WHAT IS THE ECONOMY?

What is the first thing we need to think about when understanding the economy?

• Money

• Resources

• Government

• Businesses

What are resources?

• Things we can use to make what we need and want

• Money we save in banks

• Taxes paid to the government

• Goods we buy from shops

Why do we need to make decisions about how our resources are used?

• Because resources are free

• Because we have too many resources

• Because resources are unlimited

• Because resources are limited

Which sector of the economy includes you and me?

• International sector

• Household sector

• Government sector

• Business sector

What is the role of businesses in the economy?

• To pay taxes

• To decide what to sell, what prices to charge, and who to employ

• To save money in banks

• To produce raw materials

What is tax?

• Money paid by businesses to households

• Money saved in banks

• Money paid by households and businesses to the government

• Money borrowed from banks

What is the international sector?

• Trade with other countries

• Goods sold within the country

• Money saved in banks

• Taxes paid to the government

What do banks do?

• Produce raw materials

• Decide what to sell

• Deal in money, allowing households and businesses to save or borrow

• Pay taxes

What is interest?

• Money paid by the government

• Money borrowed from banks

• Extra money paid by banks to savers or charged to borrowers

• Money saved in banks

What is the role of the Reserve Bank of Australia (RBA)?

• To help keep Australia's economy running smoothly

• To produce raw materials

• To allow people to save and borrow money

• To decide what to sell