services. If the demand is such that companies are unable to keep up with the demand for their products, this can lead to shortages of goods & services, which results in a price increase(inflation).
• Increased spending due to:

  • High consumer confidence
  • High business confidence
  • Low interest rates
  • Lower tax rates
• Democratic system of government


  A system of government where people have the power to decide who their government is
• Democratic system


  • Government may be elected by the general citizens
  • Citizens may vote for their government officials, based on the officials representation of the citizens ideas and concerns
• Democracy


  • The more accountable form of government
  • Responds to the needs of the citizens
  • Generally more inclusive, competitive and fair
  • Requires the ruler to attend to the needs of people and act on behalf of the general will
• Authoritarian government


  • Frequently subjected to fraud and extreme constraints on the participation of opposing parties
  • May or may not respond to the people's needs, depending on the wishes of the people who rule
• Bi-cameral


  • A type of legislation which is divided into "two chambers"
  • A government structure which involves 2 houses or 2 legislative bodies which are separated from each other
• Bi-cameral system


  • A second chamber with broadly equal powers to the first may help provide a more effective result in government conduct
  • Can enhance the representative capacity of parliament through the use of different voting systems
• Senate


  • One of the two houses of the Australian federal parliament
  • Consists of 76 senators, 12 senators represent each state and 2 senators represent each mainland territory
• Reason for many senators

  • To make sure that each state of the Australian federation regardless of its population has an equal number of senators
  • Helps protect the less populated states against the more prosperous and populous states
• Powers of the Australian Constitution

  • Legislative branch has the power to create laws
  • Executive branch has the power to carry out and enforce the laws
  • Judicial branch has the power to interpret laws and judge whether they apply to different cases
• Separation of powers


  • Requires the government to check each other's powers
  • Each branch is independent and actively helps keep others from exceeding their power
  • Ensures that the rule of law protects individual rights, so no one person or body of people become too powerful
• Constitutional monarchy


  A country where the position of head of state is inherited
• Benefits of being in the Commonwealth of Nations for Australia

  • Provides a means to strengthen democracy and development in our region
  • Helps improve our government and economic stability
• Democracy


  A system of government which is chosen and voted on by the entire population and or eligible members of the state through elected representatives
• Dictatorship


  A form of government where a single individual or group of people wields power without any limitation to constitutional authority
• Benefits of dictatorship


  • More stable than other forms of authoritarian rule, because they are less susceptible to insurgency
  • May see higher economic growth
  • Can broadly influence the populace and facilitate political discussions between other parties
• Supreme law making body in Australia

  The constitution, which gives the legislative power of the commonwealth the power to make laws to the parliament
• The parliament contains the King who is represented by the Governor-General and the two houses- The house of representatives and the senate
• Changing the constitution


  1. Bill of the proposed law in the Australian Parliament

  2. Majority (more than half) of the total number of senators and members of the house of representatives must vote for the bill

  3. Referendum must take place 2-6 months after the bill is passed

  4. Arguments for and against the proposed change are prepared by members of parliament

  5. Electors choose to either sanction or reject the proposed change
• Governor General


  • The King's representative in Australia
  • Ensures that Australia is governed to the rules set out in the constitution
• Royal assent


  • The method where a monarchy formally approves an act in the legislation
  • A bill passed by the Australian Parliament cannot become an act until it is formally accepted by the Governor-General
• Separation of powers


  • Different branches of government should have distinct and independent powers and responsibilities
  • The 3 branches are the legislature (parliament), the executive (government) and judiciary (the courts)
• Passing a bill (proposed law) through parliament

  1. Creating a bill

  2. Debated by the Legislative Assembly

  3. Approved by the Legislative Assembly and sent to the Legislative Council

  4. Royal assent by the Governor-General

  5. Becomes a new law
• Courts in Victoria


  • Supreme Court (highest court)
  • County Court (major trial court)
  • Magistrates' Court (first level of court system)
• Specialised court


  A court with jurisdiction limited to hearing and determining matters in a confined area