1.1.1 Nature of Economics

Question 1

Behavioural economics

Answer 1

research that considers psychology and human decision making in order to better understand decision-making by investors, consumers and other economic patricipants

Question 2

Ceteris parabus

Answer 2

All other factors remaining equal

Question 3

economic assumptions

Answer 3

• initial or prior conditions made before a micro or macroeconomic analysis is built
• sometimes used for simplification of a theoretical idea or economic relationship

Question 4

economic model

Answer 4

A simplified representation of economic processes

Representation can be used to gain a better understanding of the theory

Question 5

Microeconomics

Answer 5

Study of economics at the level of the individual firm, industry or consumer/household

Question 6

Unintended consequences

Answer 6

Outcomes that are not the ones foreseen and intended by a purposeful action