Explain the effects of changes in the factors of aggregate supply to the circular flow of income model (e.g. technology, innovation, entrepreneurship and immigration) and make connections to the production possibility curve, economic growth and employment. Economics 2025 v1.4

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Explain the - relationship existing between the five sectors of the circular flow of income model in closed and open form, in both words and diagrammatic form - components of aggregate demand: Consumption + Investment + Government Expenditure + net exports (Exports – Imports), or C + I + G + (X – M) - equilibrium condition, where injections equal withdrawals, and understand why equilibrium is not where S = I and T = G and M = X - connection between aggregate demand and GDP, and locate GDP on the Australian Bureau of Statistics website - connection between the resources and goods markets, and the business and household sectors in the circular flow of income model - economic cycle (business cycle) with booms and busts, and how the government can minimise fluctuations in the economic cycle (the level of complexity is less than the requirement for Units 3 and 4) - paradox of thrift (fallacy of composition) exposed by the circular flow of income model.

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Select data and information to analyse (the level of complexity is less than the requirement for - the various forces impacting on the size of the circular flow of income, e.g. retail sales growth, business investment, exports and imports using current data from the Australian Bureau of Statistics - the effects of government spending and taxation on the size of the economy using aggregate demand and the circular flow of income model - the effects of changes in the cash rate by the Reserve Bank of Australia on aggregate demand and the circular flow of income model and explain the meaning of basis points and percentage points.