Definitions

Economics

a social science which studies the behaviour of individuals and societies when allocating scarce resources to meet unlimet needs and wants

Microeconomics

A branch of economics which studies the behaviour of individuals and firms in particular markets

Macroeconomics

a branch of economics which studies the behaviour of the government and the eocnomy as a whole

Concept

an organizing idea with distinct attributes that are shared across multiple examples. They are words we can use to catagorize our worlds

Factors of productions

refers to the resources that are acquired to produce goods and services.

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(The four factor of production can be remembered using the acronym CELL)

Capital

refers to man-made resources

Entrepreneurship

Refers to the skill of organizing the three other factors of production

Land (Factors of production)

refers to natural resources e.g. agricultural land, wood, golf

Circular flow of income

a model which shows the interaction between households and firms.

Injection

reers to the additional money added to the circular flow of income

Leakage

the withdrawal of money from the circular flow of income

Free market economy

allocation of resources is determined by market forces i.e. consumers and producers.

Mixed economy

allocation of resources is determined by consumers, producers and the government.

Planned economy

Allocation of resources is determined by the government

Opportunity cost

Every choice made is associated with a cost which is known as an opportunity cost. It is the value of the next best alternative forgone when a choice is made

Free Goods

naturally abundant with unlimited supply and therefore do not incur any opportunity costs. (air, sea water, sunlight and desert sand)

Production possibility curve

a model which illustrates the different combinations of two goods or services that an economy or firm can produce.

Social science

the study of human interactions and relationships between individuals and societies.

Economic agents

economic decisions makers who interact for the purpose of production and consumption. e.g. households, firms and the government

Wages

reward for labour services

Income

collective rewards for all the factors of production. Sum of rent, interest, profit and salaries.

labour

both physical and mental human resources used in the production.

services

intangible products

needs

services essential for survival

wants

desires for goods and services that are not necessary for human survival but are demanded to fulfil the wishes of our customers.

Economic goods

resources and products that are limited in supply and have economic value to society.

Free market economy

an economic system which relies on the market forces of demand and supply to allocate resources in the economy.

Marginal rate of transformation (rate of substitution)

Gradient of the PPC showing the opportunity costs between the two products in question.

Pareto efficiency

pareto efficiency is when its not possible to make one person better off without making someone else worse off.

Economic methodology

Ways in which economists study the discipline.

Real GDP

a measure of an economy's total economic output or the value of all goods and services produced within a country's borders, adjusted for inflation or deflation.

Monetary policiy

the actions and measures taken by a central bank or monetary authority to manage and control the money supply, interest rates, and credit conditions in an economy.

Fiscal policy

the use of government spending and taxation to influence the overall state of the economy. Promotes economic growth, controlling inflation, reducing unemployment, and addressing income inequality.

Stagflation

Stagflation is a macroeconomic condition characterized by both high inflation (rising prices), slow growth and high unemployment occurring simultaneously in an economy.

Austerity

austerity is a type of government policy aimed at reducing budget deficits and controlling public debt. These measures typically involve cutting government spending and/or increasing taxes to achieve fiscal discipline and stabilize the economy.