key terms week 1 econ

Question 1

Consumption

Answer 1

household spending

Question 2

Investment

Answer 2

Firms spending on capital goods

Question 3

Govt spending

Answer 3

govt spending on healthcare; education; welfare

Question 4

Exports

Answer 4

Goods and services leaving the UK and income coming in as a result (INJECTION)

Question 5

Imports

Answer 5

Goods and services entering the UK and income leaving as a result (LEAKAGE)

Question 6

Savings

Answer 6

money/income that isn’t spent

Question 7

Taxation

Answer 7

a tariff on spending and income that generates revenue for government

Question 8

Factors of production

Answer 8

productive resources that are used to produce every good or service (land, labour, capital, enterprise)

Question 9

Labour

Answer 9

Human resource that earns an income in the form of wages

Question 10

Land

Answer 10

Natural resource that earns an income in the form of rent

Question 11

Capital

Answer 11

Technological resource (a man made aid to production) that earns an income in the form of interest

Question 12

Enterprise

Answer 12

Human resource with ideas that take a risk by creating a new product (allocating the other factor resources) that earns an income in the form of profit

Question 13

Income

Answer 13

flow of money - e.g. wages, rent

Question 14

Wealth

Answer 14

stock a of money - e.g. savings and other financial assets

Question 15

Economic growth

Answer 15

Where the total value of output or expenditure, or income in an economy increases over a period of time

Question 16

Recession

Answer 16

Negative economic growth over a 6 month period

Question 17

Inflation

Answer 17

Average price level increases

Question 18

Unemployment

Answer 18

where people are willing and able to work but they cannot find a job

Question 19

Market

Answer 19

a place where buyers and sellers meet to exchange goods and services

Question 20

Capitalism (free market)

Answer 20

where resources are allocated solely by the free market (Adam Smith)

Question 21

Mixed economy

Answer 21

where resources are allocated by both the market and the state (John Maynard Keynes)

Question 22

Communism (govt. provision)

Answer 22

where resources are allocated by the govt (Karl Marx)