Key Issues for Government and the Economy Flashcards
What does the size of the economy determine?
The amount of goods and services available to citizens
The quality of a country’s infrastructure and public services
What is the measure for economic size?
The conventional measure for the size of an economy is Gross Domestic Product (GDP)
What is the importance of employment?
Most people of working age rely on jobs as a source of income
People derive purpose from their jobs
Unemployment leads to social unrest
What is inflation? What are the effects?
Inflation is the rise in the general price level of goods and services
High inflation erodes living standards
Governments normally seek low inflation
How much good and services do economies produce?
National economies produce a limited range of goods and services
Why do countries produce limited range of goods and services?
Natural resources and climate mean some goods are unavailable
Some countries are unable to produce goods because of weak technology
Why do countries trade?
Countries trade to compensate for the limited range of goods and services
Moreover, consumers buy goods from abroad
What is a dividend?
A part of the profit is paid to the people who own shares in it
