Balance of Payments

Export reciepts minus import payments

Boom

A time when economic activity is high, and incomes and profits are increasing

Capital Resources

Man made good used to produce other goods

Circular Flow Model

A model that shows the relationship between sectors of the economy

Collective Goods

Goods provided by the government through the taxation system: includes both Mixed goods and Public goods

Commodity

A good or service

Consumer

A user of goods and services

Consumption

Household spending on goods and services (consumer spending)

Demerit Good

A good or service considered bad for us

Depression

A time of negative growth, incomes and profits may be falling

Direct Tax

Tax paid directly to the Inland Revenue Department (e.g. P.A.Y.E.)

Disposable Income

Income after tax

Entrepreneur

An organiser of resources

Export Receipts

Income/money coming into New Zealand from the overseas sector in return for our exports

Exports

Goods and services made in New Zealand and sold to the overseas sector

Factor Reward

Payment made to households by firms for providing resources

Factors of Production

The inputs into the production process - Land, Human resources and capital

Financial Sector

Acts as intermediary between households who save money and firms who borrow money for investment

Firm

A business in the private sector that produces goods and services

Foreign Exchange Market

Where currencies from a range of countries are bought and sold

Government Sector

Provides services such as police, hospitals, schools, etc

Household

A group of people living under one roof

Human Resources

Labour and Entrepreneurship

Import Payments

Money leaving New Zealand to the Overseas Sector in return for imports.

Imports

Goods and services brought by New Zealand from the overseas sector

Income

The flow that shows the payments made by firms to households for using resources (e.g. wages and salaries)

Income Tax

A direct tax on earned income

Independence

Self sufficient - not relying on anyone

Indirect Tax

Tax paid indirectly to a third party (e.g. frims collect tax (G.S.T.) from the consumer and passes it onto the Government)

Injection

Money that is put into the circular flow

Interdependence

A mutual reliance; when two sectors/firms rely on each other

Interest

The cost of borrowing. Payments made by firms to the financial sector in return for the money they have borrowed for investment. The reward for saving

Investment

The buying of capital by firms

Land

All natural resources

Market

A place or situation where an exchange takes place

Merit Good

A good or service considered good for us

Money Flow

The flow of money within the economy

Money Market

Connects savers (households), financial institutions and firms

Mixed Goods

Goods sold by both the private sector for profit and provided by the government (e.g. private schools and public schools)

Overseas Sector

New Zealand's trading partners throughout the rest of the world

P.A.Y.E.

Pay As You Earn (the most common type of income tax)

Producer

Someone who provides or creates goods and services

Progressive Tax

Tax that increases as income increases (e.g. in New Zealand the rates are 19.5%, 33% and 39%

Public Sector

The Government Sector

Quota

A restriction on the ammount of imports allowed into a country

Real Flow

These are the flows of the factors of production - Land, human resources and capital

Recession

A time when economic activityis low, and income and profits are low

Resource Market

Where resources are bought and sold

Sector

A part of the economy

Subsidy

A payment made by the Government to firms to help reduce the cost of production, increase output and reduce cost to consumers

Tariff

A tax on imports

Transfer Payment

A payment made by the Government to households

Withdrawl

Money that is taken out of the circular flow