Economics Flashcards
legal tender
a payment allowed by the law or recognized by the legal system to be valid for meeting financial obligations
characteristics of money
- portable: easy to move around and exchange with other currencies
- durable: able to withstand wear and tear
- relative scarcity: its not easy to get, ensures that money has its value
- difficult to counterfeit: unable to be forged or imitated
- divisible: able to be broken down into smaller values
the functions of money
- a medium of exchange: money is readily accepted to trade for goods and services
- a unit of account: allows for price to be placed on goods and services using an established rate of exchange
- a store of value: money can be saved without it losing value
- a standard differed payment: money can be used as credit.
investment
any mechanism used for the purpose of generating future income with the key aim of ‘growing’ your money
credit
- a supply of money now in return for the promise of paying back later
- therefore allows for you to access your desired goods/services immediately with payment postponed.
bugeting
the process of creating a plan for how you’ll spend your money
economy
the larger set of inter-related production, consumption, and exchange activities that aid in determining how scarce resouces are allocated in a country for a short period of time.
economics
the study of how economies and societies best satisfy their populations’ needs and wants through the allocation of scarce resources
Microeconomics vs macroeconomics
- microeconomics: the study of individuals and business decisions
- macroeconomics: the study of decisions made by countries and governments
Fundamental economic problem
- relative scarcity: individuals and groups cannot satisfy their unlimited wants (and needs) using the limited resources available to them -> this occurs because DEMAND (unlimited needs and wants) outweigh SUPPLIES available (limited resources)
what does the theory of consumerism state?
- Increasing consumption of goods is economically desirable
- consumers have a naturally increasing inclination towards the purchase of goods and services.
opportunity cost
- the second best option or alternative option which you gave up
- the option you gave up in order to have the option you considered the most desirable.
cost-benefit analysis
a systematic approach to estimating the strengths and weaknesses of alternatives used to make a decision with the highest benefit to an individual
factors that influence Demand
- consumers: impact demand through the consumption of goods and services.
- producers: impact demand because in order to produce goods and services, they must buy the resources
Law of Demand
when prices increase, less consumers are willing to purchase
Law of Supply
when prices increase, more producers are willing to sell in the market
economic resources that influence ability to supply
- natural land: raw material that’s unprocessed (plants, animals, water, minerals)
- labour: physical skill required to produce the goods and services
- capital: the human-made resources used in manufacturing goods and services
-management/entrepreneurship
who is an entrepreneur?
- who is willing to seize opportunities to start and opperate a business
- who on risks in hopes for profit
entrepreneurial characteristics
- highly motivated
- risk takers
- critical and creative
- financial and digital literacy
- strong communicators, planners, and leaders
what does it mean for a good or service to be innovative
Has to be something completely different or be a significantly improved version of an existing good or service
what links exist between entrepreneurial behaviour and economics?
an entrepreneur’s behaviour may increase a business’s success. this success will increase the business’s revenue. the revenue would be shared with the Australian economy via:
- taxation system
- that revenue being spent on the Australian economy
with growing success over time. the business will expand, thus employee numbers would increase. employees contribute to the Australian economy via:
- taxation system
- them spending their salary in the Australian economy.
stakeholders.
people or groups who have a vested interest in the business’s activities and performance
internal & external stakeholders
- internal stakeholders: found in the business’s internal environment, such as owners and employees, manager
- external stakeholders: found in the business’s external environment, such as customers and suppliers, competitors, government
competitive advantage
is something that sets a business apart from its competition, and this makes consumers want to choose the business’s goods and/or services over these of their competitors.
