Q1. Week 4

Recorder: Ailbhe Bruen
Reporter: Joan Doherty


Wages:

Broadly speaking they are a kind of return to labour. Specifically, income to a person in current employment, or expenditure by businesses to their employees, varies depending on hours worked, qualifications of the individual etc.

Wages = Unit of labour * hours worked * productivity

(Income, Expenditure)


Consumption:

Expenditure by private individuals on goods and services. Income for the provider of the good or service.

(Expenditure, Income)


Rent:

Income paid to the owner of an asset in exchange for use of the asset for a specified period of time. It is expenditure by the person paying the rent, but income for the person receiving it.

(Income, Expenditure)


Government Expenditure:

Money paid out by the government to finance the day to day running of the country.

C + I + G = Y

I= purchase of public goods such as roads, universities, transport etc.
C= consumption as defined above.
G= government expenditure as defined above

(Expenditure)


Manufacturing Output:

The end product of industrial activity, to meet aggregate demand.

(Output)


Interest Payments:

Are the costs of acquiring capital by private individuals or businesses. It can also be a source of income through interest on deposits.

Financial institutions view interest as income both on loans and deposits. However, it is also expenditure for the financial institutions as they must pay out interest to individuals on their private savings.

Interest can be considered output; the output of an economy is a sum of the money made by all the individuals in the economy.

(Income, Expenditure, Output)


Loans:

A sum of money borrowed from financial institutions in order to finance economic activities of individuals and businesses, based on agreed lending terms.

Can also be considered a stock, i.e. a stock of cash (when not being used, known as reserves or deposits, reserves are the legally required levels of money that banks must hold). It can be turned into an asset class to be made available for lending out.

(Income, Expenditure, Output)

[Borrowing should only be used to finance future (not current) expenditure]


Bank Deposits:

Money held by banks on behalf of businesses and private individuals, on which interest is paid.

Liability for the bank because the bank must pay them back.

(Income, Expenditure)




Bonds:

Debt instruments issued, usually for a period of longer than a year, as a method of raising external finance. Governments, cities, corporations and many other institutions sell bonds. The bond holder receives payments known as coupons throughout the maturity of the bond, and at maturity the Issuer repays the principal amount .

(Income, Expenditure)


Equities:

Shares of ownership issued by an institution, in the form of preferred stock or common stock.

(Income, Expenditure)


Money Balances:

Balances of money, consumers and firms actually hold at a given moment. It represents the wealth in the form of readily available purchasing power.

(Income)





Class Questions:

Recorder: Catherine Davis

Q1: What is growth rate?

Rate of change in economic activity from one year to the next. (Using a base period)


Q2: Name 2 measures of Economic Performance

GDP – Gross Domestic Product – Value of all final goods produced in an economy
Employment – The more people employed the more an economy can produce
Others include; inflation, trade surplus, GNP etc

Q3: Describe the GDP Deflator

Strips out the influence of price changes over a price index. Allows for continuous assessment and comparability.


Q4: Define Inflation

Rate of change in the consumer price index (bundle of goods)

Note: What are the side effects of inflation? Harms people on fixed incomes, harms the value of equity

Q5: Name 2 leakages from the circular flow

Savings
Imports

Q6: How do we measure unemployment?

The amount of people actively seeking work but unable to find it and divide by the working population.