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Economics Revision Cheat Sheet by

A short business revision guide for meself
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Macroe­con­omics

- Macroe­con­omics focuses on the holistic view of an economy or a country

Macro based mostly on:
- Growth
- Price Level (Infla­tion)
- Labour Markets (unemp­loy­ment)
- Balance in Foreign Sector

Macro policies include Monetary and Fiscal which influence economy spending. Can be used by government to balance trades or influence growth.

Macro Micro

Macro
Micro
Focus on holistic level
Focus on individual level
GDP, GNP, Spending of economy
Needs, buying habits of individual consumer
Example: Studying how implem­enting stabil­ization policy affects economy expend­iture
Example: Studying how firms react to increasing costs of production by raising the priuce and subseq­uently how consumers spending adjusts to new prices

Factors of Production

The factors of production are inputs that are used in the production of goods or services. These are primarily

- Land
- Labour
- Capital
- Enterp­ris­e/E­ntr­epr­enu­ership

Basic Economic Problem

Fundam­ental economic problem is Scar­city


Unli­mited Wants of consumers
Limited Resour­ces available

- It is the duty of entrep­reneurs and businesses to use efficient allocation of f.o.p.'s to minimize the problem of Scarcity
 

Circular Flow of Income

Strong Economy

Why UK wants a strong economy

- GDP/GNP Increase
- Maintain intern­ational reputation
- Improved infras­tru­cture
- Attracts F.D.I.
- B.O.P. comes down
- Demand for Exports
- Income Increases
- Lower unempl­oyment

Mergers and Takeovers

Q - Identify differ­ences b/w Merger and Takeover
Mergers
- Three types of mergers (Vertical, Horizo­ntal, Conglo­merate)
- A and B unite to become C
- Example: Sony Ericsson

Takeo­vers
- Where A acquires B to become a bigger A
- Can be either hostile or friendly
- Hostile can include buying all shares of the target company
- Example Queen Consol­idated

Q - Discuss the benefits and drawbacks of Mergers and Takeov­ers
Benefits
- Shared Knowledge
- Market Popularity
- Economies of Scale
- New Markets

Drawb­acks
- May not be on same terms (hostile)
- Culture clash
- Layovers
- Ineffi­cient Management
 

Unempl­oyment

Q - Identify the different types of unempl­oym­ent
- Seasonal
- Cyclical
- Structural
- Frictional

Q - Describe two ways to reduce unempl­oym­ent
- Better training provided for youth
- Government subsidies for entrep­reneurs and small business

Q - Two reasons why govt. wishes to reduce unempl­oym­ent
- Looks politi­cally good in the intern­ational market
- Increased produc­tivity and production capabi­lities
- Less burden on Medical and Healthcare facilities

Oppurt­unity Cost

Next best opport­unity forgone.

Example: A consumer is given the choice of buying either a brand new iPhone or a Laptop. If the consumer chooses the iPhone, the Laptop is the Oppo­rtunity Cost

Stabil­ization Policies

Q - Describe the two Stabil­ization Policies and importance to business in UK
Stabi­liz­ation Policy
- Policies which seek to influence level of aggregrate demand

Monetary Policy
- Influences aggregrate demand by changing money supply and/or interest rates

Fiscal Policy
- Influences aggregrate demand by changing governmnet spending or tax rates

UK Bussin­esses
- Using Fiscal Policy to reduce tax rates and encourage firms to produce more goods and services
- Lower interest rates attract entrep­ere­nuers to take loans and invest in new businesses

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