Economic Definitions Flashcards
(39 cards)
What is the definition of “Needs vs. Wants”?
Needs are basic goods for survival like water, food, clothing and, shelter
Whereas…
Wants are goods which are not for survival such as a IPhone or Television.
What is the definition of “Free goods”?
Free goods don’t have a opportunity cost like air and, sea water and are found in abundance and you don’t have to pay for them
What is the definition of “Economic Goods”?
Economic goods are goods that have opportunity cost, so individuals have to pay for them
What is “Economic Welfare”?
An individual or a group of people and their level of prosperity and their living standards
What is the “Production process”?
Converting inputs into outputs
What are the “resources/factor of production”?
Resources used to manufacture products such as land, labour, capital and, enterprise
What is the definition of “capital good”?
A capital good is a good which can be used to make a multiple of other consumer goods such as machinery
What is the definition of “consumer good”?
Consumer goods are goods for final consumption and are not resold
What is the definition of “population growth”?
Population growth is when there are more people in the U.K. due to either immigration or babies being born and people are living longer so this should move the PPF curve outwards.
What is the “discovery of new resources”?
Discovery of new resources such as shell gas through fracking will increase production and shift the PPF outwards.
What is “allocative efficiency”?
When a firm produces goods at the price a customer is willing to pay which is P=Mc, ({P means price} and [Mc means Marginal cost]).
What is an “economy”?
The economy in simple words can be referred to a geographical area in terms of production and consumption of goods and services
What is a “free market economy”?
A free market is a system in which the prices for goods and services are determined by supply & demand with little to no government intervention like the America
What is a “planned economy”?
A economy where the government decide what to produce and when to produce, so a communist-style government like North Korea
What is a “mixed economy”?
When a free market economy and a planned economy is both present within a economy.
What are the “sectors of the economy”? (Give definitions of each sector)
Primary sector - extraction of raw materials
Secondary sector- concerned with producing finished goods and/or services
Tertiary sector - concerned with offering intangible good and services to customers
What is the definition of “markets”?
One of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby both parties engage in exchange.
What is the definition of “inflation”?
A increase in prices of products making the currency less valuable i.e. after ww2 when the German currency was worthless.
What is meant by “demand pull inflation”?
This is asserted to arise when aggravated demand in an economy outpaces aggravated supply. It involves inflation rising as real gross domestic product (GDP) rises and unemployment falls.
What is “cost push inflation”?
Cost push inflation is inflation caused by an increase in prices of input like labour, raw materials ect. The increased price of the factors of production leads to a decreased supply of these goods.
What is the definition of “nominal and real values”?
Nominal and real values are adjusted for inflation.
The real value is obtained by removing the effect of price levels changes from the nominal value of time - series data, so as to obtain a truer picture of economic trends.
What is the “Consumer Price Index (CPI)”?
An index of the variation in prices for retail goods and other items. Use geometric formula to calculate the average prices but this does not include housing cost.
What is the “Retail Price Index (RPI)”?
An measurement of inflation published monthly by the office for National Statistics -
It measures the change in the cost of a representative sample of retail goods and services.
What is the “labour force survey”?
Statistical surveys conducted in a number of countries designed to capture data about the labour market. All European Union member states are required to conduct a labour force survey annually.
