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Business and economy
| Term | Definition |
|---|---|
| Land | Physical land and natural resources - payment = rent |
| Labour | Human input, includes skills and knowledge (finance, marketing etc) - payment = wages |
| Capital | Money invested by owners, also capital used to purchase man-made goods eg machinery, buildings etc - payment = interest |
| Enterprise | Entrepreneurs who combine the other 3 factors to produce goods/services. They take risks to set up and run their own business - payment = profit |
| Open economy | Where people and business own factors of production. Customers have wide variety of choices at competitive prices (as there is competition). Goods and raw materials can be imported and and exported. Little or no government involvement. Large gap in DoW |
| Mixed economy | When both the government and private businesses own factors of production. Can have economy which is both open and mixed. |
| Controlled economy | (Centrally planned) government own the factors, citizens are state employees |
| Inflation | Sustained increase in prices over a period of time and is usually measured by the CPI. High inflation is bad for business |
| Interest rates | Amount of interest charged by lenders. It’s the price of borrowing money. |
| Taxation | Money paid by individuals and businesses by government. Direct - income tax/Profits Indirect - VAT/Excise duties |
| Subsidy | Price support to encourage businesses to increase production eg. IE allows the business to compete |
| Grant | Non-repayable source of finance once conditions are fulfilled. Reduces costs for business and encourage entrepreneurs to set up. |
| Unemployment | The inability to work |
| Exchange rates | Price of one currency expressed in terms of another |
| Fluctuations | A fall in value of Euro means that other currencies become dearer. Exports become cheaper and imports become dearer. So costs of raw materials will increase. |
| Economy | How businesses, consumers and governments trade and interact with each other in the production and distribution of goods and services. |
| GDP | Gross Domestic Product. Measures the value of goods and services produced in a country. Includes goods and services produced by foreign-owned businesses that are located in that country |
| GNP | Gross National Product. Measures the value of goods and services produced by citizens and businesses of a country, whether they are in Ireland or abroad. |
| Economic activity | The level of activity in an economy fluctuates over time. The government monitors economic activity by measuring economic growth |
| Economic recovery | Governments use fiscal policy (taxation) to stimulate demand in the market to kickstart an economy. |
Created by:
daramacken
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