Distribution of Economic Resources Flashcards
What is an economy? What is its main goal?
An economy is the way in which goods and services are made,sold or used in a country or area. The main aim of an economy is to make the best use of the resources available to them.
What is an economic system? What are the three types of economic system? Give examples of country’s who use each different economic system?
An economic system is the method by which a country shares economic resources and buys and sells goods and services. There are three types: Centrally planned economy e.g. Cuba Free market economy e.g. U.S.A. Mixed economy e.g. Ireland
What is a centrally planned economy? What is the most extreme example of a centrally planned economy?
A centrally planned economy is an economic system where the government makes all the decisions about how the economic resources of the country are used. All businesses are owned by the government and the people of the country are not involved in business ownership.
Communism is an extreme example of a centrally planned economy.
What is a free market economy?
A free market economy is an economic system where private citizens control resources, own businesses and make all the decisions about how goods and services will be produced. The government has little involvement in how the economic resources of the country are used.
What is a mixed economy?
A mixed economy is an economic system where both the government and private citizens have control over the economic resources.
The government control essential services for the people of the country such as education and health.
Private individuals and businesses also produce goods and provide services to the citizens of the country.
What is the public sector? What does it provide? What are the three sections of the public sector? Describe each briefly.
The public sector is the part of the economy that is owned and controlled by the government. This sector provides essential services to the public.
The three sections of the public sector are:
1. National Government-provide services to the country as a whole.
2. Local Government-provide services to the local area.
3. State-Owned Businesses-businesses set up by the government.
What is the difference between commercial state-owned organisations and non-commercial state-owned organisations?
Commercial-a business that charges money for their product or service.
Non-commercial-a business that provides a service free of charge
What is the private sector? What are the three different types of business in the private sector?
The private sector refers to businesses owned by individuals that produce and sell goods and services with the aim of making a profit.
- Sole traders
- Partnerships
- Limited companies
What is the third sector? What are businesses in this category often called? What are the two types of business in the third sector?
The third sector of the economy is made up of social enterprises and organisations that do not aim to make a profit e.g. charities.
This group works independently of the government and are often referred to as non-government organisations. (NGO’s)
There are two types of businesses in third sector:
1. Social Enterprises
2. NGO’s
What is a charity? Give examples of charity’s?
Charities are set up to benefit others by raising money through various activities like collections, fundraising events and charity shops. Charities depend largely on volunteers to help them provide their services. E.g. Oxfam, Focus Ireland, ISPLA
What is a voluntary organisation? Give an example.
A voluntary organisation provides services for their members. They raise money by charging membership fees and by organising fund-raisers e.g. St. Patrick’s Donabate GAA club.
What is a social enterprise? Give examples.
Social enterprises have a social or environmental aim. They are run like a business and aim to make a profit to benefit a specific cause rather than for the owners. E.g. Donabate Credit Union.
What is the role of THE HOUSEHOLD and THE FIRM in the circular flow of income in an open economy?
Households supply the factors of production e.g. labour and in return the firm pays the household wages. Households then spend their wages on goods and services supplied by the firm.
What is the role of THE GOVERNMENT in the circular flow of income in an open economy?
Some of the household’s income is collected by the government as tax e.g. PAYE. The government spends this money on new roads and grants that will benefit the firms.
What is the role of THE BANKS in the circular flow of income in an open economy?
Sometimes a household will save income instead of spending all their money. The banks use these savings to invest and give loans to businesses that help them succeed.
