Economics and business

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What is Economics

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Economics is the study of how society uses its limited resources through the production, distribution, and consumption of goods and services

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What is income inequality

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·  Income inequality is the degree to which income is unevenly distributed among people in the economy.

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What is a Material living standard?

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·  Access to goods and services

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What is a non-material living standards?

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·  Freedom of speech

·  Free elections

·  Low levels of crime and discrimination

·  Preservation of the environment

·  Adequate leisure time

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What is Gross domestic product (GDP)

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·  Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.

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What are limitations of GDP?

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o   Impact on living standards

o   Environmental degradation

o   How resources were used or allocated

o   Whether the growth is sustainable or not

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What is inflation?

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·  Inflation is an increase in the level of prices of the goods and services that households buy.

·  Inflation is measured using the consumer price index (CPI), which measures the percentage change in the price of a basket of goods and service consumed by households.

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If inflation is too high...

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·  Consumers will have less purchasing power, which means they will buy less goods and services

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What is the Lorenz Curve?

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·  The Lorenz curve is a graphical representation which highlights how far an economy is from perfect distribution of income

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What does the Gini coefficient measure?

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·  The Gini coefficient measures the degree of variance of the Lorenz curve from the line of perfect equality.

A numerical measure of inequality as ranking between 0 and 1 depending on the Lorenz curve

·  The lower the Gini co-efficient the more equal society is and vice versa