Households
What do households provide to businesses?
Labour and resources.
What do businesses produce?
Goods and services.
What is the product market?
The market where businesses sell goods and services to households.
What are goods and services?
Goods are products sold, and services are actions performed for others.
What is the role of the government in the economy?
To collect taxes and provide public services.
What is the primary role of households in the economy?
To consume goods and services.
What role do businesses play in the economy?
They produce goods and services and employ workers.
What is the resource market?
The market where households sell resources to businesses.
What is the definition of capital goods?
Tools, machines, and equipment used to produce goods and services.
How do taxes affect households?
Taxes reduce disposable income available for spending.
What do households consume?
Goods and services.
What are the two types of markets businesses engage in?
Product Market and Resource Market
How do the factor market and the product market interact?
Households provide resources to businesses in the factor market, and businesses provide goods and services in the product market.
What are natural resources?
Raw materials from nature used to produce goods.
What are public goods?
Goods and services provided by the government for public use.
What market do households sell resources in?
Resource Market
What do businesses pay workers?
Wages (Salaries)
What do households sell in the resource market?
Labour and resources
What are subsidies?
Financial support given by the government to businesses to encourage production.
What is entrepreneurship?
The ability to start and run a business, taking on financial risks.
What is the money earned by households called?
Income
What is Profit?
The money businesses make after paying all costs.
What is consumer spending?
The money people spend in the product market to buy goods and services.
What is the difference between revenue and profit?
Revenue is total money earned by the business, while profit is what's left after all costs are paid.
What is interest as it is related to the circular flow model?
the return on investment for capital goods.