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IB Economics HL > 1.1 What is Economics > Flashcards

1.1 What is Economics Flashcards

1
Q

What is economics?

A

Social science to examin how resources should be allocated to benefit the society.

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2
Q

Basic economic Problem

A

Limited needs (resources) , unlimited wants

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3
Q

4 Factors of Production (FOP)

A

Land, Labour, Capital, Enterprise

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4
Q

Scarcity

A

Finite resources

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5
Q

Needs

A

Goods and services necessary for survival

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6
Q

Wants

A

Desires of goods and services

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7
Q

Goods

A

Tangible products

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8
Q

Services

A

intangible products

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9
Q

Economic goods

A

Resources with limited supply with economics value (utility) to society.

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10
Q

Renewable resources

A

Factors of production that can regenerate/ replenish (future proof)

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11
Q

Free goods

A

No opportunity cost, abundance of supply

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12
Q

Private sector

A

sector of economy where private firms produce goods and services

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13
Q

Public sector

A

sector of economy where the government produces goods and services

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14
Q

Free market economy

A

Purely relies on market forces of demand and supply to allocate scarce resources in the economy

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15
Q

Mixed economy

A

Uses both public and private sector

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16
Q

PPC/PPF

A

Model of the maximum combination of two products that a country can produce using all factors of production at any moment in time

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17
Q

Marginal rate of transformation/ Rate of substitution

A

The gradient of the PPC showing the opportunity cost between the two products

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18
Q

Pareto Efficiency

A

Occurs when it is not possible to make one person better off without making someone else worse off.

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19
Q

Circular flow of income model

A

macroeconomic tool to explain how economic activity and national income are determined

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20
Q

Economic Agents

A

economic decision makers comprising households, firms and the government

21
Q

Closed economy

A

Part of the circular flow of income model with firms. households and the governement, domestic sector. (where the economy has a limited amount of income in it.)

22
Q

Open economy

A

Part of the circular flow of income model with foreign economic decision makers (foreing sector)

23
Q

Injections (J)

A

Money entering the circular flow of income
J = G+I+X
government spending, exports, investment

24
Q

Leakages/ Withdrawals (W)

A

Money leaving the circular flow of income
W = S+T+M
savings, taxation, imports

25
Q

Economic Methodology

A

Study of the processes, practices and principles of economics. (Models, theories, assumptions, etc.)

26
Q

Positive Economics

A

Study of economics that is provable. Factual statements about the economy.

27
Q

Logic

A

Rationality and reasoning

28
Q

Hypothesis

A

Assumptions, notion, educated guess made before the research is done.

29
Q

Model

A

A hypothesis that had been repeatedly tested and proven/ rejected and can be used to explain the real world.

30
Q

Theory

A

A broad generaliztation used ot exaplin situations or scenarios already supported by economic evidence.

31
Q

Ceteris Paribus

A

Latin phrase “All other factors remain the same”

32
Q

Empirical Evidence

A

First-hand data and information acquired by observation/ experimentation.

33
Q

Refutation

A

Act of a statement/ theory being proven wrong by Empirical Evidence.

34
Q

Normative Economics

A

Considers people’s varying opinions and beliefs.

35
Q

Value Judgements

A

Beliefs of individuals and scoieties about right and wrong.

36
Q

Equity

A

Fairness

37
Q

Economic thought

A

Historical account of different economics ideas.

38
Q

Laissez-faire

A

Free market without governement intervention.

39
Q

The “invisible hand”

A

Adam Smith’s metaphor, individuals behaviour amd decision-making ultimately helps benefit society as a whole.

40
Q

Classical Economics

A

Self-regulating markets and allocative efficiency.

41
Q

Utility

A

Level of satisfaction by consumer from consumption

42
Q

Marginal Utility

A

Level of satisfaction gained by consumer per unit consumed

43
Q

Say’s Law

A

Supply first, then Demand.
Ability to purchase a product depends on the ability to produce or supply.

44
Q

Marxism

A

Macroeconomics policy that focuses on needs and values of the masses.

45
Q

Keynesian Economics

A

John Maynard Keynes, macroeconomic apporach to increase governement expenditure and decreases taxes to stimulte demand in the economy. (Fiscal policy)

46
Q

Monetarists

A

Monetary policy (using money supply and interest rates) to control economy.

47
Q

New Classical Counter Revolution (NCCR)

A

Supply-side policy, government interventions.

48
Q

Sustainability

A

Somethign that increases living standards without affecting the needs and wants of future generations.

49
Q

Circular economy

A

An economic system where raw materials, components and other resources are used sustainably to generate output.

IB Economics HL (2 decks)

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