economics
TRANSCRIPT
![Page 1: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/1.jpg)
![Page 2: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/2.jpg)
is the study of how we make the best possible use of scarce
resources in order to satisfy the needs and wants of as many
people as possible.
Economics
![Page 3: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/3.jpg)
You can’t have it all!
![Page 4: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/4.jpg)
Factors of production
Land Labour
Capital Enterprise
![Page 5: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/5.jpg)
Land
• Anything provided by nature that helps us produce G&S
• E.G. Sea
Soil
Gas
• Payment: Rent
![Page 6: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/6.jpg)
Labour
• Any human effort that helps to produce G&S
• E.G. Doctor
Accountant
Factory worker
• Payment: Wages
![Page 7: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/7.jpg)
Capital
• Anything that is made by humans that is used to help produce G&S
• E.G. Machinery
Computers
• Payment: Interest
![Page 8: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/8.jpg)
Enterprise
• Organises land labour and capital by setting up a business and bears the risk of success or failure
• E.G.
• Payment: Profits
Entrepreneur
![Page 9: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/9.jpg)
Economic Systems
![Page 10: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/10.jpg)
Mixed Economy
Most of the decisions regarding the factors of production are made by the private sector
Some industries controlled by the government (Essential services)
![Page 11: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/11.jpg)
Free Enterprise
Economic choices about factors of production made by private sector - Government has little intervention
- Capitalism
![Page 12: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/12.jpg)
Centrally Planned
- Government controlled economy - Gov decides what is produced and by whom
-Little intervention by private sector
![Page 13: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/13.jpg)
Consumer Choices!
Opportunity Cost
The item that you do without when you have to make a choice between two items. The items you choose is the financial cost
![Page 14: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/14.jpg)
Example
The government has €100 M to spend on building a new or a new
As advisor what do you advise?
![Page 15: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/15.jpg)
Economic Growth
Is the increase in the production of goods &
services from one year to the next
![Page 16: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/16.jpg)
GDP
Gross Domestic Product
The total value of all G & S produced in a country in one year
![Page 17: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/17.jpg)
Gross Domestic Product
FORMULAIncrease in production x 100 Year 1 production 1
Example 1Production Year 1 - €15,000Production Year 2 - €17,000Difference = €2,000
€2,000 x 100€15,000 1= 13.3%
![Page 18: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/18.jpg)
Example 2
Calculate the GDP
Production Year 1 - €50 billionProduction Year 2 - €52 billion
Example 3
Calculate the GDP
Production Year 1 - €64 billionProduction Year 2 - €68 billion
![Page 19: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/19.jpg)
GNP
Gross National Product
GDP minus profits sent out of country by foreign owned companies plus profits returned to Ireland by Irish firms abroad
![Page 20: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/20.jpg)
High Economic GrowthBenefits:
1.Improved standard of living: Access to increased quantity & quality of goods
2. Creates Employment: Demand for G&S increases
3.Increases revenue for Gov: Increase in taxes
![Page 21: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/21.jpg)
Low economic growth:
Disadvantages
1. Wages decrease
2. Unemployment increases
3. Decrease in tax revenue
4. Lack of investment in essential services
![Page 22: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/22.jpg)
Inflation
An increase in prices of goods and services from one period to the next.
- Inflation is measured by the (CPI) Consumer Price Index.
![Page 23: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/23.jpg)
FormulaIncrease in price x 100 Year 1 price 1
Inflation
![Page 24: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/24.jpg)
Example 1
Calculate the rate of inflation.
Year 1 Cost of Living = €20000
Year 2 Cost of Living = €21500
![Page 25: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/25.jpg)
Solution
(21500 - 20000) x 100 = 7.5%
20000
![Page 26: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/26.jpg)
Example 2
A family’s weekly grocery bill costs €111 in July 2010. If the inflation rate for the year was 11%, what would the bill cost in July 2011?
SolutionPrice in 2010 € 111
€111 x 11% = + € 12.21Price in 2011 = € 123.21
![Page 27: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/27.jpg)
Causes of Inflation
1.An increase in the cost of production e.g. rent, wages
2. If demand for G &S › supply
3. An increase in taxation e.g. VAT
4.The cost of importing goods may increase e.g. oil
![Page 28: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/28.jpg)
Effects of low Inflation
1. Cost of Living is cheaper
2.Businesses keep costs to minimum
3.Increase in demand for exports
4.Lower interest rates
![Page 29: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/29.jpg)
![Page 30: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/30.jpg)
Reasons for Government intervention
1. Meet minimum needs of Irish people
2. Provide basic services
3. Provide income for people who cant work
![Page 31: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/31.jpg)
4. Regulate running of businesses
![Page 32: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/32.jpg)
The National Budget
Is a financial plan outlining the
Income & Expenditure of the Government
http://businessetc.thejournal.ie/september-exchequer-returns-619584-Oct2012/http://businessetc.thejournal.ie/september-exchequer-returns-619584-Oct2012/
![Page 33: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/33.jpg)
Government
Income & Expenditure
Capital Income Capital Expenditure
Current ExpenditureCurrent Income
![Page 34: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/34.jpg)
Capital Income Capital Expenditure
Privatisation: Selling of state assets to the
private sector
EU Grants
Borrowing
Building new school
Building new roads
Building new hospitals
![Page 35: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/35.jpg)
Current Income
Income Tax
VAT
Stamp Duty
DIRT
Corporation Tax Customs Duty
Excise duty
Capital Gains Tax
Capital Acquisition Tax
http://www.thejournal.ie/ireland-saves-facebook-taxes-630895-Oct2012/
![Page 36: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/36.jpg)
Income Tax PAYE. Tax deducted from workers gross wage
VAT Tax paid on G & S. Two rates: 13.5% & 23%
Stamp Duty Tax paid on the purchase of property. Rate: 1%
Corporation Tax Tax paid on the profits made by companies
Customs Duty/ import duty Tax paid on goods brought in from outside the EU
DIRT Tax paid on interest earned in deposit account
Excise duty Tax paid on alcohol tobacco and oil
![Page 37: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/37.jpg)
Capital Gains TaxTax on profits made from the sale of an asset e.g. buildings
Capital Acquisition Tax Tax on inheritance or gifts
![Page 38: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/38.jpg)
Current Expenditure
Social welfare benefits
Teachers pay
Garda pay Judges pay
Nurses pay
Doctors payDebt servicing
![Page 39: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/39.jpg)
Place expenditures under correct headings
Department Current Expenditure Capital Expenditure
Department of Health and Children
School buildings and Equipment
NCT Testing
Department of Education and Science
Building Prisons, Court Buildings
Teachers’ pay, school running costs
Department of Justice, Equality and Law
Building waste treatment facilities
Building hospitals, Clinics, Hospital Equipment
Department of Environment
Garda Pay, Judges pay
Medical cards, Nurses and Doctors pay
![Page 40: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/40.jpg)
Solution
Department Current Expenditure Capital Expenditure
Department of Health and Children
Medical cards, Nurses and Doctors pay
Building hospitals, Clinics, Hospital Equipment
Department of Education and Science
Teachers’ pay, school running costs
School buildings and Equipment
Department of Justice, Equality and Law
Garda Pay, Judges pay
Building Prisons, Court Buildings
Department of Environment
NCT Testing Building waste treatment facilities
![Page 41: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/41.jpg)
Activity 1. Collect a newspaper article relating to Ireland economy 2. Cut it out and place it in notebook. 3. Underline key words.
4. Write summary of article. 5. Provide opinion/ recommendation 6. Present to the class
![Page 42: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/42.jpg)
Types of Current Budgets
1.A balanced Budget: Income = Expenditure
2. A surplus Budget: Income › Expenditure
3. A deficit Budget: Income ‹ Expenditure
Which of the three is our current budget?
![Page 43: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/43.jpg)
Budget 2012:
Income: €39.2 billionExpenditure: €64.4 billionDeficit: €25.2 billion
Why?
![Page 44: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/44.jpg)
€
Agriculture Service 137
Corporation Tax 77
Customs Duty 24
Debt Servicing * 237
Defence Service 86
DIRT* 139
Education & Science Service
330
Excise Duty 148
Health & Social Welfare Service
509
PAYE 619
VAT 170
Question
![Page 45: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/45.jpg)
Revenue € €
Corporation tax 77
Customs duty 24
DIRT 139
Excise duty 148
PAYE 619
VAT 170
Total income 1177
Expenditure
Agriculture services
137
Debt servicing 237
Defence services 86
Ed & Science 330
Health & social service
509
Total expenditure 1299
Budget deficit (122)
Solution
![Page 46: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/46.jpg)
Revenue
Customs Duty 500
VAT 800
PAYE 900
DIRT 50
Capital Gains Tax 100
Corp Tax 750
Total Income 3100
Expenditure
Social Welfare Services 1000
Health Services 900
Ed and Science Services
800
Agric Services 500
Debt Servicing 30
Defence Services 250
Total Expenditure 3480
Deficit Budget (380)
Text book Pg. 143 Q.20
![Page 47: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/47.jpg)
Revenue
Income Tax 7000
Customs & Excise 2000
DIRT 600
VAT 6500
Corp Tax 4500
Capital Gains Tax 550
Total Income 21150
Expenditure
Social Welfare Services
5000
Health Services 4500
Ed & Science 4000
Debt Servicing 90
Agric Services 2500
Equality & Law 2000
Local Gov Services 2400 20490
Surplus 660
Text book Pg. 143 Q.21
![Page 48: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/48.jpg)
Revenue & Expenditure €
Social Welfare Payments 800M
Debt Servicing 222M
Customs & Excise Duty 600M
Corporation Tax 500M
Education & Science Services
300M
Department of Justice 500M
VAT 600M
Income Tax 700M
Q.1 Was this a Surplus or Deficit Budget. Explain.
Q.2 What was the main source of Gov Income?
Q.3 What % of total expenditure was spent on Education
Q.4 Explain two effects of decreasing level of unemployment on the National Budget.
Sample Question
![Page 49: Economics](https://reader033.vdocuments.us/reader033/viewer/2022051616/557cfd22d8b42a071b8b4e8f/html5/thumbnails/49.jpg)