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30 Cards in this Set

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Labour
Human resources - include qualities boosted by education, training & experience
Land
All natural resources. Incl land, space above & airways, the sea, mineral wealth
Capital
Any man-made resource - incl. buildings, plant , machinery, equipment & tools.
Financial capital
Money
Capitalist economies
Society where private ownership of capital occurs
Ongoing process of adding to stock of capital
Investment
Enterprise
ecnomic resource as shown by entrpreneurs
Economic resources (4)
Labour, Land, Capital, Enterprise
Return to owner from labour
Wages
Return to owner from land
Economic rent
Return to owner from capital
Profit/Interest
Return to owner from enterprise
profit
Scarcity
the lack of resources to meet society's demands upon them
Opportunity cost
the sacrifice of the next best, or most rewarding alternative, use of a resource.
Free market system
Where all resources are privately owned and those goods & resources are distributed according to their prices, which effectivelt rations them.
What did Adam Smith, in Wealth of Nations (1776), describe with regards to the free market mechanism?
the 'invisible hand' which caused individual decisions to operate for the economic advantage of society.
Central planning system or command economy
..concentrates the decision-making process and the organisation of resources to a central authority.
Georgist system - Henry George's two main questions.
1) Why poverty exists in resource-rich economies.
2) Why resource-rich economies slide into cyclical depression.
Basis of Georgist system
100% taxation of the annaul rental value of land combined with a corresponding reduction in taxes on the returns of both capital & labour.
Definition of mixed economies
Exist where elements of the free market & central planning systems are combined to varying degrees.
Positive statements
Can be tested for proof with reference to factual information.
'is'
Normative statements
Are subjective value judgements
'should'
Microeconomics
Study of of small-scale elements of economies - consumers, firms, resource owners, industry markets.
Macroeconomics
Study of large-scale elements of the economic system and between national economies.
Economic problems are caused by...
...scarcity of resources.
Economic choices involve...
...opportunity cost.
Arbitrage
trading activity based on buying where a product is cheap and selling where it has a higher price.
Distortions
outcomes in economy that prevent market forces giving the best outcome.
Externalities
costs or benefits of an economic activity that fall on people not directly involved.
Incentives
what drives people to make the choices they do.