8. Components of the NZ Economy Flashcards
What are Real Flows?
The four factors of production (labour, capital, enterprise, land) that flow from households (consumers/workers) to firms, who need them to produce goods and services.
What are Money Flows?
Money flows and consumption expenditure
Where do Households receive their income from?
Rent, Wages, Salary, Dividends
Where does money flow out of Households to?
The income of the household sector flows into firms through the purchase of goods and services. And flows to the government through direct and indirect tax.
Where do Firms receive their income from?
Received from the sale of goods and services, income from exports, subsidies from government and borrowings from the financial sector
Where does money flow out of Firms to?
Towards imports, taxes and saving accounts in the financial sector
Where does the Government receive their income from?
Received from taxes from both firms and households, interest and dividends on investments made.
Where does money flow out of the Government to?
Subsidies and grants to firms and households. Payments to firms for use of goods and services. Transfer payments to households in form of benefits, pensions, scholarships
What is a Market?
A place or situation where an exchange of goods takes place
What are the 4 types of Market?
Goods and Services market
Resource Market
Money Market
Foreign Exchange Market
What is the Goods and Services Market?
Where finished Goods and Services are sold to the consumers
What is the Resource Market?
Where resources owned by Households are bought by Firms in exchange for a factor return - income
What is the Money Market?
Connects Households and Firms to Financial Institutions
What is the Foreign Exchange Market?
The market that works alongside the overseas sector
When overseas consumers want NZ goods and services they have to pay in NZD and vice versa.
Money flows in and out of the country through exporting and importing
What is the purpose of the RBNZ?
Supplies all the banknotes and coins
Maintains price stability via monetary policy which is setting the OCR.
