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Year 10 HASS Economics Cheatsheet

04/03/2025

Units 2.3–2.5: Indicators of Economic Performance, Living Standards, Distribution of Wealth & Income

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Unit 2.3: Indicators of Economic Performance

Key Definitions

  1. Economic Growth

    • Increase in the value of goods/services produced by an economy over time.
    • Measured as % change in real GDP (adjusted for inflation).
    • Target: 2–4% annual growth (sustainable range for Australia).

  2. Unemployment

    • % of working-age individuals actively seeking employment but unable to find work.
    • Formula:
    • Excludes: Students, retirees, caregivers, disabled.

  3. Inflation

    • Sustained increase in the general price level of goods/services.
    • Target: 2–3% annually (Reserve Bank of Australia).
    • Measured via Consumer Price Index (CPI) (tracks 1,000 common goods/services).

  4. Quantitative Indicator

    • Numerically measurable data (e.g., GDP, unemployment rate, CPI).

GDP & Economic Growth

  • Gross Domestic Product (GDP): Total monetary value of all final goods/services produced in a country annually.

    • Components: Consumption + Investment + Government Spending + Net Exports.
    • Real GDP: Adjusted for inflation; reflects true economic output.

  • GDP Per Capita

    • GDP ÷ population.
    • Measures average economic output per person (e.g., Australia: ~$55,000 vs. India: ~$2,100).

Limitations of GDP

  • Excludes non-market activities (volunteering, housework).
  • Includes harmful activities (pollution, weapons production).
  • Ignores income inequality and environmental costs.

Types of Unemployment

  1. Frictional: Short-term unemployment between jobs (e.g., recent graduate job-hunting).
  2. Structural: Skills mismatch due to technological/industry changes (e.g., automation replacing factory workers).
  3. Cyclical: Linked to economic downturns (e.g., layoffs during recessions).
  4. Seasonal: Job loss due to seasonal changes (e.g., ski instructors in summer).

Inflation & Causes

  1. Demand-Pull Inflation

    • Excess demand for goods/services (e.g., post-pandemic spending surges).

  2. Cost-Push Inflation

    • Rising production costs (e.g., oil price hikes increasing transport costs).

Hyperinflation Example

  • Germany (1923): Prices doubled every 3.7 days due to excessive money printing.

Unit 2.4: Living Standards

Key Definitions

  1. Standard of Living

    • Material wellbeing (income, access to goods/services).
    • Measured via HDI (Human Development Index).

  2. HDI: Composite index (0–1) combining

    • Life expectancy.
    • Education (mean/expected years of schooling).
    • Gross National Income (GNI) per capita.
    • Australia ranked 8th globally (2019).

  3. Quality of Life

    • Subjective wellbeing (e.g., safety, environment, equality, work-life balance).

Factors Affecting Living Standards

  1. Historical

    • Colonial exploitation (e.g., UK, France).
    • War/political instability (e.g., Syria).

  2. Economic

    • Foreign investment (e.g., China’s growth post-1980s).
    • Debt mismanagement (e.g., developing nations in “debt traps”).

  3. Social

    • Wealth inequality (e.g., property ownership in Australia).

Case Study: Australia’s Inequality

  • Samantha (low SES) vs. Andrew (high SES): Disparities in education, employment, housing despite GDP growth.

Unit 2.5: Distribution of Wealth & Income

Key Definitions

  1. Wealth: Stock of assets (property, savings, shares).
  2. Income: Flow of money from wages, investments, etc.
  3. Gini Coefficient
    • Measures income inequality (0 = perfect equality; 1 = maximum inequality).
    • Australia: ~0.33 (relatively low inequality).

Income Distribution in Australia

  • Top 20%: Earn 48% of total income.

  • Bottom 20%: Earn 4% of total income.

  • Wealth Inequality:

    • Top 20% own 62% of wealth; bottom 20% own less than 1%.

Government Redistribution

  1. Progressive Tax System

    • Higher earners pay higher tax rates (Table 2.3).
      • E.g., $180k+ income taxed at 45%.

  2. Social Welfare Programs

    • JobSeeker, pensions, Family Tax Benefit, childcare subsidies.

Key Debate

  • Should Australia tax the wealthy more?
    • Pros: Reduces inequality, funds public services.
    • Cons: Disincentivizes entrepreneurship, capital flight.

Final Notes

  • Memorize formulas (unemployment rate, tax brackets).
  • Use case studies (e.g., HDI rankings, COVID-19 unemployment spike).
  • Link concepts (e.g., high GDP ≠ high quality of life).