macro-economics (general) Flashcards
who are the key players withtin the economy?
- goverment
- industry
- conumers
- central bank
- civil society
what is the role of the goverment in the economy?
- sets rules that economic agents must oblige to
- produces goods and services (schools, hospitals
- can provide support to business
what are economic agents?
someone that engaes in economic activity
goverment, consumers, producers
what are the roles of businesses and consumers
- business: produce goods and services
- consumers: purchase these
which one is more safe- private sector funding or state funding?
private sector funding
what are SMEs?
small- medium enterprises (businesses)
50-250 people
which economies are more reliant on consumers?
UK and US
so their confidence has a large impact on the economy
what is the role of the central bank in the economy?
- sets intrest rates
How do civil socities impact the economy?
they can fight for chnages which will cause changes for businesses ad the goverment
eg: trade unions
what are some methods for financing bunsinesses?
- retained profits
- borrowing
- issuing shares
- issuing bonds
how is retained profit used?
- a proportion used to reawrd shareholders (diviends)
- funding investment (purchasing capital goods)
what are capital goods?
goods used to produce other goods and services
eg: equipment, machinary, tools
why might firms need to borrow?
- funding investment
- lacking money for day to day operations- wage/ business materials (delays from providing goods and recieving payments)
define a ‘share’
a financial asset that gives one part ownership in a company
why are shares attractive to investors?
- capital gains can be made
- dividends an income stream
- they provide a means of taking over a company
how are shares traded?
- primary market: shares are first bought - (IPO: Initial Public Offering)
- secondary market : investors buy/sell shares from each other
how do bonds work?
- company issues bonds
- investors will purchase the bond
- up until the maturity date - investors will recive regular intrest payments
- when the bond matures investors will recieve cash in full
what are people who own bonds callled?
creditors/ debtholders
what are regular intrest payments from a bond called?
coupon/ coupon rate
whar are some key issues for the goverment and economy?
- economic growth
- employment
- inflation
- trade
what does the size of the conomy impact?
- amounts of goods/services availible to citezens (living stndards)
- quality of countries infrastructure
- quality of public services
what is the measure for the sixe of the economy?
Gross Domestic Product (GDP)
Why is inflation a problem?
errodes living standards
prices for goods increases- wages do not
why is trade important?
national economies are only capable of producing a limited range of goods and services
* lack of natural resources
* some countries have weak technological capabilities
