Economics Flashcards
Factors of production
Land
Labour
Capital
Enterprise
Rewards of factors of production
Rent
Wages
Interest
Profit
Land
Anything provided by nature that helps to produce good and Services example sea grass gas
Reward rent
Economics
Is the study of how we make best possible use of our scarce resources in order to satisfy the requirements of as many people as possible in order to satisfy as many people as possible
Labour
Any human effort that helps to produce goods and services
Example factory worker, accountant, doctor
Reward Wages
Capital
Anything made by humans that is then used to help produce other
goods or services
Example machine, trucks computer loan
Reward interest
Enterprise
Is the special form of human activity that organises the other factors of production and bears the risk involved in production
Example entrepreneurs
Reward profit
Free enterprise system
Run fully by private individuals the government does not have a say
Example America
Centrally planned system
All buisness are owned by government and controls all economic activity
Eg North Korea
Mixed economy
private sector makes most desicions but government has say
Financial cost
Amount of money you pay for items
Opportunity cost
The thingg you don’t buy
Inflation
Is the increase in the General price of goods and services over a period of time
Formula for measuring inflation
The increase in price in year 2
_____________________________________ x 100
The level of price in year 1
Cause of inflation
An increase in the cost of producing goods
The demand for goods is greater than the supply
The cost of importing goods increase
Increase in indirect tax
Increase in general pay
Effects of inflation
Discourages saving
Increases cost of living
Causes demand for wage increase causes prices of exports to go up
May cause Irish people to buy cheaper imports then Irish goods
Gdp
Gross domestic product
Gross domestic product
The total amount of goods and services produced by an economy in alone period
Gnp
Gross national product
Gross national product
Is the gross domestic product LESS profits sent out of the country by foreign owned companies located in the country PLUS profits returned to a country by local companies abroad
Economic growth
More goods produced in a country sin a year than in the previous year
Negative economic growth
When the the amount of goods and services in a year is less than pouched in the previous year
Deflation
The general level of prices going down in a year
Reasons for government involvement in an economy
To provide an income
To provide merit goods
To make regulations concerning the running of the economy
To provide finance for industries
To provide sociably desirable goods or services
