3 Flashcards

Question

What is the Simple Multiplier?

Answer 1

Calculated by only considering savings as a leakage from the circular flow. In this model, it is via consumption that income and expenditure are related.

Answer 2

The portion of consumption that varies with disposable income

Answer 3

The expenditures do not vary with income (spend or stave, individuals always consume something).

Answer 4

While shifts in AD play the main role in determining the level of economic growth in the shorter term, aggregate supply also plays an important long-term role in influencing levels of economic growth.

Answer 5

Quantity and quality of factors of production.

Answer 6

Referred to as an economy's "potential", when AS increases, the economy can grow faster.

Answer 7

Increase in AS results in decrease in inflation.

Answer 8

1. Population Growth (labour is the main input in the production process) 2. Discovery of new resources 3. Workers acquiring new skills 4. Increased capital (increases capacity of business to produce goods, so do some of the others) 5. The adoption of new technology 6. Measures to improve efficiency (international standards for the size of shipping containers adopted by the transport industry) 7. Government policies

Answer 9

Response was increase in Aggregate Supply by increasing net migrants into Aus, thus increasing working population

Answer 10

1. Living Standards (fast economic growth results in increase in real GDP per capita). Australia had average 2.3% growth in per capita incomes in the 2000s. 2018, less disposable income in real terms than 5 years before due to below average wage growth. There is no longer as strong a link between economic growth and living standards. 2. Employment 3. Inflation (Occurs especially when the economy is operating at full capacity). 4. External Stability (If an economy is growing faster than its trading partners, the balance of goods and services can worsen and the CAD can increase). Balance of payments is a "speed limit" on growth, a "balance of payments constraint". 5. Income Distribution (leads to increased inequality). Only decile of income earners that increased it share of income distribution during the 2 decades to 2015-16 were the top 10% of income earners. 6. Environmental Impacts

Answer 11

Since 2010 average economic growth has average 2.7%. 3% economic growth in 2018-19.

Answer 12

1. Global economic conditions have been mostly favourable since the 1990s (mining investment boom during GFC) 2. Major structural improvement of its terms of trade. Experienced best terms of trade in 2011, adding 15% to national income. 3. Macroeconomic management has been generally successful in sustaining the rate of economic growth. Inflation a healthy 2-3%. Treasury estimates long term sustainable rate of economic growth is 3.25% of GDP. 4. RBA's pre-emptive use of monetary policy and focus on low inflation. They have responded quickly to reducing interest rates. In 2015-16 RBA made 4 adjustments to cash rate. 5. Fiscal policy 6. Wealth effect. The large increases in asset prices such as real estate and shares, encouraging greater borrowing and consumption. 7. Productivity Growth, reflective of effective impact of microeconomic reform (average grew from 1.3% in 80s to 2.1% in 90s). It is now just at 1.1%. 8. Australia is fortunate that its financial system is better regulated and not exposed to the high-risk financial products that triggered the GFC. We resisted the merging of major banks, isolation of the Australian banks beneficial in economic downturns.

Answer 13

Described by the Australian Treasury as "the three Ps" - productivity, participation and population.

Answer 14

Average growth in real GDP is expected to fall from 3.1% in the past 4 decades to 2.8% in the next four decades.

Answer 15

Treasury calculated that every 0.1% increase in average annual productivity growth over the next 40 years, Australians will enjoy an average increase in living standards of $4500 per year.

Answer 16

Macroeconomic policies influence aggregate demand, whereas Microeconomic policies aim to increase aggregate supply.

Answer 17

Microeconomic policies increase aggregate supply in order to keep pace with rising aggregate demand, and attempt to reduce the extent to which higher growth causes inflationary and current account problems (factors that may constrain higher growth).

Answer 18

Macroeconomic policies will only have limited impact on the level of long-run growth that an economy can achieve.

Answer 19

Increased investment in workforce skills and physical infrastructure in recent budgets in order to increase the economy's aggregate supply, alongside reforms to increase competitive pressures and reduce unnecessary regulation.

Answer 20

-The opportunity cost of lost production -Slower economic growth -Increased social welfare payments -Loss of taxation revenue.

Answer 21

Social Costs: -Increased inequality -Increased poverty -Crime -Family problems

Answer 22

All employed and unemployed persons in the country at any given time (population of 15 years an older who are either working or actively seeking work)

Answer 23

-Persons aged 15+ employed at least 1 hour a week of paid work -Those on paid leave -Stood down without pay for less than four weeks -On strike -Workers compensation -Receiving payment whilst under full-time study -Unemployed and actively seeking work

Answer 24

-Under 15 -Full time non working students -Full time domestic duties -Retired -Unemployed not seeking work

Answer 25

The percentage of population over 15 in the labour force (unemployed and employed). (Labour force/Working age population (15+)) Participation rate 2017-18 was 65.5%

Answer 26

A situation where individuals want to work but are unable to find a job, and as a result labour resources in the economy are not fully utilised.

Answer 27

At least one of these: -Regularly checking advertisements from different sources for jobs -Being willing to respond to ads, apply and attend interviews -Register with an employment agency linked to Jobs Services Australia

Answer 28

ABS monthly survey of labour force (around 52,000 individuals) for unemployment rate.

Answer 29

1. Classifying people as either employed or unemployed, official statistics do not take into account the number of hours people work, and disregards the inherent issue of under employment. E.g. someone could work 40 years a week or 4 people could work 10 hours per week and the unemployment rate would be lower but economic activity would be the same 2. Classifying people as employed are unemployed, doesn't include hidden unemployment (discouraged jobseekers who have left the labour force and aren't seeking a job, e.g. full time duties, disabled people)

Answer 30

ABS underutilisation rate 2017-18 was 13.9% (combination of unemployment and underemployment). This has increased by 1.2% over last 5 years. At the same time the unemployment rate has hardly changed.

Answer 31

15-19 year olds, which was 40% and 42% males and females.

Answer 32

Women 35-44 twice as likely to be underutilised than men.

Answer 33

10.7% recorded 1992-3, due to Australian and global recession. During this 92-93 recession, unemployment was worsened due to structural change and microeconomic reform. Many unable to obtain new jobs in growing industries because of higher of different skill levels.

Answer 34

4% in 2008

Answer 35

During GFC (2008-9), unemployment rose by 2% but again dropped to 5% by 2010.

Answer 36

Slightly below average

Answer 37

Treasury predicted 2018-19 employment growth at 1.7%, however job growth much faster in NSW, 3.6%.

Answer 38

Faster growth in part-time jobs than full time jobs.

Answer 39

Underemployment 2008-9 increased from 5.9%-7.8% (employers reducing hours rather than laying off workers).

Answer 40

Above 3% in order to make progress in reducing unemployment. 2015 Reserve Bank concluded rate of GDP growth consistent with stable unemployment had fallen from 5% in 1970s to 2.9%.

Answer 41

The relationship between unemployment and economic growth, showing that to reduce unemployment, the annual rate of economic growth must exceed the sum of - percentage growth in productivity + the percentage growth of labour force - in any one year.

Answer 42

High levels of productivity growth (as seen in the 90s) Lower productivity growth = Lower unemployment, however these ONLY APPLY IN THE SHORT TERM. Long Term → Higher productivity growth → High economic growth → More job creation.

Answer 43

Australia's labour force participation rate is expected to decline, falling from peak 2010 65.8% to 62.4% (2054-55) (due to ageing population).

Answer 44

Lower fertility rates + Higher life expectancy Proportion of population aged over 65 has risen from 12.6% to 15.8% past 2 decades. Expected to rise by 2% every decade to 2050, even with retirement age rising to 67.

Answer 45

A cyclical "discouraged jobseeker" effect.

Answer 46

1. Structural Unemployment: Due to structural changes within the economy caused by changes in technology or the pattern of demand for goods and services. Skills of one industry are not high enough or relevant to the emerging industry. Most of Australia's long term unemployment is due to this 2. Cyclical Unemployment: Due to a downturn in economic activity and falls during times of strong economic growth. Major contributor since 2011 with Australia's falling economic growth rate. 3. Frictional Unemployment: Temporarily unemployed due to changing jobs. Helped by online job seeking services recently. 1/12 workers change jobs every year. 4. Seasonal Unemployment: Predictable and regular unemployment e.g. fruit picking or Santa. Official unemployment figures are seasonally adjusted. 5. Hidden Unemployment: Those individuals discouraged from seeking employment and are no longer actively looking for a job. Not classified as unemployed and are considered to have exited the labour force. Australian Council of Social Service estimated there are 1.3 million hidden unemployed people in Australia. Risen from 851,000 in 2010. 6. Underemployment (not really unemployment but yeah): People who work for less than full-time (35 hours a week) but would like to work longer hours. ABS started measuring this on a monthly basis since 2014. 2018, 8.55 of the workforce is underemployed. Almost no difference in unemployment males and females (0.1% 2018), 4.1% difference in underemployment. 7. Long-Term Unemployment: Those people out of work for 12 months or longer (usually due to structural unemployment). High economic growth can stop long-term unemployment from growing but on its own does not reduce it. 8. Hard-core Unemployment: Employers consider them unemployable due to personal circumstances, e.g. disability, drug abuse, criminal record.

Answer 47

1. New arrivals into unemployment are rehired more quickly, especially if they have skills that are more up to date and attractive for employers 2. Long-term unemployment is usually due to structural unemployment and do not possess skills demanded in current labour market 3. Unemployed people are less intent on finding jobs if they are consistently unsuccessful. 4. Employers look less favourably for people who have been out of work for a long time.

Answer 48

Long-term unemployment was at an all time low 2008 at 14%, now at 23.6% (generally increasing since GFC).

Answer 49

The level of unemployment at which there is no cyclical unemployment, that is, where the economy is at full employment (comprised of frictional, seasonal, structural and hard-core). Phillips Curve diagram.

Answer 50

An increase in economic growth will cause inflation, as employers will be forced to raise wages to compete for workers.

Answer 51

Through policies that reduce structural, seasonal and frictional unemployment.

Answer 52

Reserve Bank estimated in 2017 that Australia's NAIRU is around 5%, peaking at 7% in 1995. Supported by the fact inflation increased when unemployment was 4% pre-GFC.

Answer 53

1. Economic growth ahs been too low to generate adequate employment growth 2. People don't have the right skills to fill job vacancies 3. People don't have adequate opportunities for education and training 4. Rapid structural change in our economy is creating a larger pool of workers how skills are no longer in demand 5. Wage rates are too high, especially for low-skilled workers (thus employers don't employ as many people) 6. Too many regulations surrounding employment, discourages employers 7. Government welfare benefits, people choosing to remain unemployed 8. Cannot compete with workers who are paid low wages in developing economics 9. Not enough is done to help those with disabilities find jobs.

Answer 54

The demand for labour is a DERIVED DEMAND

Answer 55

Lower domestic consumption and spending, loss of favourable conditions with high levels of consumer confidence, interest rates going up, decrease in demand for Aus. exports, appreciation of currency, contractionary monetary or fiscal policy.

Answer 56

Unemployment starts rising when economic growth falls below 2.5%, when above 3%, unemployment falls.

Answer 57

Generally time lag of around 6 months until change in unemployment levels (mainly cyclical unemployment)

Answer 58

Growth levels have stagnated therefore unemployment levels have stagnated

Answer 59

Over the longer term, unemployment is influenced by the level of sustained economic growth achieved in an economy. Constraints on economic growth. Inflationary concerns and CAD problems were constraints on economic growth (1980s) and thus contributed to unemployment problem.

Answer 60

Increase in labour force participation rate causes increase in unemployment rate in the short term (those previously not classified as unemployed now are as they seek jobs).

Answer 61

2014 Reserve Bank that mining boom saw construction jobs in the sector increase from 15,000 to 90,000 but that 60,000 of those jobs would be lost by 2018. 2017, OECD estimated shift from manufacturing to service industries is responsible for around 1/3 job losses, while automation is 2/3

Answer 62

Substitution of capital for labour in the production process. Usually structural unemployment.

Answer 63

High productivity growth causes unemployment to rise in the short term. Long term higher productivity = higher growth rates = High employment levels.

Answer 64

Mismatch between skills demanded and those supplied. Number of people in traineeships or apprenticeships in 2017 almost halved in the previous 5 years to just 268, 600 people. Only 40 occupations on Australia's skill shortage list 2018, compared to pre-GFC with 85% of all occupations having a shortage.

Answer 65

Although in recent years economists have been more concerned by low level of wage growth rather than the opposite.

Answer 66

1. A shortage of skilled labour may result in employers competing with each other, forcing wages up creating wage inflation, causing RBA to increase interest rates 2. "A wages breakout due to excessive wage demands". Nominal wages rise faster than inflation and productivity is increasing, reduces business profits, may substitute capital for labour. Labour is "pricing itself out of a job" 3. Fair Work Commission decides to increase award wages makes employment to expensive for some 4. Rise in labour on-costs. Additional costs of employing labour, e.g. payroll tax, superannuation, sick leave, holiday pay, compensation.

Answer 67

Australian labour market is generally regarded as more flexible than most OECD economies.

Answer 68

Government agency regulating Australian workplaces, with function including setting minimum wages, approval of workplace agreements and in some instances, resolution of industrial disputes.

Answer 69

1. Opportunity Cost: Economy is operating below its PPF. Economic resources are not being used to their full capacity. 2. Lower living standards: Lower incomes means more relying on welfare payments, lower average expenditure causing a decrease in quality of life and lower living standards. 3. Decline in labour market skills for long-term unemployed: Cyclical or short-term unemployment can turn into long-term structural unemployment (loss of skills, confidence and experience) in a process known as hysteresis. 4. Costs to government: Generate less tax revenue, and increased transfer payments to the unemployed as well as the cost of training and labour market programs. 5. Lower Wage Growth: High levels of unemployment means there has been an excess labour supply in the economy which should lead to a fall in wages. There is a "downward stickiness" for wages, meaning wages do not often get reduced. Instead higher unemployment is more likely to lead to slower wage growth over time rather than actual reduction in wages

Answer 70

The process whereby unemployment in the current period results in the persistence of unemployed in future periods as unemployed people can lose their skills, contact and motivation.

Answer 71

Main one is inequality however others may include: -Increased levels of debt -Increased poverty -Increased levels of crime -Loss of work skills -Family tensions and breakdown -Poor health and mental conditions

Answer 72

Unemployment 15-19 year olds is 3 times of general population (due to services industry higher demand for skilled employees)

Answer 73

Found that 60% lack skills needed to succeed in todays economy.

Answer 74

1. Indigenous Australians: Unemployment is 21.3% among Aboriginal and Torres Strait Islanders. 2. Age-relation unemployment: 15-19 year olds 17.6% unemployed. 15-24 year old underutilisation rate for 15-24 year olds was 29.6% 2018, double national average 14.4%. Average length of time job seeking for over 55s was 68 weeks, 24-54 year olds spent 49 weeks, 15-24 year olds, 30 weeks. 3. Specific regions: Unemployment in NSW 2018 was 4.8%. Southern Highland 8.1%. Eastern Suburbs between 2.1 and 3.3%. 4. People born outside of Australia: Unemployment rate for people migrated to Australia in the past decade was 7.4%. Usually due to language barriers. Participation rate actually higher among overseas born, 70% compared to 66% Australian born.

Answer 75

The changing views on the causes of unemployment.

Answer 76

Increased government spending, reduced taxation and lower interest rates can stimulate economic activity and aided by the multiplier effect, can cause an increase in output and job creation.

Answer 77

Treasury estimates that fiscal stimulus during GFC resulted in unemployment being 1.5% lower than it would have otherwise been.

Answer 78

-Tariff reduction -Deregulation -National competition policy -Privatisation -Tax reform

Answer 79

Can be solved through both macro and microeconomic policy as they both have an impact on economic growth which causes cyclical unemployment.

Answer 80

Labour market policies play a role in reducing many types of unemployment and OECD states they are among the most effective ways to reduce cyclical unemployment. They include: -Industrial relations -Education and training -Welfare to work initiatives -Wage subsidies to increase labour demand

Answer 81

OECD 2017 Employment Outlook noted increase in government spending on labour market programs of 1% of GDP reduces unemployment by 2% (in comparison to 0.5% if allocated to other budget priorities.

Answer 82

Changes in labour market regulation such as enterprise bargaining has given employers more flexibility in determining employment conditions. This gives employers greater incentive to higher workers.

Answer 83

A 2016 Turnbull Government initiative with a $752 million investment aiming to reduce youth unemployment by combining training and obligations with incentives for employers.

Answer 84

Targets young people 15-24 in regions with highest unemployment. Includes Youth Employment Innovation Challenge which offers $10 million to fund innovative solutions that help young people find employment in NSW.

Answer 85

2017 Turnbull Government introduced additional requirements for Temporary Skill Shortage Visas, including a requirement that employers who bring skilled migrants must contribute to a Skilling Australians Fund, which will pay for an increase in apprenticeships.

Answer 86

For unemployed or low-income earners, every extra dollar earn from work, they pay tax as well as lose a portion of their welfare benefit. Reducing these provides incentives to increase employment.

Answer 87

Pays for 85% of childcare costs for families earning up to $65,000 to increase labour supply.

Answer 88

A network of 62 employment service providers which had a $1.3 billion budget in 2018-19.

Answer 89

Summaries the movement in the prices of a basket of goods and services weighted according to their significance for the average Australian household. It is used to measure inflation in Australia. CPI is compiled by ABS and published every 3 months CPI excludes some items of household spending such as changes in mortgage interest rates and consumer credit charges, and also does not include property prices.

Answer 90

The annual inflation rate is calculated as the percentage change in the CPI over the year.

Answer 91

Removes the effects of one-off volatile price movements. As a result they tend to be less variable than the official or "headline inflation". Underlying inflation is calculated by using a "trimmed mean" (where the highest and smallest 15% of price increases are excluded), and a "weighted median" (where the middle observation is taken).

Answer 92

The RBA takes into account the averaged of trimmed mean and weighted median.

Answer 93

Headline inflation as measured by CPI is volatile, as seen at 2.9% in 2014 and 1.3% in 2016.

Answer 94

Where the RBA targets an inflation rate averaging 2-3% as a guide to determine interest rate decisions, a major factor in keeping inflation low.

Answer 95

1996-2018, headline and underlying inflation averaged 2.5% and 2.7% respectively.

Answer 96

1999, 2003, 2007 and 2010.

Answer 97

-Structural changes during 1980s and 1990s -Microeconomic reform increasing competition within Australia -Productivity growth improving

Answer 98

Underlying inflation was at a peak of 5.1% between 2005 and 2008 as the result of higher global prices for commodities.

Answer 99

Due to large increases in prices of fruit, vegetables and fuel.

Answer 100

Inflation rates have been at the lower end of the target band set by the RBA for the past few years.

Answer 101

Surge of budget deficits resulting from Trump administration policies and higher prices for Chinese imports as the value of Yuan appreciates, will add to global inflationary pressures. However, other factors such as subdued oil prices and geopolitical uncertainty will have offsetting effects.

Answer 102

For Australia, regulatory changes to utility prices and increased wholesale prices for gas and electricity have put upward pressure on the headline inflation rate. But record low economic growth has put downward pressure. Australia's high levels of household debt will drag down consumption in the future and also constrain inflationary pressures.

Answer 103

Occurs when aggregate demand or spending is growing while the economy is nearing its supply capacity so that higher demand leads to higher prices rather than more output. Mining boom was a form of demand-pull inflation, however inflationary expectations have been largely subdued by slow wage growth.

Answer 104

Occurs when there is an increase in production costs (such as oil price or wage increases) that produces pass on in the form of higher prices thus raising the rate of inflation. When wages increase faster than productivity growth, cost of labour increases and thus cost-push inflation. Since wages typically comprise around 60% of a firm's costs.

Answer 105

RBA estimated in 2016 that 10% change in the price of oil results in a 0.4% change in inflation in any one year.

Answer 106

1. If prices of goods and services are expected to increase consumers will attempt to purchase products before prices increase. This causes higher demand pull inflation. Similarly, if a firm expects that demand for their product will increase, the firm may raise prices to maximise profits 2. If employees expect inflation to increase, they will take this into account when negotiating wage increases. Since contracts are negotiated in advance for the next 2 years, then an employee who expects higher inflationary pressures will ask for a higher wage to preserve purchasing power. Leads to cost-push inflation Inflationary expectations are a self-fulfilling prophecy.

Answer 107

Transferred to Australia through international transactions. One of the main causes is rising import prices (the same way an increase in domestic prices is inflation). This will also occur due to a depreciation of the Australian dollar (we cannot buy as much overseas as our currency is weak and thus relative to us prices rise). However, if imports face competition from locally made products, they may reduce profit margins and not pass on to consumers the full effect of the overseas price rise or depreciation.

Answer 108

Increasing indirect taxes, e.g. increasing government excise on tobacco products → Cost-push inflation. Other measures that may influence prices include deregulating an industry, changing tariff rates, imposing price controls and increasing charges for goods provided by the government (transport).

Answer 109

A sustained increase in the money supply of a country (or currency area).

Answer 110

Inflation is the main constraint on economic growth. Low inflation has a beneficial effect on the level of economic growth because it removes the distortion to investment and savings decisions which high inflation causes. High inflation discourages business investment because it makes producers uncertain about future prices, costs and profits.

Answer 111

Where producers and consumers change their spending and investment decisions in order to minimise the effect of inflation on themselves (e.g. buying assets rather than investing in income producing activities). Consumers are more likely to spend not save during periods of high inflation (since inflation is a rate and they can see in the future the value of their money will decrease).

Answer 112

Inflation has a major influence on nominal wage demands. Employees demand higher wages during inflation to protect purchasing power. Leads to a "wage-Price inflationary spiral".

Answer 113

High inflation has a negative impact on the distribution of income as low-income earners find that their incomes do not rise as quickly as prices. Further, they may face higher interest rates on their borrowings if inflation rises. Erodes the value of existing savings.

Answer 114

Higher levels of inflation will usually result in contractionary fiscal and monetary policies, resulting in slower economic growth and higher unemployment in the short to medium term. Further, low levels of unemployment are often associated with rising inflation - a relationship demonstrated by the Phillips curve.

Answer 115

When the rate of inflation and the rate of unemployment rise simultaneously.

Answer 116

High inflation results in increased prices for Australia's exports, reducing international competitiveness and the quantity of exports.

Answer 117

In the short term, higher inflation may result in an appreciation of the exchange rate, as speculators expect the RBA to raise interest rates in response, attracting greater financial flows. However, high inflation generally causes the currency to depreciate over time. Low inflation long term increases international confidence and strengthens Aussie dollar.

Answer 118

Lower inflation normally results in lower interest rates. High inflation results in high interest rates as central banks try to reduce demand pressures in the economy.

Answer 119

It reduces the likelihood of deflation which can have lots of negative consequences.

Answer 120

Where the RBA takes action against inflation before it emerges as a problem. RBA increased interest rates 7 times 2009-10 to address concerns about inflation after emerging well from GFC.

Answer 121

The RBA tries to make interest rate changes predictable by emphasising its intentions to keep inflation between 2-3%,

Answer 122

Microeconomic policies → Reduction in protection → Lowers prices of imports thus reduces inflation.

Answer 123

China as a producer of low-cost manufactured goods has helped reduce global inflationary pressures since the early 2000s. Inflation is increasingly influenced by global factors rather than government policies.

Answer 124

An aim of government policy that seeks to promote sustainability on the external accounts so that Australia can service its foreign liabilities in the medium to long run and avoid currency volatility.

Answer 125

1. A persistent current account deficit (CAD): Driven by a deficit on the net primary income account. Since the mid-1980s the CAD ahs averaged 4.3% of GDP (although since 2010 it has averaged a lower rate of 3.4%) 2. Volatile Terms of Trade: Fluctuated wildly due to commodity boom. Terms of trade peaked in 2011, 85% above average through 20th century. 2018 terms of trade was 23% lower than its 2011 peak 3. Australia's lack of international competitiveness: Due to geographical isolation and small population base. High cost of transporting goods, lack of economies of scale in the domestic production and high cost of labour. 4. Growth of foreign debt: Recently has been close to 60% of GDP. Low interest rates has meant that foreign debt servicing costs are still lower than 90s. 5. Rising foreign ownership in Australia: Minerals and resources sector has $315 billion in foreign investment in 2017. In 2011 (height of mining boom), foreign investors owned 80% of resources sector 6. Volatility of the Australian dollar: Value of Australian dollar reflects fluctuations in commodity prices. In 2011, 130% against the US dollar. Has decreased since then.

Answer 126

The CAD as a percentage of GDP. It is a better measure of trends in the current account rather than the size of the CAD in dollar terms.

Answer 127

3-6% Performed well relative to other deficit economies and surplus economics (such as China, Japan and Germany).

Answer 128

The extent to which the CAD is perceived as a problem as well as the policy response required depends on what factors are seen to be the causes of Australia's CAD

Answer 129

Initially regarded as largely a trade problem when it emerged in the 80s, most NOW explain the high CAD as a structural issue related to the primary income account. CAD is the result of a SAVINGS AND INVESTMENT GAP, rather than a TRADE GAP. For this reason many state that the CAD is sustainable since it is the result of high levels of direct investment in Australia that allow for higher economic growth and exports in the longer term. Some argue high CAD means Australia cannot finance its external liabilities.

Answer 130

Deficit on the balance of goods and services, slow export growth and expanding demand for imports.

Answer 131

The trade argument is underpinned by the fact that Australia lacks international competitiveness in many higher value added areas of global trade, such as elaborately transformed manufactures (ETMs). Our poor economies of scale and necessary offshoring is causing increased reliance on imports.

Answer 132

Due to the sustained period of high commodity prices causing an appreciation of Australian dollar during the past decade.

Answer 133

Demand for one type of exports may drive up the value of exchange rate, making other exports less competitive.

Answer 134

World Economic Forum estimates Australia's competitiveness to have fallen in recent decades, falling out of the top 20 countries in 2014, now at 27th.

Answer 135

Another factor underpinning trade argument is that Australia's terms of trade has a major effect on the CAD. The high terms of trade in the mid 2000s actually saw a short to medium term increase in the CAD, due to a surge in capital imports for mining construction and expanding operations. CAD historic high of 6.7% of GDP 2007. CAD later fell as investment turned into greater output. Where terms of trade declines, trade balance follows.

Answer 136

Trade balance has improved from an average deficit of 1.5% of GDP in 2000s to average deficit 0.5% in this decade.

Answer 137

Because a large fall in commodity prices could trigger CAD increase, danger of our narrow export base.

Answer 138

The result of an excess of domestic investment over domestic savings. In order to make up for this we borrow or sell overseas. Thus foreign savings instead of domestic savings finance domestic investment.

Answer 139

If the government runs a budget deficit (which it has), this reduces the level of national savings and widens the savings-investment gap.

Answer 140

As long as foreign investors and loans are increasing Australia's productive capacity and not just funding the purchase of existing assets (such as housing), they will add to Australia's capacity to service its foreign liabilities, and the CAD will be sustainable in the longer term.

Answer 141

As long as a CAD is the result of savings and investment decisions by the private sector that are not the result of distortions to normal market mechanisms (such as government policy), then there is no cause for concern about an economy's external stability. Lenders and borrowers are responsible for their own decisions. Pitchford Thesis gained some criticism following GFC, showed that private sector decisions doesn't' always involve a proper calculation of risk. Pitchford Thesis also assumes that private sector debt is entirely separate from public sector debt. However, the GFC demonstrated that national governments are often forced to assume the liabilities of their country's private sector banks in order to avoid financial collapse.

Answer 142

Despite government running large budget deficits, the private sector still accounted for 82%

Answer 143

Australia's financial obligations to the rest of the world minus the rest of the world's financial obligations to Australia (foreign debt + foreign equity).

Answer 144

The growth in net foreign liabilities

Answer 145

Total stocks of loans owed by Australians to foreigners, minus the total stock of loans owed by foreigners to Australians.

Answer 146

Total value of assets in Australia such as land and shares owned by foreigners, minus the total value of assets overseas that are owned by Australians.

Answer 147

Servicing Australia's debt constitutes an outflow of funds on the current account, and thus increases our CAD.

Answer 148

Selling assets to foreigners does not directly add to Australia's foreign debt, however, we do have to send overseas returns on equity investment such as company profits, rent on land and dividends on shares.

Answer 149

Equity-servicing costs on primary income

Answer 150

Australia's net foreign debt to GDP ratio has been growing consistently for decades. However fluctuations can occur in the short term in response to movements of Australian dollar (as seen 2011 and 2015). In 2017-18, Australia's net foreign debt was just above $1 trillion, reaching 56.3% of GDP, lower than peak of 61.8% 2015-16.

Answer 151

Rising net foreign debt could cause overall standard of living and economic growth potential to decrease. Could also lead to "Debt Trap scenario"

Answer 152

It is one of the most reliable economic measures of a country's capacity to service its foreign debt and measures the proportion of export revenue that must be spent on interest payments on foreign debt.

Answer 153

Debt servicing ratio peaked at 20% in 1990, in 2017-18 at 6.2%. This shows that despite in the increase in foreign debt levels, the low levels of global interest rates have meant that the servicing cost of that debt has remained stable.

Answer 154

Because of increased domestic savings.

Answer 155

55%, but public sector debt represents only around 18% of net foreign debt.

Answer 156

Between 2013 and 2017, for the first time, the value of Australia's foreign assets was greater than the value of foreign ownership of Australian assets (net foreign equity was at 0).

Answer 157

Net foreign equity tends to be more volatile than net foreign debt reflecting exchange rate movements and shifts in the market valuation of companies and assets.

Answer 158

Dividends are only paid when Australian asset or business is generating profitable return, while interest payments on debt must be paid regardless of whether there is a profit. Therefore equity less of a concern.

Answer 159

Since 2000, Australia's ownership of equity rose from $306 billion to $1402 billion, whilst Australian loans overseas grew from $211 billion to $1200 billion.

Answer 160

Foreign owned equity in Australia rose from $382 billion to $1319 billion, while gross foreign debt increased from $506 billion to $2236 billion.

Answer 161

The interest rate consistent with a neutral stance for Australia.

Answer 162

Globally interest rates have begun rising more recently, with the US Federal Reserve rate just under 2% by mid 2018.

Answer 163

Higher interest rates to compensate for a perceived increase in risk. (This is what would be demanded by investors if Australia was to lose its AAA credit rating)

Answer 164

The larger fluctuations attracts speculators and despite comprising just 1% of global trade, the Australian dollar is the 5th most traded currency. Fluctuates from 47 US cents in 2001 to US$1.10 in 2011. This also means that foreign exchange markets can often overshoot when major currency movements occur.

Answer 165

Measures of external stability will be volatile (headline inflation?, net foreign liabilities and CAD as a percentage of GDP).

Answer 166

No. The reduced concern around external stability is not just because of the Pitchford thesis, but is also related to Australia's improved medium-term export prospects (with higher volumes of resources exports, even if commodity prices are below their peaks) and increased household savings.

Answer 167

1. Monetary policy is not being used to address Australia's external imbalances. In the past, contractionary monetary policy was used to reduce consumer spending on imports in order to create a short-term improvement in the balance of goods and services. However it is not considered ineffective, impact is only temporary and results in slowdown of whole economy. It is also unable to target long-term structural causes of Australia's external imbalances. 2. By adopting the policy of fiscal consolidation (running balanced or surplus budgets over the course of the economic cycle), governments attempt to fund domestic investment with its own domestic savings, rather than borrowing from overseas (budget deficit). 3. Compulsory superannuation requiring employers to set aside 9.5% of employee wages has lifted level of national savings. Further proposals to increase this to 12% in between 2021 and 2025 and reduce long-term pressures on Australia's external accounts. 4. Microeconomic reform can be used to address structural problems causing Australia's external imbalances. Lifting efficiency and competitiveness of Australian firms (removing protectionist barriers).

Answer 168

The extent to which Australia maintains the confidence of international investors.

Answer 169

The amount of money or other benefits measured in money terms, that flow to individuals or households form the sale of factors of production over a period of time. The benefit of owning, maintaining or managing productive resources.

Answer 170

The policies that aim to create a more internationally competitive economy.

Answer 171

The degree to which income is unevenly distributed among people in the economy.

Answer 172

Lowest 20% of Australians receive 7.7% of income, highest 20% of Australians receive 39.8% of income (2015-16).

Answer 173

Share of income of every quintile has fallen, except for the top quintile which has increased by 3%.

Answer 174

Average income in the highest quintile is $261, 872, 10 times higher than the lowest quintile of $23, 712.

Answer 175

A graphical representation of income distribution, plotting the cumulative increase in population against the cumulative increase in income, where there is a diagonal line known as the line of equality.

Answer 176

Calculated as the ratio of the area between the Lorenz curve and line of equality, and the total area under the line of equality. Gini coefficient = 0, all incomes are equal. Gini coefficient = 1, a single household receives all the income.

Answer 177

All incomes are equal

Answer 178

A single household receives all the income

Answer 179

Australia is ranked by OECD as 23rd for its Gini coefficient of 0.337, meaning Australia has a more unequal distribution of income than most OECD economies (where the average is 0.32). Australia's current Gini is at its second highest level on record, just below its level pre-GFC.

Answer 180

The distribution of wealth

Answer 181

Top quintile owns 63% of Australia's wealth, bottom quintile own 1% of total wealth.

Answer 182

70% of households have less than the average level of household wealth which was $929, 400 in 2016.

Answer 183

1. Between 1915 and 1967, wealth inequality improved dramatically as a result of urbanisation, industrialisation and declining significance of rural landholders. 2. Weal inequality has remained relatively stable recently, with Gini coefficient most recently calculated as 0.605 by the ABS. Compulsory superannuation has given many individual in lower incomes quintiles with a financial asset for the first time and has thus increased their share of wealth since the 1980s. 3. Growing wealth inequality between generations. 2017 HILDA report over 65s experienced increase in median net wealth of 70% since 2002, whilst just 3.2% for 25-34 age bracket

Answer 184

1. Wages from the sale of labour: Main source of income for consumers. Includes non-wage outcomes such as fringe benefits. 2. Rent from land: Source of income when rented, investment properties 3. Earnings from capital: People with greater wealth tend to enjoy a much higher income because wealth creates ongoing income through returns from owning the factors of production. For most consumers, their ownership of capital occurs indirectly through superannuation and other investment funds or through the ownership of shares. 4. Profit from entrepreneurial skills: Profits from operating small businesses 5. Transfer Payments: Over a 1/3 of income collected through taxation is used to pay for transfer payments (unemployment and sickness benefits, age and disability pensions).

Answer 185

Payments from the government to assist people with basic costs of living → Social welfare payments, government benefits, social security, income support etc.

Answer 186

The value of household assets such as houses and savings minus the value of liabilities such as loans.

Answer 187

Over half the population earn less than the mean income of $1009 per week (income distribution is asymmetric).

Answer 188

80% because wealth is so highly concentrated in the upper quintiles

Answer 189

AU $6 million

Answer 190

45-54 age bracket earns the highest mean weekly earning ($1842) while those aged 20 and under earn the lowest ($722).

Answer 191

Average weekly earnings are highest for those with a postgraduate degree ($1675) and lowest for those without a non-school qualification ($882)

Answer 192

In 1982 women in full-time jobs were earning 81% of male earnings and in 2016 this had risen to 84%. Women on average earn around $250 per week less than men.

Answer 193

In 2018, 28% of Australians were born overseas. Around 55% of migrants come from countries that are not mainly English-speaking countries. Recent migrants and temporary residents have a higher participation rate of 70% compared to 66% 2016 Australians. Migrants who have become Australian citizens have a higher labour force participation rate than the general working age population, 80% compared to 70%.

Answer 194

Those who have migrated under the skilled migration program have a participation rate of 78% compared to 59% for those under a family migration program.

Answer 195

English speaking migrants earned between $1193 and $3979 more (for males and females respectively) than Australians. Non-English speaking backgrounds generally earn $8000 less per year than Australians.

Answer 196

Median weekly disposable income for indigenous individuals was $441 compared to $661 for the general population, and $1203 for households compared to $1438 for the general population.

Answer 197

National gap between indigenous and non-indigenous unemployment rates has fallen to 11.6%, however in Queensland's remote communities there is a 33.3% gap in unemployment levels.

Answer 198

The gap between indigenous and non-indigenous life expectancy is widening. Life expectancy of aboriginal person born 2010-2012 is around 10 years lower than that for non-indigenous Australians.

Answer 199

In 2017, overall school attendance rate for indigenous students nationally was 83.2% compared with 93% for non-indigenous students.

Answer 200

In the NT, indigenous attendance rate fell from 70.2% in 2014 to 66.2% in 2017

Answer 201

Indigenous child mortality fell by 35%, 91% enrolment rate for indigenous 4 year olds in early education.

Answer 202

Increasing female participation in the workforce Decreasing family sizes Increasing proportion of people living alone.

Answer 203

Single parent households are the worst off, with a weekly median income at $628, around 1/3 below the average for all family structures.

Answer 204

Couples without dependent children were the highest income family structure receiving $914 per person per week.

Answer 205

The distribution of wealth by family type shows a similar pattern to income distribution. The main difference is that single-person households have much more wealth than single-parent households despite their similar weekly incomes, reflecting the "income-poor" but "asset-rich" elderly people living by themselves.

Answer 206

NT and ACT with highest household incomes of $1913 and $1770, and Tasmania with the lowest at $1117 per week. INTERSTATE INEQUALITY. Age also plays a role in this because states like ACT and NSW have a higher population of young people than states like Tasmania.

Answer 207

Average rent of Sydney property 2018 at $582 per week, compared to median rent in Hobart at $410 per week.

Answer 208

Population living in the capital city area in NSW earning 37% more than those in rural areas. 47% higher net worth for Sydney households than rural households. Important to remember that cost of living differences mean that raw income levels can exaggerate the true extent of income inequality between geographic areas.

Answer 209

Past decade, income of top 1% has doubled, income of top 0.1% has tripled. Wealth share of the top 200 people has tripled since 1980s.

Answer 210

The "growth first, distribute later" assumption has characterised the ECONOMIC PARADIGM.

Answer 211

1. Inequality reduces overall utility The principle of diminishing marginal utility → As more of a good is consumed it will provide less utility to the consumer. Higher income earners have lower utility for every extra dollar. 2. Inequality can reduce economic growth Lower income earners have a higher MPC, meaning an economy with a higher level of income inequality will have a lower level of consumption and a higher level of savings, leading to lower economic activity, employment, investment and living standards. OECD estimates that the rise in inequality in OECD countries in past to decades resulted in reduced cumulative growth by 4.7% 3. Inequality creates conspicuous consumption Creates a leisure class, where individuals consume expensive goods and services such as designer labels to display their wealth. 4. Inequality creates poverty and social problems Causes RELATIVE POVERTY, creates an underclass of low-income earners, less access to education and health, create a self-perpetuating cycle of disadvantage. 5. Inequality increases the cost of welfare support Higher inequality places greater pressure on government revenue to assist the higher proportion of individuals with low income.

Answer 212

1. Social Class Divisions Divides into upper, middle and lower class, results in higher levels of crime and social disorder. Wage disputes often occur, occurrences of social and economic instability. 2. Poverty Australia has a high level of relative poverty not absolute poverty. Household Income and Labour Dynamics in Australia (HILDA) Survey from 2000-2017 noted that 10-14% of Australian are living in poverty at any one time. However, this may occur for brief instances, whilst 3% of the Australian population is consistently in poverty. 17% of adults experience multiple deprivation such as foregoing necessary medical treatments because they cannot afford it.

Answer 213

In NSW, just 6% of all postcodes account for 50% of the most disadvantaged locations. Disparities students may experience from living in these regions can be the equivalent of losing as much as 4.5 years of schooling.

Answer 214

Economic benefits are mainly derived from the incentive effects of inequality. 1. Inequality encourages the labour force to increase education and skill levels However, this assumes that children growing up in poor households still have the opportunity to access a good education. If this is not the case, this may just result in longer term low levels of productivity growth. 2. Inequality encourages the labour force to work longer and harder The potential to earn high incomes is an incentive for workers. If increased output is rewarded through higher pay, this encourages improved labour productivity. 3. Inequality makes the labour force more mobile Higher incomes make both geographical and occupational mobility more incentivised, as seen in the influx in mining workers during the Mining Boom. More efficient allocation of resources and higher economic growth. 4. Inequality encourages entrepreneurs to accept risks more readily The possibility of higher incomes through business ventures results in higher investment and innovation. 5. Inequality creates the potential for higher savings and capital formation Higher inequality encourages increased savings, reducing Australia's reliance on foreign capital by providing domestic funds for investment.

Answer 215

1. Existing inequality in the distribution of income and wealth tends to perpetuate inequality of opportunity. (Higher education = Higher pay, cycle). 2. Not everyone has the same mental and physical attributes (some people are naturally better suited to certain occupations such as manual work. 3. People who acquire wealth through inheritance have a much greater opportunity to build wealth. 4. People may not have access to the same networks of people that may lead to new opportunities (e.g. migrants are likely to find it difficult to access social and business networks).

Answer 216

Unemployment. Periods of unemployment lead to inequality in the distribution of income.

Answer 217

Sustained underemployment

Answer 218

The proportion has fallen since the 90s and has helped to reduce the level of income inequality between households.

Answer 219

The gig economy and rise of underemployment due to casual and part time work has caused greater income inequality. The decentralisation of the labour market has widened inequality between wage earners. Under enterprise agreements, high skilled workers bargain for wage increases, whilst less skilled workers rely on industrial awards for wage rises.

Answer 220

Special provisions to help low paid workers engage in enterprise agreements.

Answer 221

Through adjustments of minimum wage. Fair work has tendency to raise minimum wage (2018 increase by 3.5% raising minimum wages by 1.2% in real terms up to $18.93 an hour).

Answer 222

Age pension at $46.9 billion, disability support pension at $16.6 billion, family tax benefit at $18.4 billion and unemployment and other working age benefits $16.2 billion.

Answer 223

Increased from $210 to $579 per week. The combined effect of taxes and transfers is a reduction in the Gini coefficient from 0.52 to 0.34.

Answer 224

ABS data showed that lowest 40% of income earners have a proportionately larger tax burden, earning only 12% of total private income but paying 15% total taxes (the result of the impact of indirect consumption taxes that are not related to income).

Answer 225

$144 billion in personal income tax reductions phased in over 7 years. Once fully implemented, 62% of the benefit of tax cuts will go to the top 20% of taxpayers, while bottom 30% will just get 7% of the benefit.

Answer 226

2018-19 budget $24.5 billion Quality Schools Package. Delivered an average 50% increase in commonwealth funding per student over the decade.

Answer 227

Since 80s, proportion of employees covered by superannuation has risen from 42 to 94%. Although compulsory superannuation has reduced wealth inequality, the tax concessions given to voluntary superannuation contributors mainly benefit high income earners who can afford to set aside extra income.

Answer 228

Superannuation to be increased from 9.5% to 12% by 2025.

Answer 229

When interest rates increase, this transfer wealth from low to high-income earners, as more low income earners are borrowers, whilst high income earners have net savings and high interest rates increase their income.

Answer 230

In general, microeconomic reform is intended to improve efficiency and increase the returns on investments to owners of assets. Benefits flow to wealthier asset owners, costs felt by low-income earners. For this reason, microeconomic policies are often accompanied by substantial adjustment packages to compensate for the hardship that lower income groups may experience as a result of the reforms/structural changes.

Answer 231

Involves conserving and enhancing the community's resources so that ecological processes and quality of life are maintained. It is a level of economic activity that is compatible with the long-term preservation of the environment.

Answer 232

Adopting a combination of policies to support economic growth and mitigate climate change, such as investment in low-emission and climate resilient infrastructure, could increase average economic output by 1% for G20 countries by 2021, and up to 2.8% by 2050.

Answer 233

The concept that resources should not be used in a way that will limit the quality of life of future generations.

Answer 234

1. Integrating Economic and Environmental Goals in policies and activities 2. Ensuring that environmental assets are appropriately valued 3. Ensuring fairness in the shifting of costs and assets within and between generations 4. Managing environmental risks with caution 5. Taking into account the global effects of environmental issues

Answer 235

1. To enhance individual community wellbeing and welfare by following a path of economic development that safeguards the welfare of future generations 2. To provide for equity within and between generations 3. To protect biological diversity and maintain essential ecological processes and life-support systems.

Answer 236

The key determinant in decisions about what goods to be produced, however the price mechanism does not take into account the long-term effects of economic activity on the environment (its simply an interaction of supply and demand forces).

Answer 237

Occurs because the price mechanism takes account of private benefits and costs of production to consumers and producers but does not take account of wider social costs and benefits borne by all of society. This is an economic system based on private ownership, however there are no general property rights associated with environmental resources (the problem lying behind market failure).

Answer 238

Unintended negative outcome of an economic activity whose cost is not reflected in the operation of the price mechanism. Goods and services that have negative externalities are known as demerit goods.

Answer 239

The environment and other common resources can be destroyed through overuse (such as overfishing the seas or rivers, or polluting the atmosphere and waterways) because no independent party owns these resources as their private property.

Answer 240

When environmental resources become scarce, the cost of natural resources increases, reducing the number of resources consumed. In addition, the high price will also induce producers and buyers to look for and develop alternative inputs to production.

Answer 241

The unintended positive outcome of an economic activity whose value is not reflected in the operation of the price mechanism. Goods and services that have positive externalities are known as merit goods.

Answer 242

Goods and services with negative externalities tend to be overproduced, and goods and services with positive externalities tend to be under-produced.

Answer 243

Groups or individuals who benefit from a good or service without contributing to the cost of supplying the good or service.

Answer 244

1. Non-excludable → Attracts free riders 2. Non-rivalrous → Consumption of good by one consumer does not reduce quantity of the good available for other consumers.

Answer 245

Due to the potential for free riders, and thus the lack of profitability.

Answer 246

Goods and services provided by the government, such as train services and hospitals.

Answer 247

Not all public sector goods are public goods. For example, train services are provided by the government but they are not public goods because they are excludable. Likewise, not all public goods are provided by the government (NGOs).

Answer 248

1. Restrictions on development in environmentally sensitive areas such as mining in national parks 2. Protecting native plants and animal species from extinction 3. Controls over emissions of waste products 4. Requiring new plantation in areas where logging has occurred

Answer 249

Australia protects 17% of its total land areas, compared with 33% in New Zealand and 28% in the UK.

Answer 250

In 2017, 151 flora and 71 fauna were considered critically endangered under the 1999 Environment Protection and Biodiversity Conservation Act, despite Australia being 1 of the 6 most bio diverse nations on the planet.

Answer 251

1. In the short term, environmental policies may result in a reduction in economic growth through interventions in the price mechanism that may cause higher prices or over supply. 2. Industries will face higher costs if they comply with rigorous environmental standards. Environmental standards make us less competitive, as a result Australia may miss out on opportunities that would lift economic growth and exports. 3. The cost of repairing damage to the environment is often borne by taxpayers rather than by those who have caused the economic damage.

Answer 252

$50 million to 2020 for the 20 Million Trees Program.

Answer 253

Where beverage containers can be deposited at recycling facilities in exchange for a 10c refund.

Answer 254

Pollution is often felt far away from its source, and can therefore be a problem for the global economy and for international institutions/governments. e.g. Sulphur emissions into the atmosphere from industrial regions in Europe and the US cause "acid rain", which has damaged lakes and forests throughout Europe and North America.

Answer 255

Could emplace quotas, taxes or even subsidies to encourage environmentally friendly practices.

Answer 256

Can naturally regenerate or replace themselves in a relatively short period of time. However, they may be depleted to the point where they become non-renewable (e.g. overfishing).

Answer 257

Natural resources in limited supply cause they can only be replenished over a long period of time, or cannot be replenished at all (coal and iron ore).

Answer 258

According to the Intergovernmental Panel on Climate Change (IPCC) as part of the UN, about half of cumulative CO2 emissions from human activity between 1750 and 2010 has occurred in the past 40 years.

Answer 259

1. Burning of fossil fuels to meet the electricity and transportation needs of individuals and businesses, which account for over a 1/3 of the world's greenhouse gas emissions. 2. Changes in land use due to agricultural practices such as deforestation, irrigation, livestock farming and landfill, account for a further third of global emissions.

Answer 260

1.9% per year. Large developing economies such as China and India account for the majority, at 2.7%.

Answer 261

1. Melting polar ice caps causing an increase in sea levels of between 18 and 59 centimetres 2. Weather conditions becoming more extreme and unpredictable 3. Skin cancer rates increasing by as much as 140% 4. The number of environmental refugees increasing up to 200 million 5. Coastal flooding that may affect 20 million people and place an additional 30 million people at risk of hunger 6. Average global temperatures rising between 1.1 and 6.4 degrees

Answer 262

1. Reducing Australia's GDP by 4.8% by 2100, consumption by 5.4% and real wages by 7.8% 2. Causing permanent damage to sensitive locations such as coral bleaching in Great Barrier Reef and loss of up to 80% of Kakadu wetlands by the end of this century, also harming tourist industry 3. Increased incidence of heat-related health conditions such as heat stroke 4. Increased frequency of drought in southern parts of Australia leading to a reduction in agricultural production.

Answer 263

Aims to ensure that the present generation does not over consume the stocks of renewable resources and minimises depletion of non-renewable resources.

Answer 264

It means establishing an optimal rate of use that allows the resources to regenerate so that there is no long-term decline in these resources. (Renewable resources)

Answer 265

We should establish a rate of decline that is acceptable for both present and future generations.

Answer 266

Because it can be hard for present generations to predict the needs of future generations. It is also often hard to assess the existing stock of a mineral or other resource, e.g. it was argued in the 70s that the world's oil supply would be depleted by the end of the twentieth century.

Answer 267

-Zinc -Lead -Bauxite -Nickel -Uranium

Answer 268

Share of Australia's electricity generated from renewable sources has risen from 8% in 2001 to 15% in 2017.

Answer 269

Incentivising rooftop solar PVs (solar panels) saw employment growth in renewable energy sector, peaking at 19,220 in 2011-12.

Answer 270

Market-based policy to achieve the dual objectives of reducing carbon emissions and improved energy reliability, however some criticised it as reducing incentives for renewables compared to Renewable Energy Target.

Answer 271

A ban on the production of a particular good or service

Answer 272

Banning a product will remove all externalities associated with the use. Because of the negative unemployment and cost effects this can have governments only do this if there is a suitable substitute. E.g. all state and territory governments (except NSW) have bans on retailers providing single use plastic bags.

Answer 273

Had flow on effects for Australian recycling industry, 30% of Australia's recyclable waste was once exported to China. Led to dumping of recyclable material in landfill.

Answer 274

Carbon Emissions

Answer 275

Tax or excise on fuels such as petrol (carbon emissions passed onto drivers)

Answer 276

Established in 2016 with $1 billion to encourage the availability of new energy technologies.

Answer 277

Government investing $30 million to support threatened species in Australia. This forms part of Australia's Threatened Species Strategy - a project that might not be viable if privately funded.

Answer 278

Every 5 years

Answer 279

Where the ABS has been documenting a series of measurements of Australia's stock of environmental assets.

Answer 280

A plan that will increase generation capacity by 50%, an increase in current electricity generation to provide power for an additional 500,000 homes.

Answer 281

Murray-Darling Basin Authority

Answer 282

Established an annual target of 2750 gigalitres to be returned to the water system with flexibility through the Sustainable Diversion Limit Adjustment Mechanism to be implemented in 2019. A total of $12 billion has now been allocated to support water reform initiatives in the Murray-Darling Basin. Talk about mass fish killing that occurred at the start of the year in the Murray Darling River

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