Business Economics

Question 1

What is economics?

Answer 1

The branch of knowledge surrounding the production, consumption and transfer of wealth; how people interact within a market to achieve goals

Question 2

What is relative scarcity?

Answer 2

When the wants and needs of society outweigh the resources/money

Question 3

What is opportunity cost?

Answer 3

The benefit forgone or sacrifices made in allocating resources or choosing one option over another

Question 4

What is net benefits?

Answer 4

The benefit of something minus the cost

Question 5

What is the production possibility curve?

Answer 5

An abstract tool used by economists to highlight a number of concepts including opportunity cost

Question 6

What is a free market?

Answer 6

Capitalist, profit motive, demand and supply sets price (vic market)

Question 7

What is a planned market?

Answer 7

Communist, equality, government jobs, gov sets price and determines production

Question 8

What is inflation?

Answer 8

A rise in prices overall

Question 9

What is the law of demand?

Answer 9

As the price of a product increases, demand decreases, vice versa

Question 10

Factors that will effect demand?

Answer 10

Price, fashions and trends, disposable income

Question 11

What is the law of supply?

Answer 11

As the price increases, supply will increase (profit motive)

Question 12

Factors impacting supply?

Answer 12

Price of raw materials, wage rates, interest rates

Question 13

What is the GDP?

Answer 13

Volume of goods and services produced in a period, measured at market prices

Question 14

What is economic growth?

Answer 14

Real growth in the volume/value of goods and services produced by a country over a period

Question 15

What is the AD Equation?

Answer 15

AD= Agregate/ Total Demand
C= Consumption
I= Investment
G= Gov Spending
G2= Gov Investment
(x-m)= exports minus imports

Question 16

What is the labour force?

Answer 16

Employed + Unemployed

Question 17

What is employed?

Answer 17

Working for one hour or more per week

Question 18

What is unemployed?

Answer 18

Not currently working but actively seeking

Question 19

What is underemployment?

Answer 19

The growth in part time work meaning workers seek an increase in working hours

Question 20

How is the rate of unemployment calculated?

Answer 20

Number of Unemployed/Labour Force

Question 21

What is cyclical unemployment?

Answer 21

Decrease in demand results in less need for production leading to job cuts

Question 22

What is structural unemployment

Answer 22

Advances in technology causes job cuts

Question 23

What is seasonal unemployment?

Answer 23

Caused by the time of the year and related to seasonal factors

Question 24

What is frictional unemployment?

Answer 24

Short term unemployment, faced by usually well qualified people, contract work

Question 25

What is capital?

Answer 25

Goods created with the intention of making more goods in the future, increasing efficiency

Question 26

What is labour?

Answer 26

The mental and physical efforts by humans in the production process

Question 27

What is land?

Answer 27

All resources that occur in nature

Question 28

What is entrepreneurship?

Answer 28

Skills of individuals who combine resources to produce goods and services. They are all business owners who take financial risks

Question 29

What is a commodity?

Answer 29

A raw material or primary agricultural products that can be bought or sold (oil)

Question 30

What is a tariff?

Answer 30

A tax on imports and exports to help local producers

Question 31

What is consumption?

Answer 31

The amount of goods and services used by households

Question 32

What are market forces?

Answer 32

The economic factors affecting the price of, demand and availability of a commodity

Question 33

What is hardcore unemployment

Answer 33

Unemployed for 12 months or longer

Question 34

What government policies can slow the rate of inflation?

Answer 34

Decrease the supply of money Decrease government spending Increase taxes Increase interest rates

Question 35

How may the government increase inflation?

Answer 35

Print more money

Question 36

What is hidden unemployed

Answer 36

Those who are no longer actively seeking work

Question 37

What is productivity?

Answer 37

The efficient use of productive resources

Question 38

How does unemployment effect the government?

Answer 38

Less people earning enough to pay income tax leading to less government spending

Question 39

How does unemployment effect businesses?

Answer 39

Less people in the work force, leading to a decrease in production and profit

Question 40

How does unemployment effect society

Answer 40

Less people working means people will become desperate, increased crime rates and decrease in personal wellbeing

Question 41

What are some limitations of the GDP?

Answer 41

- doesn't account for volunteer work - doesn't account for leisure time - doesn't share benefits of growth equally - not sustainable over the long run --> Inflation: result of scarce resources

Question 42

What are government policies to stimulate growth?

Answer 42

- subsidies: pay for a portion, entices spending | - decrease income tax: more disposable income to spend on good and services