Government Interactions with Households and Businesses

These flashcards define key terms regarding the economic interactions between the government, private households, and business entities as presented in the lecture notes.

Household

The private individuals who own the factors of production and consume goods and services.

Factors of Production

All the resources used as inputs in the production process to produce goods/services, including land, labour, and capital.

Civil servants

People who work for a government department.

Public Corporations

Businesses that are controlled and owned by the government.

Public goods & services

Goods and services provided by the government for collective use of all people in the country, such as education, healthcare, housing, and infrastructure.

Income Tax

A form of tax paid by households to the government based on their income.

Consumption Tax (VAT)

A tax levied on the consumption of goods and services.

Business

The provider of goods and services.

Infrastructure

Physical resources needed to support economic activity such as roads, harbours, rail transport systems and public transport.

Incentive

A payment from the government to a business to encourage a certain type of economic activity.

Company Tax

The tax a company pays to the government which is calculated as a percentage of the business’ profits.

Judicial & Penal System

The legal system whereby the laws of the country are enforced by the courts; if accused and found guilty, individuals are sentenced by the court.

DTI

The government entity responsible for providing support and advice to businesses.