Economics Flashcards
Scarcity
Economic problem of having unlimited needs and wants , but limited resources available
Resources
Natural or man made materials that are used to fulfil our needs and wants. People are also considered resources
Economic resources (factors of production)
Land, labour, capital, entrepreneurship
Key concepts of economics and business (6)
Scarcity, making choices, specialisation and trade, interdependence, allocation and markets, economic performance and living standards
Economic decisions
Financial choices, business decisions, employment decisions and legal decisions
Specialisation
A term that refers to the way an individual, business or entire country can focus on the production of a particular good or service in order to develop a more efficient and competitive production process
Interdependence
A term that refers to the way we rely on others to satisfy our needs and wants
Allocation
The concept that refers to the way we distribute our scarce resources among producers and then distribute scarce goods or services among consumers
Market
The exchange of goods and services among buyers and sellers
Economic performance
Measurement of how well and economy is doing
Economic indicators
GDP, inflation, unemployment, productivity
Material living standards
Refer to our access to physical goods and services
Non-material living standards
Include things that contribute to our happiness (freedom, low crime, etc)
GDP
A measure of the total value of final goods and services produced in a country over a year
Gross (in GDP)
Total figure before depreciation (deductions are not taken into account)
Domestic (in GDP)
Within a country
Product (in GDP)
Final goods and services
Recession
Economic growth falls for two or more quarters in a row
Depression
An ‘extreme’ recession, lasting two or more years
Inflation
Increase in the general level of prices paid for goods and services over a certain period of time
CPI
The way the ABS measures inflation
Interest rates
The price of ‘borrowing’ money
Unemployment rate
The percentage of people in the labour force who are unemployed
Labour force
Employed (working at least 1 hour a week) + unemployed (ready to start work and taking advice steps to find a job)
Frictional unemployment
Created by movement between jobs/in or out of training, etc
Cyclical unemployment
Relating to level of demand in the economy at the time.
Seasonal unemployment
Those who are temporarily unemployed due to their work not being consistent through the year
Structural unemployment
Changing priorities/focus of an economy. Industries decline, while others rise. New technologies replace workers, but create other opportunities.
Hidden unemployment
Those who’ve given up even looking for a job
OECD
Organisation for Economic Co-operation and Development
Productivity
Measures what can be produced (output) from a given amount of resources (input)
Labour productivity
Measures the amount of goods and services that a worker produces in a given amount of time
Capital productivity
Measures the amount of goods and services that can be produced using a fixed amount of capital in a given amount of time
