Economics Definitions

Question 1

Define economics

Answer 1

Economics is the study of how individuals satisfy their unlimited wants and needs with limited resources.

Question 2

What are consumers

Answer 2

People who use goods and services

Question 3

What are producers

Answer 3

Manufacturer of goods and services

Question 4

What are goods

Answer 4

Has a physical existence, it is a tangible item

Question 5

What is a service

Answer 5

A job that is done for you

Question 6

What are needs

Answer 6

Essential for survival

Question 7

What are wants

Answer 7

Things we would like to have but which are not essential for survival

Question 8

What are necessities

Answer 8

Goods and services which are essential to maintain life

Question 9

What are means

Answer 9

The goods and services that we can have will depend on our personal resource

Question 10

What are limited means

Answer 10

The resources we have as individuals

Question 11

What is the circular flow model

Answer 11

Shows relationships between various sectors in an economy and that there is a mutual reliance

Question 12

What is the household sector

Answer 12

Consumers spend money on goods and services and provide labour to firms

Question 13

What is the firms sector

Answer 13

Firms/producers receive money for goods and services and provide goods and services to households

Question 14

What is the government sector

Answer 14

Receives direct tax from households, receives indirect tax from firms, give households transfer payments, give firms subsidies

Question 15

What is the financial sector

Answer 15

Receives savings from households, gives loans to firms for investment for existing and new ventures, give loans to government

Question 16

What is the overseas sector

Answer 16

Receives money from overseas buyers, pays money to overseas sellers, gives goods to local firms from overseas sellers, receives goods from local firms going to overseas buyers

Question 17

What is consumption

Answer 17

Households buying or spending on goods and services

Question 18

What is income (households)

Answer 18

Payments by firms to households for using factors of production

Question 19

Firms income

Answer 19

Comes from households spendings on goods and services

Question 20

What is savings

Answer 20

Income that is not spent

Question 21

What is investment

Answer 21

When firms buy capital

Question 22

What is Direct tax

Answer 22

Government receives direct tax from households when deducted from salaries and wages

Question 23

What is indirect tax

Answer 23

Government receives indirect tax from firms for gst

Question 24

What is transfer payments

Answer 24

A payment made by the government to those in need with nothing in return

Question 25

What is subsidy

Answer 25

A payment by government to firms to keep costs of production down so supply will increase

Question 26

What are export receipts

Answer 26

Money flows into firms from overseas buyers

Question 27

What are import payments

Answer 27

Money flows out from local firms to overseas sellers

Question 28

What are real flows

Answer 28

Goods and services from firms to households, factors of production from households to firms, exports of goods/services, imports of goods/services

Question 29

What are money flows

Answer 29

Consumption spending, factor rewards/income, direct tax, transfer payments, subsidies, indirect tax, export receipts, import payments, investments, savings

Question 30

What is dependence

Answer 30

Where one person or group of people rely on another person of group of people

Question 31

What is independence

Answer 31

When a person or group of people does not rely on anyone else

Question 32

What is interdependence

Answer 32

Two or more people rely on each other, a mutual reliance

Question 33

What are leakages

Answer 33

Savings, direct tax, indirect tax, import payments

Question 34

What are injections

Answer 34

Investment by firms, transfer payments, export receipts, government spending, government subsidies