Topic 2 - Understanding the economics Flashcards
(25 cards)
Market Economy
Decisions made by individuals and businesses with no government regulations.
(Prioritizes freedom growth and efficiency).
Mixed Economy
All economic decisions made by government and individuals.
Traditional Economy
Run by individuals. What is produced, how its made, who consumes it.
(Prioritizes stability and security).
Command/Planned Economy
All economic decisions made by the government, usually by a dictator.
(Prioritizes stability)
Economic Stability (6 Major Economic Goals)
All necessities are consistently available for public without uncertainty.
Economic Efficiency (6 Major Economic Goals)
Reducing waste while making sure consumers can get what they want.
Economic Growth (6 Major Economic Goals)
Improving standard of living through innovation and economic growth.
Economic Freedom (6 Major Economic Goals)
Individuals make their own economic decisions without government interference.
Economic Security (6 Major Economic Goals)
Supports and provides necessities for the poor or disadvantaged. (the MARGINALIZED)
Economic Equity (6 Major Economic Goals)
Evenly distributing wealth of a nation to make sure there is fairness in allocating resources.
5 Sectors of (Australian) Mixed Market
Household, business, financial, government, overseas.
Household Sector (5 Sectors)
Consumers determine what will be produced because they are the ones who buy it.
They provide their time/skill/labor in exchange for income/wages.
Pay taxes to the government.
May borrow, save money with financial sector.
Government Sector (5 Sectors)
Receive taxation from households and firms.
Spend this money on public goods and services, such as roads, parks, schools and hospitals.
Financial Sector (5 Sectors)
Bank and insurance companies that permits the exchange of funds. (Allows access from other sectors to borrow or save money)
Overseas Sector (5 Sectors)
Transactions of foreign trade
Business Sector (5 Sectors)
Produce output (goods and services) which they sell to consumers.
Pay taxes to government.
May borrow and/or save money with financial sector
Why does trade make people better off?
Allows people to focus on what they do well then trade with others who do other things. It makes people better off because it is inefficient to make everything we need.
(This allows certain people or countries to specialize in something then trade for what they want/need).
An economic system is how a society determines…
Economic production, economic distribution and economic consumption.
What is the tragedy of the commons?
A situation where individuals with access to a public resource act in their own way, ultimately using up the resource.
Free trade agreement
International policy that allows inexpensive imports and exports.
Division of labour
When the production of a good is broken down into separate tasks.
(With different workers performing each task).
Specialization
When an individual or country focuses on producing one thing.
The production process
Economic resources, land, labor, and capital are combined by entrepreneurs to create goods and services that meet our wants and needs.
Capital goods
goods that are used in producing other goods (buildings, machines,)
