Economics

Unit 1: Economic decision-making

Economics is a dynamic and constantly evolving field of social science, which looks at the way humans behave and the decisions made to meet the needs and wants of society. In this unit students explore their role in the economy, how they interact with businesses, and the role of the government in the economy. Students use demand and supply models to explain changes in prices and quantities traded. Through close examination of one or more markets, they gain insight into the factors that may affect the way resources are allocated in an economy and how market power can affect efficiency and living standards.

On completion of this unit the student should be able to:

• Describe the basic economic problem, discuss the role of consumers, businesses and the government in the economy, and analyse the factors that affect economic decision-making.
• Explain the role of relative prices and other non-price factors in the allocation of resources in a market-based economy and analyse the extent of competition in markets.
• Explain how behavioural economics complements traditional understandings of decision-making, and analyse the effects of behavioural economics insights on consumers and other economic agents.

Unit 2: Economic issues and living standards

A core principle of economics is maximising the living standards of society. This is done through economic decisions that optimise the use of resources to produce goods and services that satisfy human needs and wants. Economic activity is therefore a key consideration for economics. Students consider the link between economic activity and economic growth and investigate the importance of economic growth in raising living standards. They evaluate the benefits and costs of continued economic growth and consider the extent to which our current measurements of living standards are adequate.

On completion of this unit the student should be able to:

• Explain the purpose of economic activity, the distinction between material and non-material living standards and the factors that may affect levels of economic activity and growth, discuss the costs and benefits of economic growth and examine the impact of economic activity on living standards using alternative measures.
• Explain the factors that affect two economic issues at a local, national and international level and evaluate actions to address the issues. 

Unit 3: Australia’s living standards

Students develop an understanding of the macroeconomy. They investigate the factors that affect the level of aggregate demand and aggregate supply in the economy and apply theories to explain how changes in these variables might affect achievement of domestic macroeconomic goals and living standards. Students assess the extent to which the Australian economy has achieved these macroeconomic goals during the past two years.

On completion of this unit the student should be able to:

• Analyse how markets operate to allocate resources and evaluate the role of markets and government intervention in achieving efficient outcomes.
• Analyse key contemporary factors that may have affected domestic macroeconomic goals over the past two years, evaluate the extent to which the goals have been achieved and discuss the effects on living standards.
• Analyse the factors that may affect the exchange rate, terms of trade and Australia’s international competitiveness, and discuss their impact on Australia’s international transactions and the achievement of the domestic macroeconomic goals and living standards.

Unit 4: Managing the economy

This unit focuses on the role of aggregate demand policies in stabilising the business cycle to achieve the domestic macroeconomic goals. Students develop an understanding of how the Australian Government can alter the composition of budgetary outlays and receipts to directly and indirectly affect the level of aggregate demand, the achievement of domestic macroeconomic goals, and living standards. Students also examine the role of the RBA with a focus on its responsibility to conduct monetary policy. Students consider how the tools of monetary policy can affect interest rates, the transmission mechanism of monetary policy to the economy and how this contributes towards the achievement of the domestic macroeconomic goals and living standards. 

On completion of this unit the student should be able to:

• Discuss the operation of aggregate demand policies and analyse their intended effects on the achievement of the domestic macroeconomic goals and living standards.
• Discuss the operation of aggregate supply policies and analyse the effect of these policies on the domestic macroeconomic goals and living standards.