Economics Test Revision Flashcards

VOCABULARY style flashcards covering the four factors of production, the circular flow of income, GDP, CPI, and basic economic indicators from the lecture notes.

Land

One of the four factors of production; represents the natural resources every business needs.

Labour

One of the four factors of production; refers to workers, such as those baking bread.

Capital

One of the four factors of production; refers to equipment used in production, such as ovens in a bakery.

Enterprise

One of the four factors of production; refers to the business skills of an owner or the person who runs the business.

Circular Model of the Economy

A cycle showing how money, goods, services, and resources move between households, businesses, and the government.

Household to Business Flow

Includes the movement of labour/workers and consumer spending from people to companies.

Business to Household Flow

Includes the movement of wages/income and goods and services from companies to people.

Government to Household Flow

The flow of public services and welfare from the government to people.

Government to Business Flow

The flow of grants and subsidies from the government to companies.

Household/Business to Government Flow

The flow of taxes collected by the government from people and companies.

GDP

The total value of goods and services produced in a country.

GDP Per Capita

The average wealth per person, calculated as $\frac{\text{GDP}}{\text{population}}$.

Incentive

A reward, subsidy, or discount used to encourage specific behavior.

Disincentive

A tax, fine, or price increase used to discourage specific behavior.

CPI

Consumer Price Index; a measure of change in prices over time for items like food, transport, housing, and clothing.

Inflation

An increase in prices that causes things to become expensive and the cost of living to rise.

Unemployment

A state where people who want jobs cannot find work, leading to less spending and a slower economy.

Tax

Money collected by the government to pay for public infrastructure and services like schools, hospitals, and roads.