ECS1601 - All-in-one

ECS1601 Summary, Breakdown of the Study Units & Revision (Q & A) S - The study-notes marketplace Downloaded by: sibsdlam | Distribution of this document is illegal S - The study-notes marketplace 1 ECS1601 Summary Downloaded by: sibsdlam | Distribution of this document is illegal S - The study-notes marketplace 2 INTERDEPENDENCE OF THE MAJOR SECTORS, MARKET AND FLOWS IN A MIXED ECONOMY  Production is not pursued for its own benefit, the ultimate aim is to use or consume the products to satisfy human wants.  Production creates income and this income is then spent to purchase products.  This process contains 3 major elements are: • Production • Income • Spending.  One problem is how the income is distributed among the various participants in the economy.  The following are 4 economic participants: • Households/Consumption (C) • Government Expenditure (G) • Foreign sector (Exports & Imports) (F) • Businesses/Firms (B)  Production, income and spending are all FLOWS.  Stock variable – can only be measured at a particular point in time and has no time dimension (wealth, assets, liabilities, capital, population, and balance on savings account).  FLOW VARIABLE – can be measured over a period of time (income, profit, loss, investment).  In mixed economy households, firms, government and foreign sector are all participants.  Exchange is an important economic activity that links all the various sectors. 1. HOUSEHOLDS  Households can be defined as all the people who live together and who make joint economic decisions.  Can be an individual, whole family.  These members are called consumers.  Consumption – the act of using or consuming goods and services. Symbol C = total consumption or consumer