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Flashcards in Economics Deck (20):
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Economics

Is the study of how people and business with limited income make decisions about what they spend there money on.

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Factors of production

The elements necessary to produce goods and services. They can be divided into:
Land
Labour
Capitol
Enterprise

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Land

The natural resource available in a country

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Labour

The people available in the country and their qualification and skill

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Capitol

All man made things that are available to help produce goods and services

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Enterprise

This is the act of putting together Land, Labour and Capitol to set up a business to make a product/service at a profit

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Income from land

Rent

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Income from labour

Salary/wage

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Income from Capitol

Re-sale, rent, interest

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Income from enterprise

Profit

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Economic growth

Economic growth refers to the change in the quantity of goods and services on a country from one year to the next ( gross national production )

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Benefits of economic growth

New jobs are created
People enjoy a higher standard of living
Money is available to the government

12

Inflation

An increase in prices in a country from one year to the next is referred to as inflation

13

Economic system

The way in which a country uses it's factors of production to produce goods and services is referred to as the economic system in a country

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Causes of economic growth

Low inflation
Low interest rates
Increase exports

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Causes of Inflation

An increase in the cost of producing goods
The demands for certain goods is greater than the quantity of goods available
The price of goods has increased abroad

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Types of Economic systems

Centrally planned economy
Free enterprise economy
Mixed economy

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Entrepreneur

The person who shows enterprise and sets up his or her own business

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Consumer price index

The selection of goods chosen to calculate the rate of inflation

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Gross national production

The total quantity of goods and services produced in a country