Chapter 3 - Production, Income & Spending in a Mixed Economy Flashcards
What are stocks in an economy & give examples?
A stock has no time dimension & can only be measured at a specific moment. Eg. Wealth Assets Liabilities Capital Population Unemployment
What are flows & give examples?
A flow has a time dimension & can only be measured over a period Eg Income Profit Loss Investment Number of births & deaths Demand for labour
Is production a flow or stock?
Flow
How do stocks change?
As a result of flows
On what does the quantity of labour depends?
Size of population
Proportion of population that is able & willing to work
What is meant by the term Human Capital?
The quality of labour - this refers to the skill, knowledge & health of workers
In economics, what is referred to in Capital?
All manufacturing resources including machines, tools & buildings. Capital goods are produced to produce other goods & services.
What does “consumption of fixed capital” mean?
Depreciation
Name 2 other production resources.
Entrepreneurship & technology
What is the driving force behind production?
The Entrepreneur
What is technology in economy?
Knowledge
Name the 4 types of income.
Rent
Salaries & wages
Interest
Profit
Who owns labour?
The members of households
What is a factor market?
Market where factors of production are sold
What 3 important flows form part of government’s economic activity?
Government expenditure
Taxes
Transfer payments (from the wealthy to poor)
In an economy, who takes part in spending?
Households
Firms
Government
Foreign sector
Government spending constitutes a …..
Addition or injection into the flow of spending & income
Taxes constitutes a …..
Leakage or withdrawal from the circular flow of income between households & firms
Exports constitutes ….
An addition or injection into the circular flow of income & spending
When households save there is a …. from the circular flow of income & spending.
Leakage or withdrawal
What are the 3 major flows in the economy?
Production, income & spending
