Economics - An introduction. (Inflation (Advantages of Low Inflation…
Economics - An introduction.
How people make the most of scarce or limited resources
Limited resources eg. Money
Choices are made between
Choice you do without is known as "
Four factors of Production
eg. workforce Payment:
: all man made things that help in the production of goods and services eg. machinery Payment/Reward:
All 3 factors brought together Reward/Payment:
Resources supplied by nature eg. mountains, sea, air Payment:
: Most decisions are made by the Governement eg.
: Decisions made by Government & private sector Eg.
: Decisions made by private sector. Little government involvement eg.
Measured by CPI (Consumer Price Index)
Know how to calculate inflation: Answer in %
Causes of Inflation:
Increase in cost of production eg rent When demand is greater than supply Cost of an imported good increases eg. Oil
Advantages of Low Inflation Rates:
Buy more with your money Exports increase (cheaper prices) Stable Prices
General rise in prices over a period of time
Total income produced in the country in a year
Often referred to as
: Gross National Product
Disadvantages of a decrease in GNP
Increase in emigration Increase in unemployment Less tax revenue
Advantages of an increase in GNP
Higher standard of living Increase in employment More wealth
Know how to calculate GNP: Answer in % format