Circular Flow of Income
Goods and services which are sent to another country
What is an export?
Things that you need to survive: food, shelter, safety
What is a need?
What is a competitive advantage?
Tangible (things you can touch) products. Things like paper, food etc.
What are households, businesses, workers and governments?
Australia's key trading partner
What is China?
The five sectors that form the circular flow of income model.
What are households, firms, financial sector, government sector, and overseas sector?
Things that you desire but are unnecessary for survival.
What is a want?
The cost of choosing one option over another
What is opportunity cost?
The four factors of production in the economy
What is land, labour, capital and entrepreneurs?
The relationship when two entities are dependent on the others for the supply of necessary goods and services.
What is economic interdepedence?
Firms and businesses provide these for households?
What are goods and services?
A word/phrase to describe how we have unlimited wants and needs, but limited resources
What is (relative) scarcity?
When a country can produce a good or service at a lower opportunity cost than another country
What is comparative advantage?
Intangible products. Things that cannot be touched but benefit the consumer in some way. i.e. tutoring, massage etc.
What are services?
A global event that can impact economic activity in a country and between other countries?
What are natural disasters, sporting events, financial instability, wars etc.?
What are savings, taxes and imports?
3 possible goals for the national economy
What is full employment, security and stability, economic growth, efficiency, financial freedom, reducing inflation?
3 strategies that firms can use to gain a competitive advantage
What is cost-leadership, differentiation and focus?
The four participants in the economy
What are households, businesses, workers and governments?
When companies trade similiar or different products with each other
What is two-way trade?
3 ways that money can be injected into the circular flow of income
What are investments, government spending and exports?
3 questions that economists try to answer?
What to produce? How to produce? For Whom to produce?
One negative aspect of this economic system is that the workers can be unfairly treated. (HINT: Remember the image analysis)
What is Capitalism? This is why we have a mixed system with some governemnt oversight to ensure rights of workers while still having he benefits of a Capitalist market system.
The savings and benefits of having larger operations
What is economies of scale?
Two reasons for why countries are interdependent on each other
What is industrialisation, labour specialisations and/or regional production?