The focus of this topic is the nature, causes and consequences of the economic issues and problems that can confront contemporary economies. Outcomes A student: H1 demonstrates understanding of economic terms, concepts and relationships H2 analyses the economic role of individuals, firms, institutions and governments H4 analyses the impact of global markets on the Australian and global economies H7 evaluates the consequences of contemporary economic problems and issues on individuals, firms and governments H9 selects and organises information from a variety of sources for relevance and reliability H10 communicates economic information, ideas and issues in appropriate forms H11 applies mathematical concepts in economic contexts H12 works independently and in groups to achieve appropriate goals in set timelines.
Content Students learn to: Examine economic issues • examine the arguments for and against increasing economic growth rates • investigate the economic and social problems created by unemployment • analyse the effects of inflation on an economy • discuss the effect of a continued current account deficit on an economy • investigate recent trends in the distribution of income in Australia and identify the impact of specific economic policies on this distribution • analyse the economic and social costs of inequality in the distribution of income • examine the economic issues associated with the goal of ecologically sustainable development
Apply economic skills • identify and analyse problems facing contemporary and hypothetical economies • calculate an equilibrium position for an economy using leakages and injections • determine the impact of the (simple) multiplier effect on national income • explain the implications of the multiplier for fluctuations in the level of economic activity in an economy • calculate the unemployment rate and the participation rate using labour force statistics • interpret a Lorenz curve and a Gini coefficient for the distribution of income in an economy • use economic concepts to analyse a contemporary environmental issue • assess the key problems and issues facing the Australian economy.
Students learn about:
Economic issues in the Australian economy
Economic growth • aggregate demand and its components: Y = C+I+G+X–M • injections and withdrawals (I+G+X; S+T+M) • the simple multiplier: k = 1/(1–MPC) • measurement of growth through changes in real Gross Domestic Product • sources and effects of economic growth in Australia • increases in aggregate supply – improvements in efficiency and technology • trends in business cycle
Unemployment • measurement – labour force – participation rate – unemployment rate • trends • types and causes – cyclical – structural – frictional – seasonal – underemployment – hidden – long term • non-accelerating inflation rate of unemployment (NAIRU) • main groups affected by unemployment -economic and social costs
External stability • measurement – Current Account Deficit (CAD) as a percentage of Gross Domestic Product – net foreign debt as a percentage of Gross Domestic Product – net foreign liabilities as a percentage of Gross Domestic Product – terms of trade – exchange rate – international competitiveness • trends • positive and negative causes and effects
Distribution of income and wealth • measurement – Lorenz curve and Gini coefficient • sources of income as a percentage of household income • taxation, transfer payments and other assistance • sources of wealth • dimensions and trends, according to gender, age, occupation, ethnic background and family structure • economic and social costs and benefits of inequality
Environmental sustainability • ecologically sustainable development • private and social costs and benefits – externalities, market failure • public and private goods – free riders • environmental issues: – preservation of natural environments – pollution, climate change – depletion of renewable and non-renewable resources.