ec6012 PBL exercise 1 Defining term answers

EC6012 – group pbl exercise 05 March 07

Group Members: Alex, Martina, Sinead, Jason and Shane

Wages – financial remuneration accorded to an individual in exchange for performing stated work. It is an income for the individual and expenditure for the employing firm.

Consumption – household expenditure on a range of goods and services. It is an expenditure. Income from buying goods and services. Added value one attains for owning a given asset. It is a transfer for the use of goods.

Rent – amount a firm or an individual will pay to hire an asset for a given period. It is an expenditure. For an individual or a firm, it is classed as an income.

Govt. Expenditure – day to day expenditure by a govt for the running of an economy. It is an expenditure for the govt. For an individual or a firm, it is classed as an income.

Manu Output – total amount of manufacturing goods a firm produces. Output.

Interest Payments – amount paid by a debtor on loans. It is an expenditure. From the perspective of an entity lending finance, it is considered an income. Can be thought of as an output – think banks lending.

Loans – sum of money given or received by lending institutions to firms or individuals on the understanding of agreed lending rates. Both income and expenditure. (Savings is a stock and investment is a flow) Engine of value creation in an economy.

Bank Deposits – sums of money lodged into a banking institute. Income for individual, expenditure for financial firm.

Bonds – fixed long term loans with set repayments given by a corporation or a government. Income for individual, expenditure for financial firm or government.

Equities – item or goods bought purely for investment purposes. Income now, expenditure later.

Money balances – given in exercise. How much money – wealth in the form of readily available purchasing power – consumers and firms actually hold at a given moment.