1.1 (Pg. 7-11)

Question 1

What is scarcity?

Answer 1

We have unlimited wants but limited resources

Question 2

Why is labour limited?

Answer 2

There are only a number of people and a number of skills.

Question 3

Why is capital limited?

Answer 3

Capital is limited by technology

Question 4

What is demand?

Answer 4

The want of goods and services, which is infinite.

Question 5

What is supply?

Answer 5

The production of goods and services, which is limited.

Question 6

How do demand and supply work in economics?

Answer 6

The aggregate demand = The aggregate supply.

Question 7

What is aggregate demand?

Answer 7

The total number of spending on goods and services.

Question 8

What is aggregate supply?

Answer 8

The total number of output on goods and services.

Question 9

Define Macroeconomics

Answer 9

Study of aggregate supply and demand.

Question 10

Define Microeconomics

Answer 10

Study of individual demand and supply of a specific product.

Question 11

What is the simple philosophy of macroeconomics?

Answer 11

Resources should be used as well as possible.

Question 12

Can resources be saved in economics?

Answer 12

Some but not all. For example, labour cannot be saved (1 week of the people not going to work is a labour waste not saved).

Question 13

Why is growth wanted in eco.?

Answer 13

To full-fill more wants.

Question 14

What is business cycle?

Answer 14

Periods of growth and recession.

Question 15

What is inflation?

Answer 15

When firms increase price of product due to high demand.

Question 16

What is recession?

Answer 16

When growth becomes negative for more than 6 months.

Question 17

Why does recession happen?

Answer 17

Due to low demands, shops start selling less which results in these shops buying less from manufacturers, who produce less.

Question 18

Define Rate of inflation

Answer 18

Inflation in percentage over 12 months.

Question 19

Define balance of trade surplus

Answer 19

When exports is more than imports.

Question 20

Define balance of trade deficit

Answer 20

When imports is more than exports. This can happen due to inflation within the country.

Question 21

Define demand-side policy.

Answer 21

When government changes the aggregate level of demand through policies.

Question 22

Define supply-side policy.

Answer 22

When government changes the aggregate level of supply through policies.

Question 23

Define opportunity cost

Answer 23

Best thing that could have been done as an alternative with the resources.

Question 24

Define rational choice

Answer 24

Weighing up pros and cons before making a choice.

Question 25

What is production?

Answer 25

How much an economy produces.

Question 26

What is consumption?

Answer 26

How much people spend on particular items.

Question 27

What are the 4 factors of production?

Answer 27

Labour, Land, Capital and Entrepreneurship