Economics Flashcards
What is a market?
A market is where buyers and sellers interact with one another to exchange things of value.
What are the three main markets?
- The housing market
- Labour market
- Stock market
What is the stock market?
The stock market is where shares are bought and sold from public companies.
What is the labour market?
The labour market is when people sell their skills and knowledge to earn income.
What is the housing market?
The housing market is where houses are bought and sold.
What is a landlord?
A landlord is someone who owns multiple houses and leases them out to tenants in exchange for rent.
What are savings?
Savings is the money consumers deposit into banks and other financial institutions. Savings is a leakage.
What is investment?
Investment is the money producers borrow from the financial sector to buy new capital. Investment is an injection.
What is taxation?
Taxation is a percentage of a consumer’s income that is paid to the government. Taxation is a leakage.
What is government spending?
Government spending is the money the government injects back into the economy through welfare payments and providing public goods and services such as healthcare and education.
What are injections?
Injections are the introduction of income into the circular flow.
What are leakages?
Leakages are the withdrawal of income from the circular flow.
What is the law of demand?
When prices rise, the quantity demanded decreases. When prices fall, the quantity demanded increases.
What is the law of supply?
When prices rise, the quantity producers are willing to supply increases. When prices fall, the quantity producers are willing to supply decreases.
What is resource allocation?
How we divide resources and how these resources are then distributed to consumers.
