THE NATIONAL BUDGET December 2012 THE ECONOMIC FRAMEWORK

What did you learn in the previous class? What is Economics? What are Resources? What are the Factors of Production (FOP’s)? The difference between needs and wants? What is opportunity cost? What is an economic system? What is economic growth (advantages) and how is it measured? What is inflation and how is it calculated?

Economics is the study of how individuals, businesses and governments with limited resources make choices. Resources are used in the production of goods and services. FOP’s are those scarce resources which we use to produce wealth. There are 4 FOP’s Land, Labour, Capital & Enterprise. Needs are finite and wants are infinite. Opportunity Cost is that which we must give up when making choices. An Economic System is how a country makes decisions about its FOP’s.

Economic Growth Occurs where there is an increase in the amount of goods and services produced in a country from one year to the next (GDP & GNP). The calculation of Economic Growth: (change/original) x 100 Advantages of economic growth: Increase in wealth, employment & Standard of living. Inflation is an increase in the cost of living/prices from one year to the next. Inflation is calculated by the CPI.

Homework Q 4 pg. 121 (Textbook) (a) What is meant by an economic system? (b) Write a short note explaining each of the following economic systems: Centrally Planned Free Enterprise Mixed Economy (c ) Which type of economic system operates in Ireland?

December 2012 THE NATIONAL BUDGET

What will we learn today? Why the government provides services. Examples of State owned and Semi-State Bodies. The difference between National & Local government. The National Budget. The difference between the current & capital budget. The National Debt and Debt Servicing. How to present, calculate and interpret a National Budget (Exam Questions)

Key Terms & Abbreviations. Public utilities The National Budget (Balanced, Surplus & Deficit) Income Tax: PAYE, PRSI, VAT, CGT, CAT & Corporation tax. Privatisation Nationalisation Revenue Buoyancy National Debt Debt Servicing

Distinguish between National & Local Government National Government Ministers (e.g. Joan Burton & Frances Fitzgerald) and departments (Social protection & Children and Youth Affairs) run by the Government. Local County Councillors run towns and counties

Government Departments Finance - Minister Michael Noonan Education & Skills - Minister Ruairí Quinn Health - Minister James Reilly Jobs, Enterprise and Innovation - Minister Richard Bruton These are financed by Tax

Prepared by The Minister for Finance (Michael Noonan) in December.

Budgets: Balanced, Deficit & Surplus Balanced Budget: Planned Income = Planned Expenditure Budget Deficit: Planned Expenditure > Planned Income Surplus Budget: Planned Income > Planned Expenditure

Class Exercise

What did you learn today? Why the government provides services. Examples of State owned and Semi-State Bodies. The difference between National & Local government. The National Budget. The difference between the current & capital budget. The National Debt and Debt Servicing. How to present, calculate and interpret a National Budget (Exam Questions)

Key Terms & Abbreviations: What do they mean? Public utilities The National Budget (Balanced, Surplus & Deficit) Income Tax: PAYE, PRSI, VAT, CGT, CAT & Corporation tax. Privatisation Nationalisation Revenue Buoyancy National Debt Debt Servicing

Homework Q 2, pg. 125 (Workbook)

Remember: Layout & Presentation