COMMERCE CORE UNIT
THE ECONOMIC
&
BUSINESS ENVIRONMENT
By Karen Devine
1
Devine Educational Consultancy Services
Commerce Elective
The Economic
&
Business Environment
By Karen Devine
© Karen Devine
http://www.devineconsult.com.au
2
This book is intended for use in NSW Secondary
Schools.
It follows the 2019 NESA Syllabus for the Elective
Commerce Course.
This work is copyright. Apart from any use permitted
under the Copyright Act, no part may be reproduced
by any process, or any other exclusive right
exercised, without the permission of Devine
Educational Consultancy Services.
Pps: 142
The author has taken due care to ensure the accuracy of the data in this resource. Any errors
made are therefore unintentional. The author asserts their moral rights to this wor
© Karen Devine
http://www.devineconsult.com.au
3
CONTENTS
The Five Sectors
The Roles of the Five Sectors
Interdependence of the Five Sectors
The Business Cycle
The Price Mechanism
The Types of Markets
Trading and ATSI Peoples
Government Intervention in Markets
Other Reasons for Government Intervention
Types of Businesses
Legal Structures of Businesses
Factors Influencing Business Decisions
Entrepreneurship and Innovation
Ethical Business Behaviour
Corporate Social Responsibility
The GFC
The Influence of Globalisation
© Karen Devine
http://www.devineconsult.com.au
4
Core
The Economic
&
Business Environment
© Karen Devine
http://www.devineconsult.com.au
5
GLOSSARY.
Complete definitions of these terms as you encounter them in class.
TERM
Bank
DEFINITION
Business Cycle
Capital Gain
Centrelink
Complement
CPI
Credit Check
Debt
Deficit
Demand
Demerit Goods
Depression
Differentiated
Disequilibrium
Dividends
Downturn
Duopoly
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© Karen Devine
http://www.devineconsult.com.au
10
THE HOUSEHOLD SECTOR
• Households or consumers are concerned with making decisions
about spending, saving and personal investment.
• Households offer their labour to businesses in exchange for
wages and salaries.
• They spend their wages and salaries in businesses in order to
buy goods and services.
• Households make decisions in order to satisfy their needs and
wants.
THE FIRMS SECTOR
• The major objective of firms is to provide consumers with goods
and services.
• The firms sector produces and distributes goods and services to
satisfy the needs and wants of households.
• They also provide the household sector with employment
opportunities to enable them to earn an income.
THE FINANCIAL SECTOR
• In Australia the financial sector:
a) Provides options for those without surplus funds
b) Makes loans to those who can utilise these funds
c) Creates a link between savers and borrowers
© Karen Devine
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11
▪ The links between the 5 key sectors in the economy are
best demonstrated by the circular flow of income:
Income
Households
Firms
Consumption
Savings
Financial
institutions
Taxation
Government
Imports
Overseas
© Karen Devine
Investment
Government
Spending
Exports
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12
CLOZE EXERCISE.
Find the words in the box below and use them to fill in the blanks
in the text:
Salaries
Consumers
Deposits
Production
Labour
Transactions
Advice
Monopolies
Communications
Savers
Exchange
Modifying
Goods
Unemployed Building
Investment
Satisfy
Infrastructure Distributes
NBFI’s
Surplus
Superannuation
Gambling
Public
Loans
Power
Defence
Trading
Merit
Volatile
Negative
Welfare
Employment
THE HOUSEHOLD SECTOR
• Households or …………………….. are concerned with making
decisions about spending, saving and personal investment.
• Households offer their ……………………… to businesses in
exchange for wages and salaries.
• They spend their wages and …………………. in businesses in
order to buy goods and services.
• Households make decisions in order to …………………… their
needs and wants.
THE FIRMS SECTOR
• The major objective of firms is to provide consumers with
……………. and services.
• The firms sector produces and ………………… goods and
services to satisfy the needs and wants of households.
• They also provide the household sector with ……………..
opportunities to enable them to earn an income.
© Karen Devine
http://www.devineconsult.com.au
13
WORD HUNT.
Find the words in the matrix below and then carefully explain
them:
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DEMERIT GOOD: ______________________________________________________
EXCHANGE RATE: ____________________________________________________
MONOPOLY: __________________________________________________________
NBFI: _________________________________________________________________
PUBLIC GOOD: _______________________________________________________
REALLOCATE: ________________________________________________________
REDISTRIBUTE: ______________________________________________________
STABILISE: ___________________________________________________________
SUPERANNUATION: __________________________________________________
WELFARE: ____________________________________________________________
© Karen Devine
http://www.devineconsult.com.au
14
TRUE/ FALSE QUESTIONS.
Answer true or false to the statements below:
STATEMENT
1)
2)
TRUE OR
FALSE?
Households are concerned with making
decisions about spending, saving and personal
investment.
Households spend their wages and salaries in
businesses in order to produce and distribute
goods.
3)
A major objective of firms is to provide
consumers with goods and services.
4)
The firms sector attempts to satisfy the needs
and wants of households.
5)
In Australia the financial sector creates a link
between spenders and savers.
6)
Banks are prohibited
superannuation funds.
7)
Governments provide public goods for citizens
which are not provided by businesses.
8)
Governments attempt to regulate negative
behaviours of businesses such as pollution,
non-payment of wages and monopolisation.
9)
The overseas sector is largely concerned with
Australia’s trading links.
10)
The overseas sector has little involvement in
exchanging currency.
© Karen Devine
from
managing
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15
© Karen Devine
http://www.devineconsult.com.au