MacroEconomics Flashcards
Types of income
Earned income – are those income that is earned through labor such as wages and salaries
Unearned income – are those income that is not earned through labor example rent dividend investment
Forms of income
Rent – income received by owners of properties for rental purposes
Dividend – return on investment eg unit trust of fiji, fnpf
Royalty – income received by usage of intellectual properties eg musicians ,landowners
Interest – it is a fee that is charged when someone takes a loan
Enterprising skills – small businesses which allow individuals to use the skills in order to earn some income
Commitments that affect personal income
Family commitments such as children educational commitments such as buying stationaries
higher purchase n loan repayments
cultural obligations
Impact of changes in personal income
Decrease level of savings,
decrease in ability to invest,
decrease in disposable income,
decrease in the ability to purchase more goods and services
Effects of decisions made on personal income
Increase in financial commitment leads to decrease in disposable income
External factors affecting income levels in lifestyle
Educational commitments, religious activities, global market changes, inflation
What is your budget and steps in preparing a budget
Budget is a plan of income and expenditure or how to use income
Determine the time periods either weekly or fortnightly
, identify sources of income and calculate level of income
identify expenses into fixed or variable,
Compare income with expenses to calculate savings or deficit
Factors affecting Net worth family
Use of statement of affairs can lead to a decrease in the total net worth of a household
intangible assets such as location of properties
Types of credit facilities in Fiji
Credit unions,
moneylenders,
property loans,
loan from families,
insecure the bank loans( soft loan)
,secured bank loan ( term loans)
Purpose of credit
To purchase personal assets,
to meet family commitments,
to finance religious and educational commitments
What is production, producer, production process
Production is an act of producing goods and services
A producer is the business firm that produces the goods and services to satisfy the needs and wants of consumers
Production process is a process where are factors of production r combined together and transformed into guds n services services
Stages of production
Primary stage – extracting stage of raw materials for processing example mining and farming
Secondary stage – converting from materials into finished or semi finished goods example manufacturing
Tertiary stage – distribution of goods and services example of transportation ,insurance or banking
What is productivity
How to calculate productivity
It is a measure of how efficiently resources are used
Total production divide by number of units of input
Cost of production
Cost of resources example wages Capital and raw materials
Cost of services example electricity and insurance
What is accounting cost, implicit cost, economic cost, accounting profit, economic profit
Accounting cost a.k.a. explicit cost is the total expense of a business
Implicit cost a.k.a. opportunity cost [could be earning]
Economic cost is a total cost incurred to produce goods and services ( ac +oc)
Accounting profit = total revenue - accounting cost
Economic profit = accounting profit – opportunity cost
