Questions and Answers
What are Exports Earnings?
What does Land include?
Everything that grows on it or under it, including the sea and all natural resources.
What is Labour in economics?
The human factor of production, including mental and physical contributions of the workforce.
What is Capital in the context of production?
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What does Entrepreneurship refer to?
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What is the Circular Flow Model?
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What are Taxes?
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What is Government spending?
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What are Import Spendings?
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What are Final goods and Services?
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What is Rent?
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What is a Salary?
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What is Interest?
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What is Profit?
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Who is a Consumer?
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Who is a Producer?
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What is Overseas Trade?
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What is Investment Spending?
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What is Consumption Spending?
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What is Government?
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What are Financial Institutions?
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What are Leakages in economics?
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What are Injections in terms of the circular flow of income?
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Study Notes
Economic Terms and Definitions
- Exports Earnings: Revenue generated by a company or country through selling goods or services to foreign markets.
- Land: Includes all natural resources, encompassing terrestrial and marine environments.
- Labour: Represents the human effort, both physical and mental, contributed by the workforce.
- Capital: Represents resources acquired through investment in physical assets and human expertise.
- Entrepreneurship: Involves individuals who take risks to coordinate land, labour, and capital for production.
The Circular Flow Model
- Definition: A diagram illustrating the monetary transactions within an economy, depicting flows of goods/services and corresponding financial transactions.
- Flows: Comprises two main types: physical flows (goods or labour) and monetary flows (payments for goods and services).
Government and Economic Contributions
- Taxes: Mandatory payments from individuals and businesses to the government, used for public expenditure.
- Government Spending: Encompasses all forms of government expenditure including consumption, investments, and transfer payments.
Trade and Spending
- Import Spendings: Financial resources allocated for acquiring foreign goods to domestic markets.
- Overseas Trade: Engaging in the exchange of goods and services with countries separated by oceans.
- Investment Spending: Expenditure on capital goods that facilitate production, including machinery, land, and infrastructural development.
- Consumption Spending: Refers to purchases made by households for personal needs, including food, clothing, and durable goods.
Financial Aspects
- Final Goods and Services: Products or services acquired directly by consumers, distinct from intermediate goods used in production.
- Rent: Regular payments made by tenants to landlords for property usage.
- Salary: A regularly scheduled payment made by employers to employees, typically expressed as an annual figure.
- Interest: Payment made for borrowing money, calculated at a specified rate.
- Profit: Financial gain realized when income exceeds expenses involved in production or operation.
Economic Participants
- Consumer: Individuals who purchase goods and services for their personal use.
- Producer: Entities (individuals, companies, or nations) engaged in creating or supplying goods for sale.
Economic Concepts
- Leakages: Outflows from the circular flow of income that reduce overall economic activity.
- Injections: Additions to the economy via investments, government spending, or exports that stimulate economic output.
Financial Ecosystem
- Financial Institutions: Organizations that manage financial transactions, including investments, loans, and deposits.
- Government: A structured group responsible for administering a community or nation.
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Description
Explore key concepts of the Circular Flow Model through flashcards. Learn definitions of essential terms such as exports earnings, land, and labor that illustrate the interactions between different sectors of the economy. Ideal for students wanting to solidify their understanding of economic principles.
