Economics 1 Flashcards
Explain needs
The essential items required for survival ex. Basic clothing, shelter, food, water
Explain wants
Any items we would like to have in addition to our needs
Explain factors of production
The factors of production are the resources that help to produce a product or provide a service
Give the four factors of production
Land
Labour
Capital
Enterprise
Explain land in relation to the factors of production
Anything provided by nature that helps produce a product. Payment: rent
Explain labour in relation to the factors of production
Human effort required to help produce a product or service.
Payment: wages
Explain capital in relation to the factors of production
Anything made by humans that helps the production of a good ex. (Machinery, money, roads, trucks)
Payment: interest
Explain enterprise in relation to the factors of production
The entrepreneur that organises the other factors of production and takes the risk the produce and product /service
Payment: profit
Explain economics
This is the study of how we use the worlds scarce resources in order to satisfy the requirements of people, this includes needs and wants.
Explain a free enterprise system
All resources are owned by private individuals or by companies and used for their benefit only. Ex. America
Explain centrally planned system
All resources are public ally owned by the government and they control all economic activity. Ex. North Korea
Explain mixed economy
Most of the major economic decisions to be made by the private sector but the government intervenes to ensure the supply of essential goods to the public. Ex. Ireland
Explain financial cost
The amount of money paid for something
Explain opportunity cost
The opportunity cost is the item we must do without when forced to make a decision between two or more actions/products
Explain inflation
The increase in the general level of the price of goods and services over a period of time
What is the formula for inflation
The increase in price in year 2
————————————— X 100
The level of prices in year 1.
Give three causes of inflation
Increases in cost of production
The demand for goods is greater than the supply
Increase in indirect taxes (VAT)
Give four effects of inflation
Increases the cost of living
It causes demand for wage increases
It discourages saving
It may cause Irish people to buy cheaper imports
What does GDP stand for
Gross domestic product
What does GNP stand for
Gross national product
Explain GDP
The total amount of goods and services produced in an economy in one period
Explain GNP
This is the GDP less the profits sent out of the country from foreign companies set up in Ireland and plus the profit of Irish companies which have set up abroad
Explain economic growth
This occurs when more goods are produced in a country in one year then were the previous year
Give four benefits of economic growth
Improves standard of living
It creates employment
It improves the government finances
It alleviates poverty
Explain Negetive economic growth
This occurs when the amount of goods and services produced in one year is less than the amount produced in the previous year
Explain economic recession
This happens when less goods and services are produced in an economy in two consecutive quarters
What is the measure of inflation in ireland
Consumer price index
