the economy as a system

Who are the main economic actors?

households, companies, financial insitituions, the governement and the world market.

What is the circular flow diagram?

it is a schematic model of the economy as a system representing all economic interactions between the economic actors

What are the 4 production factors

nature, labour, capital, entrepreneurship

What is the role of banks?

They use the savings to provide loans. The difference between interest received and the interest payable is their profit.

what’s the difference between capital and money markets?

capital: >2 years

money: <2 years

what do governments supply?

Governments supply collective goods and redistribute incomes

How are collective goods financed?

through taxes and social contributions

what’s a trade surplus?

X>M

what’s a trade deficit?

X<M

balance of payments

overview of all incoming and outgoing financial flows between a country and abroad

trade balance

overview of all imports and exports of a country