CH3 - Economics & Business Flashcards
(34 cards)
What is economics?
It is the study of how individuals, companies, governments and nations allocate their limited resources to satisfy their unlimited wants and needs.
What are resources?
Resources the inputs used to produce outputs.
What does factors of production mean?
Factors of production are the basic resources that a country’s businesses use to produce goods and services.
What factors of production incudes?
- Land
- Labour
- Capital
- Natural resources
- Entrepreneurs
- Knowledge
What is an Input Market?
Companies buy inputs or resource from households for production. It could be land, labour, capital, entrepreneurship.
What is an output market?
Households buy goods and services from companies.
What does economy system means in the context of a country?
A country’s economic system is the way in which a country seeks to allocate its resources.
What are the 3 fundamental questions that an economic systems seek to answer.
- What
What goods and services should be produced to meet consumer. - How
How should these goods and services be produced. - Who
Who should receive the goods and services.
Identify the 2 possible extremes of economic system
- Planned Systems
- Free market system
What is a planned system?
Where government exerts control over the allocation or distribution of all goods and services.
What is the Free-market system?
Where businesses are owned and operated by individuals free to respond to consumer demand.
What is GDP?
Gross Domestic Product.
GDP is the value of all finished goods and services produced IN a country within a certain period of time.
What is one of the methods of calculating GDP?
GDP= C + G + I + NX
C = Consumption
G = Government Spending
I = Investment
NX = Net exports
What are the elements that GDP cannot gauge?
The health, wellbeing and happiness of a population.
What are some other examples of statistics that governments look at to determine a country is being run effectively?
- UN’s Human Development Index.
- GINI coefficient.
What does UN’s Human Development Index measures?
Human longevity and well being.
What does he GINI Coefficient measures?
Wealth inequality.
What are the 3 economic goals?
- Economic Growth
- High employment
- Price stability
What is an inflation?
When the economy overheats it leads to the increase in prices of goods and services which is called inflation.
What is a deflation?
When the GDP goes down and customers buy less gods and services it results in less goods and services being produces which leads to a decrease in prices which is called deflation.
What is monetary Policy?
The BoC controls the monetary police by controlling the flow/supply of money and the interest rates by which it lends money to other banks.
What is Fiscal policy?
The Federal and Provincial Governments together control fiscal policy which relates to taxation levels and the level of government spending. If the Government increases and/or reduces taxation this will put more money in the pockets of the businesses and individuals and stimulate the economy.
What is a Market?
It is an exchange process between buyers and sellers.
What is a market economy?
It is the result of millions of exchanges each day.
