Grade 10 Economics: Key Terms and Methods

• The study notes cover key terms and methods in Grade 10 economics.
• They're split into two sections: "Key Terms and Methods" and "Circular Flow and Business Cycle."

Basic Economic Concepts

• Scarcity refers to the limited availability of resources relative to unlimited human wants.
• Choice is necessary because scarcity forces individuals and societies to decide how to allocate resources.
• Opportunity cost represents the value of the next best alternative that is given up when a choice is made.
• To calculate opportunity cost, you must compare the gains versus the losses of a decision.
• Factors of production are the resources used to produce goods and services
• Land includes natural resources.
• Labor includes human effort.
• Capital includes machinery, tools, and infrastructure.
• Entrepreneurship includes the ability to organize resources and take risks.
• Economic problem is allocating scarce resources efficiently in order to meet human needs.

Economic Systems

• Traditional economy relies on customs and traditions, often using barter in rural areas.
• Command/planned economy features government control of all resources and economic decisions.
• Market economy is based on supply and demand with minimal government intervention.
• Mixed economy combines market forces with some government control, balancing private and public sector roles.

Demand and Supply

• Demand is the willingness and ability to purchase goods/services at different prices.
• The law of demand states that as price increases, demand decreases, and vice versa.
• Supply refers to the willingness and ability of producers to sell goods/services at different prices.
• The law of supply says that as price increases, supply increases, and vice versa.
• Demand schedule is a table showing quantity demanded at different prices.
• Demand curve is a downward-sloping graph that shows the relationship between price and quantity demanded.
• Supply schedule is a table showing quantity supplied at different prices.
• Supply Curve is an upward-sloping graph that shows the relationship between price and quantity supplied.
• Market equilibrium occurs where supply equals demand, determining the market price.

Market Structures

• Perfect competition involves many small firms, identical products, no market control, and free entry/exit.
• Monopoly is when one firm dominates, has high barriers to entry, and sets prices.
• Oligopoly is characterized by few large firms, interdependent pricing, and non-price competition.
• Monopolistic competition features many firms with similar but differentiated products.

Economic Indicators

• Inflation is the rate at which the general level of prices rises, reducing purchasing power.
• Inflation is measured by the Consumer Price Index (CPI).
• Gross Domestic Product (GDP) is the total value of goods and services produced in a country in a year.
• GDP is calculated using the formula: GDP = C + I + G + (X - M), where C = Consumer spending, I = Investment, G = Government spending, X = Exports, M = Imports.
• Unemployment rate is the percentage of the labor force that is jobless and actively seeking work.
• Unemployment rate is calculated as (Unemployed ÷ Labor force) × 100.
• The Balance of Payments (BOP) records a country’s economic transactions with the rest of the world.
• BOP includes the trade balance (exports minus imports) and financial transactions.

Government and the Economy

• Taxes are collected by the government to fund public services.
• Direct taxes are paid directly to the government.
• Indirect taxes are applied to goods and services.
• Government spending is the amount of money used to provide public services.
• Subsidies are financial aid given to businesses or individuals to lower the cost of goods/services.

The Circular Flow of Income

• The circular flow model illustrates the movement of money, goods, and services between sectors of the economy.
• Key sectors include households, firms, government, and the foreign sector.
• Households provide labor and consume goods/services.
• Firms produce goods/services, hire workers, and pay wages.
• Government collects taxes, provides public services, and regulates the economy.
• Foreign sector involves exports and imports.
• Real flow is the physical movement of goods, services, and resources.
• Money flow includes financial transactions.
• Leakages (withdrawals) are money exiting the economy.
• Injections are money added into the economy.
• Total Injections (I + G + X) = Total Leakages (S + T + M), where I = Investment, G = Government spending, X = Exports, S = Savings, T = Taxes, M = Imports

The Business Cycle

• The business cycle shows fluctuations in economic activity over time.
• Phases include expansion, peak, contraction, and trough.
• Expansion is when there is increased production, rising employment, and higher demand.
• Peak signifies the highest point; boom phase.
• Contraction is when economic growth slows, and unemployment starts to rise.
• Trough is the lowest point of the cycle; depression phase.
• GDP Growth Rate = (Current GDP - Previous GDP) ÷ Previous GDP × 100
• Inflation Rate = (New CPI - Old CPI) ÷ Old CPI × 100
• Unemployment Rate = (Unemployed ÷ Total labor force) × 100