Economy and Business Environment Flashcards
What are the 5 sectors of circular flow
households, firms, financial, government, overseas
What is the difference between an injection and a leakage
an injection injects money into the economy and boosts economic activity and stimulates economic growth while a leakage takes money out of the economy and lowers economic activity and growth
geisti
give 3 examples of both injections and leakages
injections: exports, government spending, investment
leakages: imports, saving, taxes
what do financial sectors act as
the financial sector acts as an intermediary between savers and borrowers of an economy
Explain the business cycle
the business cycle the natural cycle of fluctuations in the level of economic growth
what is a boom in economic activity called in the business cycle
an expansion
what are some features of an expansion
increased economic growth, increased taxes, increased interest rate, increased inflation, lower unemployment, increased consumer confidence
what are some features of a contraction
increased unemployment, decreased taxes, decreased inflation, decreased interest rate, decreased consumer confidence, decreased economic growth
what are 2 consecutive quarters of negative economic growth called
recession
what is bigger a depression or a recession
depression
what is the law of demand
the lower the price the higher the demand
demand is inversely proportional to price
what is the law of supply
the higher the price the higher the supply/quantity
what is the price mechanism
the price mechanism is the shifting of supply and demand graphs according to external factors
what is the equilibrium price
the equilibrium price is the price where the supply and demand charts meet
give 2 reasons each why demand would increase and supply would decrease (bananas)
bananas are proven to increase brainpower by 20 percent, and bananas are good for your teeth
bananas are out of supply because of a drought in a banana farm, tariffsw for bananas are getting higher.
