AOS2: Output, Employment and Income
Key knowledge

This knowledge includes

The nature and purpose of macroeconomic activity

• the business cycle;

• aggregate demand and its components;

• aggregate supply;

• material and non-material living standards, and the nature and purpose of economic activity as it relates to living standards and long-term economic prosperity;

• factors influencing living standards including income per capita, environmental quality and the distribution of income;

Low inflation

• the meaning of the Reserve Bank of Australia’s goal of stability of the Australian currency (low inflation);

• measuring rates of inflation using the Consumer Price Index;

• the impact on living standards of failing to meet the goal of low inflation;

• aggregate demand and aggregate supply factors that may have influenced the rate of inflation over the past four years;

Strong and sustainable economic growth

• the meaning of the goal of strong and sustainable economic growth;

• economically sustainable development including consideration of access to, and use of, natural resources;

• ways of measuring economic growth using Real Gross Domestic Product (GDP);

• limitations of GDP and alternative measures of living standards, including Genuine Progress Indicator (GPI) and Measuring Australia’s Progress (MAP);

• the reasons for pursuing economic growth, including the impact upon material and non-material living standards;

• the impact on living standards of failing to meet the goal of strong and sustainable economic growth;

• aggregate demand and aggregate supply factors that may have influenced the rate of economic growth over the past four years;

• factors that may influence Australia’s future rates of economic growth;

Full employment

• the meaning of the term full employment;

• measures of the labour force including the participation rate, the unemployment rate and the labour

force underutilisation rate; • the costs and benefits of achieving full employment including the impact on living standards; • aggregate demand and aggregate supply factors that may have influenced the achievement of full

employment over the past four years;

External stability

• the nature, significance and measurement of international transactions including the balance of payments, exchange rates, terms of trade and net foreign debt;

• the impact on living standards of changes in international transactions;

• the nature of free trade and protection including advantages and disadvantages, methods of protection, and the effects of free trade on domestic and global trade and living standards;

• aggregate demand and aggregate supply factors that may have influenced international transactions over the past four years;

Equity of income distribution

• sources of income and the meaning of equity in the distribution of income;

• ways of measuring income distribution, inequity and poverty including the Lorenz Curve, the Gini Coefficient and the Henderson Poverty Line;

• economic and social costs and benefits of income inequality, and how this might influence living standards;

• the trade-off between equity and efficiency;

• factors that may have influenced the distribution of income over the past four years.

Key skills

These skills include the ability to

• use a range of sources to acquire economic information;

• define key economic concepts and use them appropriately;

• apply economic concepts and theories to explain the nature and importance of key economic goals;

• interpret and analyse statistical and graphical data to investigate the factors that have influenced the achievement of key economic goals over the past four years;

• analyse the impact of key economic goals on living standards.

	Created by hbora over 12 years ago

12 Economics Note on Study Design Economics, created by hbora on 15/09/2013.