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Summary Economics 1B (Macro) Full Summaries
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Includes summaries from learning units 1-11 of the 2023 module outline from Varsity College.
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Economics1B – Macro
economics
Important note:
These study notes have been compiled
personally based on the module outline
for the 2023 academic year and are
merely a summary of the work. They
may include additional content or omit
certain information relevant to other
academic years. Additionally, please be
aware that the document may contain
some errors and spelling mistakes. It is
important to note that these notes are
intended to serve as a supplementary
aid for certain topics and should not
replace the use of textbooks or other
primary study materials. Students are
strongly encouraged to consult their
prescribed academic sources for
accurate and comprehensive
information regarding the module.
, LEARNING UNIT 1 - CHAPTER 3
Three major elements:
• Production
Combining inputs to make or grow
an output for sale or use.
• Income
Reward or remuneration that one receives for
providing a good or service or through an investment.
Four sources of income
▪ Labour (wage/salary)
▪ Capital (interest)
▪ Land (rent)
▪ Entrepreneurship (Profit)
• Spending
Four sources
▪ Households
▪ Firms
▪ Government
▪ Foreign sector
Consumer spending (C), investment spending (I), government
spending (G), and foreign sector spending (X-Z).
▪ C + I + G + X -Z
Stocks:
• Measured at a particular point in time.
• Has no time dimension.
• Only changes as a result of flow.
• Stock statistics offer a snapshot of the economy.
Flows:
• Measured over a period of time.
• Has a time dimension.
• Flow offers a moving picture of the economy.
,PRODUCTION:
Factors of production:
• Primary
Natural resources
Labour
• Secondary
Capital
Entrepreneurship
Natural resources:
• Consists of all materials found in nature.
• There are a fixed supply and availability cannot be increased.
Labour:
• Human mental and physical effort that people allocate to producing goods
and services.
• Human resources are used.
• Division of labour:
Quantity.
Quality.
Capital:
• All man-made resources used in the production of goods and services.
Entrepreneurship:
• Human resource that organises the other three factors.
• Business leaders that come up with new ideas.
, Technology:
• Can be seen as the fifth factor of production.
• Technology creates new knowledge to improve innovation.
Choice of technique:
• Capital-intensive production.
Production process dominated by machines.
Depends on the availability and quantity to various factors.
• Labour-intensive production.
Production process dominated by labour.
Depends on the availability and quality to various factors.
INCOME:
Income:
• Reward or renumeration that a person or firm receives for providing a good
or service.
Types of income:
• Rent.
Remuneration for the use of natural resources.
• Salaries and wages.
Remuneration paid for use of labour.
• Interest.
Remuneration paid for use of capital.
• Profit.
Difference between revenue and cost.
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