Economics Flashcards
What is a market?
A market is where buyers and sellers interact with one another to exchange things of value.
What are the three main markets?
- The housing market
- Labour market
- Stock market
What is the stock market?
The stock market is where shares are bought and sold from public companies.
What is the labour market?
The labour market is when people sell their skills and knowledge to earn income.
What is the housing market?
The housing market is where houses are bought and sold.
What is a landlord?
A landlord is someone who owns multiple houses and leases them out to tenants in exchange for rent.
What are savings?
Savings is the money consumers deposit into banks and other financial institutions. Savings is a leakage.
What is investment?
Investment is the money producers borrow from the financial sector to buy new capital. Investment is an injection.
What is taxation?
Taxation is a percentage of a consumer’s income that is paid to the government. Taxation is a leakage.
What is government spending?
Government spending is the money the government injects back into the economy through welfare payments and providing public goods and services such as healthcare and education.
What are injections?
Injections are the introduction of income into the circular flow.
What are leakages?
Leakages are the withdrawal of income from the circular flow.
What is the law of demand?
When prices rise, the quantity demanded decreases. When prices fall, the quantity demanded increases.
What is the law of supply?
When prices rise, the quantity producers are willing to supply increases. When prices fall, the quantity producers are willing to supply decreases.
What is resource allocation?
How we divide resources and how these resources are then distributed to consumers.
What are factors of production?
All the things we need to create the finish product i.e., resources. These include land, labour, capital, and enterprise.
What is meant by scarcity of resources?
Scarcity refers to the economical challenge that we don’t have enough resources to satisfy our unlimited wants and needs.
Explain opportunity cost
The opportunity cost is the cost of what you give up when you choose one thing over another.
What are externalities?
The government charges excise duty on products such as tobacco, alcohol, fuel.
What is the price mechanism?
The way price can affect the supply and demand of goods and services.
What is a surplus?
A surplus is when the price is set too high, and the supply is greater than the demand.
What is a shortage?
A shortage is when the price is set too low, and the demand is greater than the supply.
What is the equilibrium?
The equilibrium is when the prices naturally move towards the point where the supply and demand are equal.
What is the factor market?
Where factors of production are bought and sold.
What is the product market?
Where goods and services are bought and sold.
