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Economics_RC Bus.
Intro to Economics for JC Business
Question | Answer |
---|---|
Name the 2 basic principles of economics | 1. Scarcity = all resources are scarce e.g. Oil. Scarce resources results in higher prices. 2. Choice = requires making choices on resources. This process is called economising. |
Explain the term 'economic growth' | The increase in the production of goods & services in a country from one year to the next |
What instrument is used to measure Economic growth? | Gross National Product (GNP). This is the total amount of goods and services produced in a country. |
Explain the term 'Inlfation' | The increase in the price of goods & services from one month to the next |
Explain the term CPI | Consumer Price Index (CPI). This is used to measure inflation. The price of regular goods and services are monitored each month. |
Name 2 causes of inflation | 1. High demand - prices rise if more consumers wants goods. 2.Increase in production costs. |
Name 2 advantages of low inflation | 1. Better value for money as the price of goods does not rise 2. Savings are protected as you do not have to spend as much money. |
Name 2 effects of high inflation | 1. Less value for money as goods are more expensive 2. Savings may have to be used by consumers |
Name 2 advantages of an increase in Economic Growth | 1. Increase in employment 2. Increase in tax intake for government |
Name 2 effects of a decrease in Economic Growth | 1. Umemployment rises. 2. Less tax for government i.e. PAYE |
Explain the difference between 'imports' and 'exports' | Imports = goods and services brought into a country. Exports = goods and services going out of a country |
Explain the term 'import substitution | Replacing imported goods by producing them in your country. |
Name 3 reason why a country imports goods | 1. To provide goods not produced in a country. 2. To get raw materials. 3. Consumers demand variety. |
Explain difference between consumer goods and producer goods | Consumer goods = These are goods that we use on a day-to-day basis e.g. Food. Producer goods = machines that are used in the production of goods. |
Explain the term 'raw materials' | "These are products that we use in the manufacturing of other products. E.g. oil " |
Outline the difference between 'Capital Expenditure' and 'Current Expenditure' | Capital Expenditure = long term expenditure/investment by the Government. E.g Building roads or schools. Current Expenditure = short term expenditure by the Government on day-to-day items e.g. Wages of teachers and nurses. |
Outline the difference between 'Capital Income' and 'Current Income' | Capital Income = long-term income for Governments. Comes from non-tax revenue (not from tax). E.g. Privatisation (sale of state assets like the National Lottery). Current Income = money that the Government receives on a day-to-day basis e.g. PAYE/VAT |
Explain the term 'Debt Servicing' | When the Economy is in debt (loss), they will have to get a loan. They can borrow money from the European or World Banks. They will have to repay these loans with interest; this is called ‘Debt Servicing’. |
Formula for Balance of Trade? | Visible Exports - Visible Imports |
Formula for Balance of Payments? | Total Exports - Total Imports |
Explain the term 'the National Budget' | "The ‘National Budget’ is a forecast of Government ‘Income’ and ‘Expenditure’ for the next year. The ‘National Budget’ is prepared by the Minister for Finance (Department of Finance)." |
Explain the term 'Budget Deficit' and 'Budget Surplus' | Deficit = The Government spends more than they earn, i.e. Expenditure is greater than Income. Surplus = The Government earns more than they spend, i.e. Income is greater than Expenditure |
Name the 4 factors of production | 1. Land 2. Labour 3. Capital 4. Enterprise |
Give an example for each of the factors of production | 1. Land = farms, forestry 2. Labour = factory workers 3. Capital = money invested in businesses 4. Enterprise = starting and growing businesses e.g. Supermacs |
Give 1 economic benefit for each of the factors of production | 1. Land = rent 2. Labour = wages 3. Capital = interest 4. Enterprise = profit |
Explain the term 'mixed economic system' | When a government has a mix of private enterprise e.g. Dell/Intel, and government (public) companies e.g.ESB/Bord Gais. |