8.2

Question 1

What is Land?

Answer 1

Raw materials/natural resources that go into production.

Question 2

What is Labour?

Answer 2

Human skills and effort required to produce goods and services

Question 3

What is Capital?

Answer 3

The equipment used by human labour in process of production.

Question 4

What is Enterprise?

Answer 4

Ability to recognise the demand for new goods or services, and to start up a new business or expand an existing business to attempt to satisfy that demand.

Question 5

What are the 4 factors of production?

Answer 5

Land, Labour, Capital and Enterprise.

Question 6

Explain the circular flow of income. (the interrelationship between consumers and businesses).

Answer 6

Households purchase goods and services from businesses and Businesses pay wages and salaries to households so they are able to.

Question 7

What is the financial sector?

Answer 7

The area of the economy concerned with the lending and borrowing of money.

Question 8

What are the 4 functions of money?

Answer 8

Medium of Exchange, Measure of value, Store of value and Standard of deferred payment.

Question 9

Explain Medium of exchange

Answer 9

Money allows us to pay for goods/services becauise it’s accepted by everyone in our economy.

Question 10

Explain Measure of value

Answer 10

Money allows us to put a price on goods and services. Price is a measure of what we believe the goods/services are worth.

Question 11

Explain Store of value

Answer 11

Money allows us to save our income/wealth for spending later because it holds its value.

Question 12

Explain Standard of deferred payment

Answer 12

Money allows us to purchase goods and services on credit, with both the buyer and seller knowing exactly how much has to be paid later.

Question 13

What is a Financial Intermediary?

Answer 13

Any organisation that takes deposits from those with surplus funds and makes those funds available to borrowers e.g. bank

Question 14

What is investment?

Answer 14

The use of money to purchase equipment or premises for the establishment of a new business or the expansion of an existing business.

Question 15

What is the government sector?

Answer 15

The area of the economy concerned with regulation, taxation and the redistribution of wealth.

Question 16

How can the government affect the economy?

Answer 16

High taxes = less spending
Money from taxes -> welfare payments (pensions, unemployment benefits), Money from taxes -> essential services (building roads, schools & hospitals)

Question 17

What does it mean, that Australia is an open economy?

Answer 17

They trade goods and services with other countries.

Question 18

What are exports?

Answer 18

Goods and services sold by local businesses to overseas consumers.

Question 19

What are imports?

Answer 19

Goods or services produced overseas and brought into Australia.

Question 20

Why do we import/export?

Answer 20

Exporting help Australian businesses grow.
Some products can be made more efficiently elsewhere.
Greater variety of goods and services available

Question 21

Explain the circular flow of income

Answer 21

file:///C:/Users/Ben%20Cheng/Downloads/GetImage.png