Greenacre Educational Publications 

Economics Preliminary Course

 

Topic 1:                                   An Introduction to Economics

 

The focus of this topic is 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 Stage 6 Syllabus).

Glossary of Terms

TERM

DEFINITION

Business Cycle

The name given to the sequence of business fluctuations which occur over a period years in a regular cyclical pattern. The phases of the cycle may be referred to as expansion (recovery), boom, recession, and contraction (downswing or slump).

Capital

The produced means of production used in the production of other goods and services, such as factories and machinery.

Circular Flow of Income

A theoretical model, based on certain assumptions, that describes the transfer of money, goods, and services between the major sectors of an economy.

Economic Growth

A sustained increase in a nation's output over time, generally measured as real Gross Domestic Product per annum.

Enterprise

The factor of production that an entrepreneur contributes to production. It consists of innovation, organisation, and risk taking.

Exports

Goods sold to other countries. It is also an injection into the circular flow and has an economic symbol of X.

Government Expenditure

Money spent by the government. It is also an injection into the circular flow and has an economic symbol of G.

Imports

Goods produced overseas and bought for use in the Australian Economy. It is a withdrawal from the circular flow and has an economic symbol of M.

Injections

Expenditure (such as government expenditure, business investment or exports) which is not a direct function of income, but is ' injected ' into the circular flow of income. It increases the level of aggregate demand and expenditure in the economy.

Investment

Investment is expenditure on goods not for current consumption. It is used to make additions to the stock of capital in the economy. It is also an injection into the circular flow and has an economic symbol of I.

Labour   A factor of production, which is rewarded for mental or manual effort, by wages, salaries, and professional payments.  
Land  The factor of production which consists of natural resources, including mineral deposits, timber, and water.  
Opportunity Cost The cost of the best alternative forgone or sacrificed.  
Production Possibilities Frontier A curve showing the maximum production that can be achieved at a particular time given the existing resources and technology.  
Quality of Life The overall standard of living and wellbeing of the people.  
Resources Anything that can be used to produce goods and services. Economic resources are made up of  land (natural resources), labour, capital and enterprise  
Savings  The part of personal disposable income which is not used for the current purchase of consumption goods and services. It is a withdrawal from the circular flow and has an economic symbol of S.  
Scarcity A shortage of something in relation to what is wanted.  
Taxation  The main source of government revenue and an instrument of economic policy .The main functions of taxation are to release resources from the private sector and make these available to the public sector. It is a withdrawal from the circular flow and has an economic symbol of T.  
Technological Change The introduction of new or improved products, new or modified production processes or improvements in the productivity of resources.  
Wants  Peoples' desires for those goods and services which give them satisfaction.  
Welfare A government payment to the needy or worthy without them providing anything in return, such as pensions, austudy.  
Withdrawals Deductions or leakages from the circular flow. They include savings, net taxes, and imports.  

In studying economics, you have chosen a subject that offers students an understanding of how the economy around them actually works. The use of current information and statistics is very important to economics. In order to find up to date statistics, the Australian Bureau of Statistics has most of the statistics you will need in your study. Statistics range from the unemployment rate to the consumer price index.

The Human Development Report can also be interesting as well as full of information. On the site information includes National Income Accounts, as well as statistics on health, the environment, trends in economic performance, the level of poverty, and more, on both developing and industrialised nations.

The International Monetary Fund site contains data on Government Financial Statistics, Country Information, Finance and Development information, as well as publications and articles.

The US Central Intelligence Agency (CIA) apart from playing spies also provides a very good information source about living standards and the economies of many countries in their CIA Factbooks. These can be found at

The final section of topic 1 deals with looking at similarities and differences between countries. The following site provides an exercise looking at life in Russia:


Go to Preliminary Topic 2 - Consumers and Business

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Last modified 26 August 2006
Comments and enquiries to
Tony Stokes