basic concepts

Question 1

economy

Answer 1

allocation (distribution), limited resources (not enough money/products), given ends (what at the end we will need to choose due to limited time and resources)

Question 2

parts of the economy

Answer 2

microeconomics and macroeconomics

Question 3

microeconomics

Answer 3

you are studying individuals, consumers, firms, markets, and companies

Question 4

macroeconomics

Answer 4

studying aggregate variables: GNP, GDP, inflation, unemployment

Question 5

market equilibrium

Answer 5

when supply and demand meet

Question 6

parts of market equilibrium

Answer 6

price, quantity, demand and suppliers

Question 7

profit

Answer 7

revenue-costs

Question 8

excess of demands

Answer 8

(below the line) consumers are sad because there is no enough product, suppliers are happy because they can increase the prices and make profit

Question 9

excess of supply

Answer 9

(above the line) consumers are happy because there is enough product, suppliers are sad

Question 10

what is the market?

Answer 10

it solves the economic problem because it adjusts itself to what is trending at the moment

Question 11

Adam smith

Answer 11

the invisible hand

Question 12

the invisible hand

Answer 12

division of labour
the government does not involve
profit-seeking producers
needs of society automatically meet
competition keeps quality high
competition keeps prices low
competition and self-interest act as an invisible hand that requires the free market

Question 13

two actors that created a solution model during the great depression

Answer 13

keynes and hayek

Question 14

Keynes

Answer 14

the state needs to provide/invest in basic necessities for the people

Question 15

Hayek

Answer 15

believed in the free market

Question 16

business cycles

Answer 16

growth, peak, recession, trough or depression

Question 17

Gross domestic product

Answer 17

the monetary value of all the finished goods (tangible) and services (intangible) produced within a country’s borders in a specific period of time

Question 18

formula of GDP

Answer 18

consumption + investment + government + exports - imports

Question 19

Gross national product

Answer 19

estimate of the total value of all the final products and services produced in a given period by the means of production owned by a country’s residents

Question 20

the organization as an open system

Answer 20

environment
input
transformation process
output
feedback

Question 21

environment

Answer 21

it is not in the system but it can influence the system

Question 22

input

Answer 22

resources, people

Question 23

transformation process

Answer 23

making the product

Question 24

output

Answer 24

final product

Question 25

feedback

Answer 25

to improve the product

Question 26

the transformation process as a cycle

Answer 26

stage 1 inputs
stage 2 good and services
stage 3 sales revenue a or b

Question 27

stage 1 of cycle

Answer 27

firm incurs costs to produce inputs of raw materials, labour, and tools and equipment

Question 28

stage 2 of cycle

Answer 28

firm organizes the process of production. managing employees to use tools and equipment to transform raw materials into goods and services

Question 29

stage 3 of cycle

Answer 29

firm generates revenue from sale of goods and services. the element of profit is the difference between total revenue and total costs

Question 30

sales revenue b

Answer 30

profit van be used to grow the business

Question 31

sales revenue a

Answer 31

profit can be taken out of the business as income for the owners

Question 32

the domestic circular flow

Answer 32

assimilation of how the economy works in reality

Question 33

3 actors of domestic circular flow

Answer 33

households
government
firms

Question 34

households

Answer 34

consumers purchase goods and services from firms

Question 35

firms

Answer 35

produce goods and services and needs to hire people, so they give: wages, dividends, interest, profits and rent to consumers

Question 36

governments

Answer 36

take taxes from consumers and companies, give consumers public health, transport, schools, school grants etc, give companies government purchases