Focus Questions

In this learning module, we will focus on the following questions:

• How does the economy contribute to my well-being?
• What creates innovation?
• Who is making decisions about my economic future?

Each update focuses on an everyday application of economic thinking. These are:

1. Your Society
2. Your Economics (how we interact in the market)
3. Your Government
4. Your Livelihood
5. Your Workplace
6. Your World

Each of these learning areas ask you to make a comment on the update, and also provide an  independent contribution to the learning in your own update. By commenting and posting your own independent research you will show how you have engaged with the learning materials and demonstrated your understanding. You can also support your peers in answering their questions and asking them questions about their independent updates. There are activities included here as PDFs that you need to download and complete. You can share this work for feedback from your teacher and peers and to support you in your learning. There are also two surveys with links provided that will help you check for understanding. You will be able to use these new concepts and understanding you gain from these surveys in your comments and updates. 

You are going to investigate and create an informative/ exploratory text about a major economic event or development that has affected Australian consumers and businesses, including causes, impacts and responses. This Project is outlined in the next update Your Future. The following examples will provide you with some ideas:

• reasons for deregulation of a particular Australian industry, eg banking and finance
• consequences of the 2008 Global Financial Crisis
• the emergence and influence of global companies in Australia
• an issue relating to the activities of a transnational corporation (TNC) such as modern slavery

The success criteria for this learning module is described below:

• Make a comment on at least 4 updates
• Make at least 4 independent updates
• Comment on 5 peer comments
• Submit a draft for the Project
• Provide peer feedback on a Project using the published rubric
• Revise your work and submit a finished informative/ exploratory text about a major economic event or development that has affected Australian consumers and businesses.

Threshold Concepts in Economics

Watch this clip, 11:20 mins, (Ha-Joon Chang, 2016).

Ha-Joon Chang gives us this salient advice "You should not be a man or woman with a hammer" (RSA Animate, 2016, 4:52 min).

Comment below, on what he means by this and how it relates to economic thinking. Remember to comment on a peer's comment as well.

Learning Intention: To start the writing project and use the rubric to identify what is important to include.

Project Name: Economics for People: When the Extraordinary Becomes the Everyday

Description: Write an informative/ explanatory text about a major economic event or development that has affected Australian consumers and businesses, including causes, impacts and responses. The past is in the present which creates your future. Explain the event and how it is affecting economic events today and into the future.

You can choose on of these major economic events or developments or use them to investigate another event or development that interests you:

• reasons for deregulation of a particular Australian industry
• consequences of the 2008 Global Financial Crisis: see the trailer featured below (Paramount Pictures, 2015)
• the emergence and influence of global companies in Australia
• an issue relating to the activities of a transnational corporation (TNC)

Check the Work Request in your Notifications. Click on this link to open the “Untitled Work” in Creator. Then, change the title, and begin a first draft. Go to About This Work => Project => Description for further project information.

For what you need to do in order to write a good informative/explanatory text, go to Feedback => Reviews => Rubric. Keep the Rubric open and refer to it as you write.

When you are ready to submit, click “Submit Draft” below the work. This is the version of your work that will be sent to others for review.

Project Rubric

Check the rubric for the important details you need to include and plan for in your research and drafting.

Comment: Do you have any questions about how Scholar works? Make a comment in this update. If you think you have an answer to another student's question, please answer it - be sure to name the student you are replying to in your comment by starting with @Name.

Intended Learning Outcomes:

• investigate the business cycle and its impact on the economy

• explain the interdependence between different sectors of the economy, for example the role of the government in protecting consumers, the role of the financial sector in facilitating business investment

Traditional economics sets out some basic premises. Let's think these through and see where they are happening in our everyday lives.
​
The operation of an economy relies on:

• the production of goods and services from resources – natural, labour, capital and entrepreneurial resources
• the distribution of goods and services
• the exchange of goods and services
• the provision of income
• the provision of employment and quality of life through the business cycle and
• the circular flow of income
• individuals, businesses, financial institutions, governments, international trade and financial flows

The Boom and the Bust

Understanding that everyday events are part of something bigger is the first step to recognising the relevance of studying economics. Gross Domestic Product (GDP) measures the total production of all goods and services in an economy. Real GDP is adjusted for inflation, meaning it can be compared across years. The business cycle shows how the economy moves through good times (booms) and hard times (busts) showing the increases and decreases of real GDP.

The Business Cycle

 Watch this clip from Econstories, 7:32 mins, (Emergent Order, 2010) which features two rap-rivalling superstars of economics: John Maynard Keynes and Fredrich August Hayek. Keynes and Hayek have opposing views about how governments and the financial sector can protect us from the ups and downs of economic fortunes. Want to follow the rap battle with the lyrics? Use Genius.

Comment: Scroll through the comments on the YouTube clip "Fear the Boom and Bust: Keynes vs. Hayek - The Original Economics Rap Battle!" (Emergent Order, 2010). Choose one of the comments and explain the commenter's position, do they support one side or the other? What is the basis for the ideas they present in their comment?  

Make an Update: Take one of these leading thinkers of economics, Keynes or Hayek, and explain how they have contributed to our understanding of economics in 100 words or less, including a media element to further explain your points. If your economist were alive today, what advice would they give governments in managing a recovering Covid- economy?

Intended Learning Outcomes

• investigate the role of consumers, business, government, financial institutions and the overseas sector in the five sector circular flow model

• explain the price mechanism and the interaction of demand and supply within a market

• investigate the concept of a market and the various types of markets, for example retail markets, labour markets, financial markets, stock markets

Economics is the study of how people interact with each other and with their natural surroundings in providing their livelihoods, and how this changes over time.

CORE ECON (2021)

It is part of something bigger, shown here:

The Price Mechanism

This delicate balance between the economy and society relies on the price mechanism, which like a see-saw moves depending on the amount of demand on one side and the amount of supply on the other. When the two are equalised, they are in equilibrium and that's the price we pay. Everyone sets the price of a good or service, as explained here in MRU's clip "A Price is a Signal Wrapped Up in an Incentive" (MRU, 2015). Watch the clip, 4:46 mins.

As we focus  on the economy, we can see different groups or sectors, such as households and firms, going about their everyday economic decision-making. See how these sectors interact with each other in the following schematic from Core Econ (2021) swapping goods and services for labour.

A model of the economy: Households and firms.

The model gets bigger every time you add more groups or sectors that contribute to our economic well-being. Complete this activity "Sectors in the Economy" to help you to find out about the different sectors that make up our economy.

Sectors in the Economy (RBA Education, 2020)

The different sectors of the economy all interact, sharing resources and expertise, building an economic life where citizen economists act out their daily roles. They give their labour for remuneration (wages or salaries and other benefits like holidays and sick leave) in order to purchase goods and services that help them stay healthy and happy. Fill in the blanks in the activity "Complete the Circular Flow Model" from the RBA Education Team (RBA, 2020) to investigate how theses sectors interact and follow the money. When you're ready, you can find the suggested responses here.

Complete the Circular Flow Model (RBA Education, 2021)

So, what happens when there are no limits on the interactions? Watch this clip "The Story of Solutions", 9:06 mins, (The Story of Stuff Project, 2013) and consider what goals we are striving for in our economic understanding.

Comment: Three important economic concepts have been discussed in this update: the price mechanism, the 5-sectors, and the circular flow. Give an example from your daily life that relates to ONE of these concepts.

Make an Update: Find an example of a community or government initiative that is making better use of our limited resources, such as the plastic bag recycling project explored in "The Story of Solutions". Explore where it sits in the 5-sector model and how it is using the price mechanism and incentives to change behaviour. How is it refocusing the flow in the circular flow model?

Intended Learning Outcomes

• examine the reasons for government intervention in the market, for example energy pricing, prevention of environmental degradation, conservation of natural resources

Markets will usually provide a short-term response that satisfies most needs in a developed and stable economy but there are limits to markets, especially in areas that produce pollution and long-term harmful effects on the environment. Governments sometimes need to intervene, such as for energy pricing, prevention of environmental degradation, or the conservation of natural resources.

Traditional economics sets out some basic premises. Let's think these through and see where they are happening in our everyday lives.

• Market failure occurs when the price mechanism fails to reflect social costs and benefits of production
• A public good is non-excludable and non-rival and because of this, the free market will generally fail to provide them, e.g. clean air
• Governments in most circumstances will subsidise merit goods, e.g. the Arts
• Markets reward businesses for producing demerit goods, e.g. alcohol and cigarettes, but the government will penalise consumption
• ​Extreme inequality is undesirable
• Pollution and climate change are externalities of the market
• Some markets are best served by a monopoly supported by government as a public enterprise

Why we need some intervention in the market

Many economies around the world, including our own rely on the operation of markets which are pushed and pulled by individuals and businesses buying and selling good and services. The free market ideology has created wealth and improved the living standards of millions of people around the world as Hans Roslings (BBC, 2010) shares with us in 4:47 minutes:

The argument for the laissez-faire approach with deregulated markets seems to have emerged as the hero of the 20th century. Most governments around the world favour economic management and policies that ​support free trade and globalisation. With the Covid-19 pandemic those policies are taking a battering and we're left wondering what is the right balanced approached that creates wealth and prosperity for all? The limits of the free market rely on the individual's self-interest and this update is concerned with discovering how economics might have us pegged.

Watch this 4:49 minute clip (Splitorsteal, 2010) and decide: What would you do? 

Summing up: Why governments intervene

Markets are not a perfect mechanism because they rely on individual self-interest, not the broader social and economic concerns that benefit us all. We saw in the 'Split or Steal' scenario that self-interest overrode the altruistic sense to cooperate with another human being. Cheat or be cheated. Cooperate and others will cooperate. We can't leave the broad social needs of our society to a market that thrives on individual self-interest alone; we need a balance. Too much government intervention crowds out the individual's creativity and innovative perspectives, too little, and we're left with a society that is bereft of equal opportunity that thrives on the 'law of the jungle' where only the fittest will survive.

Comment: Play this interactive "The Evolution of Trust" (Case, 2017) and share your strategy in the comments below. When do you think people or governments can be trusted?

Make an Update: Find an example of where the government has intervened in the market, for example energy pricing, prevention of environmental degradation or for the conservation of natural resources. How did the government intervene? What led to this intervention? Do you think it will/ did work? Consider the economy, society and the biosphere.

Intended Learning Outcomes

• investigate the contribution of entrepreneurship and innovation

• explore the importance of ethical decision-making for businesses and corporate social responsibility

Your livelihood provides you with a living wage, described in economics as your income. Income is the amount of money you receive in a week or a month, and it can come from exchanging your labour, market investments or government transfer payments. It is described as a flow variable as it can change overtime and flows regularly into your life. Wealth, on the other hand, is a stock variable meaning it has no relationship to time. Entreneurship and innovation build income and that income can be used to create wealth through capital investments such as investing in a share portfolio. The entrepreneurial know-how is what create the spark for innovation and change and it is what keeps our economy growing and finding new and better ways to use limited resources to meet the needs of society.

As the world becomes more globalised, interconnected by technology, transport and communication networks, national boundaries matter little as companies expand and build through innovation. What happens next is creative destruction which makes way for the next big thing. Sometimes that transition is difficult and there are winners and losers as globalisation takes hold. 

Watch MRU's (2019) "Creative Destruction", 7:51 mins, and think of something you have (or used to have) that is now left behind by creative destruction.

Check your understanding in these practice questions: Creative Destruction: Technology and Trade

As businesses and individuals innovate using their entrepreneurial skills, they create more wealth in the economy. There are important considerations around how this distribution of wealth affects the rest of society. Find out what they are, here in Doughnut Economics' clip "5. Design to Distribute", 1:38 mins (Doughnut Economics Action Lab, 2017). Use this new knowledge in your Update below.

Comment: What makes an entrepreneur? Do you have what it takes? What types of innovations would you like to see in your lifetime? Apple's innovation to sell parts (Deutsch, 2021) is an example you could use.

Make an Update: Entrepreneurship and innovation drives economic growth, changing incomes and wealth. Where have you seen this happen in your life? Who is paying for fast fashion choices or single-use plastics? What innovative solutions are redistributing incomes in these situations?

Intended Learning Outcomes

• explore different types of businesses and their features, for example online, on-demand, global, offshore, small and large scale, government, not for profit 

• investigate factors influencing business decisions, for example technology, business cycle, globalisation

If you had to narrow down the most important decisions a business makes, it comes down to three things:

1. What are they going to make?
2. How much or how many goods or services should they make available?
3. How are they going to make them?

All the other decisions come back to these three basic things.

The goals of a business centre in creating economic growth and building productive capacity. You can sum these up in 5 general areas:

1. Maximising profit: the difference between total sales (or revenue) and total costs.
2. Meeting shareholder expectations: Shareholders are the owners and sometimes they're only interested in short-run returns.
3. Increasing market share: dominating the market is a priority for executives.
4. Maximising growth: growing assests that help achieve profits in the long-run.
5. Satisficing behaviour: a little bit of everything!

All businesses have similar decisions and goals but there are different types of businesses that have varying features. Using this table, find a real life example of a type of business, listed in the first column, and decide which goal(s) you think are most important for that business. The first one has been done for you.

In meeting the challenges of the economy, the decisions of businesses and entrepreneurs are affected by a range of factors, for example technology, the business cycle and globalisation. So how does globalisation affect businesses? 

Watch MRU's "Avengers: The Story of Globalization (episode 1)" , 10:38 mins (MRU, 2019a) to find out.

Comment: Try the 5 practice questions here to check your understanding and then decide: Did Covid push us to Globalization 4.0? Give a reason for your answer in your comment on this update.

Make an Update: Investigate a business that fits into two or more categories for the types of businesses listed in the table "Different types of businesses and their features". Find out how that business answered the three questions all businesses need to answer. Include the effect of factors such as technology, the business cycle and globalisation, on their decisions: 

1. What do they make?
2. How much or how many goods or services do they make available?
3. How do they make them?

Intended Learning Outcomes

• explore customary trading practices of Aboriginal Peoples and Torres Strait Islander Peoples and the nature of participation in historical and contemporary markets, for example trade in rare and valuable goods, changes in technologies and ideas, use of cultural knowledge in enterprising ways

We tend to think that the study of economics only started with the Industrial Revolution in the 18th century, as businesses became globalised and prospered through more complex production processes and greater access to labour markets. The study of economics is so central to our everyday interactions that it really has been around for as long as people have traded. The Ancient Greeks used the word Oikonomia, which is the root word for economics, meaning "household management". Economic incentives are recorded by Solon, who reigned over Athens in 594. He laid down a law that only fathers who taught their sons a trade could legally demand support in their aging years. 

How is economic behaviour central to our organisation as a society? Watch Morgan Spurlok's "Cave-o-nomics" (We The Economy, 2014) as he explains how in this 6:45 min clip. If you would like to watch more great videos from We, The Economy head to this link.

The customary trading practices of Aboriginal and Torres Strait Islander Peoples (ATSI) and the trade in rare and valuable goods, new ideas in the gentle technology of tools and their sharing of cultural knowledge in enterprising ways, underpin our modern-day economy. Our roads follow the original paths of our First Nations People and we are still learning about building sustainable societies from elders who share their wisdom about how to "care for country". One of those roads is The Bundian Way. It is an ancient track, used for 40,000 years, now creating a path for reconciliation.

The Bundian Way acted as contemporary markets do, providing opportunities for ceremonial meetings and trade opportunities for ATSI Peoples. Looking ahead, cultural tourism can develop an understanding of and respect for ATSI histories, cultures and languages.

The Bundian Way is a pathway from the sea to the mountains. A 365km pathway of shared Aboriginal and European history that leads through a remarkable variety of bush landscapes, across plains and mountain ranges, between Turemulerrer (Twofold Bay) and Targangal (Mount Kosciuszko), the highest point on the Australian mainland.

Eden Local Aboriginal Land Council (2021)

Here's a quick introduction to The Bundian Way, 1 min (sapphire Coast NSW, 2020):

This longer version, 19:55 mins (sheba2211, 2016) shows how ATSI Peoples treasure this connection to country and the significance of The Bundian Way as a link to the ancestors and the cultural heritage ATSI Peoples value in our modern-day contexts.

Each generation makes way for the next generation. One of the most important considerations is that we ensure there is intergenerational equity for those yet to become the caretakers. The study of economics provides us with the tools to understand how to plan for growth and conservation, and to ensure we don't rob the next generation of their heritage.

Comment: Make a comment about how The Bundian Way preserves a past and builds a future.

Make an Update: Choose ONE of these inquiry questions and make an update that uses a variety of sources, including interesting and engaging media, to provide an explanation.

1. Identify and classify examples of different types of decisions that ATSI people made in a traditional setting and discuss the consequences of those decisions.
2. Describe the links between trading groups around the Bundian Way: explain the factors influencing decisions to trade locally and regionally.
3. Investigate probable influences on economic activity in a traditional setting by examining factors which may have contributed to changes in economic behaviour and practices by groups using the Bundian Way.

Learning Intention: To give feedback on other students’ works and then revise your own.

Check your Notifications for Feedback Requests: You have received a Feedback Request. Click on this link to take you to the work you have been assigned to review. Go to Feedback => Reviews => Review Work. Rate the work on each criterion and explain why you gave the work that rating. Make in-text comments at Feedback => Annotations. Make an overall recommendation at Feedback => Recommendation.

Submit your feedback once it is finished at About This Work => Project => Status. You will not be able to submit your review until all requirements set by you teacher have been met. These may include a Review, Annotations, and/or a Publication Recommendation.

For more information, see Reviewing a Work and Submitting a Review and Annotations.

The next stage of the writing process is to revise your own work.

Check your Notifications for a Revision Request: You have received a Revision Request. Click on this link to take you to the most recent version of your work. Then go to Feedback => Reviews => Results to see the reviews and Feedback => Annotations to see in-text comments. Once you have incorporated all of the feedback (Reviews/Annotations) from your peers, click “Submit Revision” below the work.

You can also write a self-review, explaining how you have taken on board the feedback you received.

For more information, see The Revision Phase.

Comment: Do you have any more questions about Scholar at this stage? Make a comment in this update. If you think you have an answer to another student's question, please answer it - be sure to name the student you are replying to in your comment by starting with @Name.

Learning Intention: Celebrate successful writing.

Check Notifications to see if your work has been published and whether works that you provided feedback on have been selected for publication. Published works may be viewed on your and any collaborators' individual profiles in Community.

Comment: Read two - three other people’s published informative/explanatory texts.Write a comment about the most interesting thing you learned from reading them.