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IB Economics DP1 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What are the basic economic questions?

A
  1. What/how much to produce
  2. How to produce
  3. For whom to produce
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2
Q

Scarcity

A

The Idea that resources are insufficient to satisfy all the needs and wants of humans

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3
Q

Choice

A

Since resources can be scarce, it means that not everyone can get everything. Therefore choices must be made between what to produce and what not to produce.

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4
Q

Resource Allocation

A

Refers to assigning available resources, or factors of production, to specific uses chosen among many possible alternatives.

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5
Q

Which economic questions does resource allocation answer?

A

What/how much to produce and how to produce

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6
Q

Distribution of Income

A

How much output different individuals or different groups in a population receive.

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7
Q

Which economic question does the distribution of income answer?

A

For whom to produce

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8
Q

Redistribution of Income

A

When the distribution of income changes so that different social groups now receive more or less income and output than they were previously.

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9
Q

Market Economy/Free Market

A

Resources are owned by private individuals or groups of individuals, and it is mainly consumers and firms who make economic decisions by responding to prices that are determined in markets.

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10
Q

Command Method/Planned

A

Resources are owned by the government, which makes economic decisions by commands.

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11
Q

Efficiency

A

The thought of producing the most product for capitol, without having any waste

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12
Q

Equity

A

is the idea of being fair or just

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13
Q

Sustainability

A

maintaining the ability of the environment to produce and satisfy needs and wants in the future

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14
Q

Recently, countries have been moving from a mixed economy to a ___ economy

A

mixed market

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15
Q

interdependance

A

economic decision-makers interact and depend on each other

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16
Q

Government Intervention

A

changes the allocation of resources from what markets would have achieved working on their own.

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17
Q

Mixed Economies

A

A combination of markets and commands.

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18
Q

Rationing

A

The method used to make resource allocation and output/income distribution decisions.

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19
Q

Recently, countries have been moving from a mixed economy to a ___ economy

A

mixed market

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20
Q

what are the factors of production?

A

Land, capitol, labor, entrepreneurship

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21
Q

What are the specified types of capitol

A

Financial capital, Human capital, Physical capital, Natural capital.

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22
Q

what is opportunity cost?

A

a value you have to give up in order to obtain something else

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23
Q

Positive economics

A

Economics based on something that is, was or will be.

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24
Q

Normative economics

A

Economics based on beliefs or value judgments. Keywords: should, good, bad, right, wrong.

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25
Q

Logic

A

Making a series of statements, each of which is true given that the previous statement is true.

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26
Q

Hypothesis

A

Educated guess that indicates a cause-effect relationship about an event.

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27
Q

Ceteris Paribus

A

All else equal

28
Q

Empirical Evidence

A

Real-world information, observations and data that we acquire through our senses and experience.

29
Q

Theory

A

A general explanation of a set of interrelated events, usually based on several hypotheses that have been tested successfully.

30
Q

Law

A

Describes an event in a concise way, and is supposed to have universal validity.

31
Q

what terms construct the inside of the circular flow of income chart?

A

revenue, household expenditure, household income, cost of production

32
Q

what types of Production Possibilities Curves are there?

A

Either a constant marginal cost or an increasing marginal cost.

33
Q

What is production possibilities?

A

all posible combinations of producing goods, attempting to maximize the outcome

34
Q

where is the Production possibility located on a PPC curve in the real world?

A

Inside the curve(due to the fact that there might be unemployment, or lack of resources to produce said good, inefficiencies in production.

35
Q

Economic growth

A

increase in output of an economy

36
Q

how can Economic growth be demonstrated on a PPC, and how is it caused?

A

through the moving of the PPC curve in the positive or negative direction. caused by higher quality resources, new technologies, increases in quantity of resources. there can also be non parallel shifts

37
Q

what terms construct the base of the Circular flow of income chart?

A

businesses, resources market(labor, resources), consumers, product market(goods and services)

38
Q

what terms construct the outside of the circular flow of income chart?

A

(goods and services) , (land, labor, capitol, entrepreneurship)

39
Q

Models

A

Used to illustrate theories and to describe connections between variables.

40
Q

Refutation

A

The idea that it must be possible to disprove a hypothesis or theory by subjecting it to empirical testing.

41
Q

Equity

A

Being fair or just (normative)

42
Q

Equality

A

Being equal with respect to something (positive)

43
Q

Adam Smith

A

“Father of economics” Thought that self-interested behavior without gov’t intervention led to a more efficient use of resources and increased output.

44
Q

why is the circular flow of income chart inaccurate?

A

it doesn’t accommodate, for the government and other forms of leakages from the circular flow.

45
Q

What are the leakages in the circular chart?

A

government taxes, imports, saving

46
Q

What are the injections in the circular chart?

A

investments, exports, gov spending

47
Q

laissez-faire

A

A free market where there is without any government interventions

48
Q

Classical Economics

A

The economics ideas that developed during the 19th century

49
Q

Utilititarianism

A

goods and services are only useful if they help people in the economic system

50
Q

Marginal

A

extra or additional

51
Q

Marginal Utility

A

theory of value that determines prices of goods and services.

52
Q

Say’s Law

A

supply creates its own demand. The economy teands to words fill employment in absence of any government interventions

53
Q

Karl Marx

A

German philosophers had a profound influence on the course of global events during the 20th century.

54
Q

John Maynard Keynes

A

An extremely influential British economist, set forth an economic theory that entirely replaced the classical theory and Say’s Law.

55
Q

Monetarism

A

emphasizes the role of money in the economy.

56
Q

New Classical Economics

A

emphasizes the importance of individuals’ rational expectations of inflation and government policy actions.

57
Q

Behavior Economics

A

A method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.

58
Q

Circular Economy

A

Goods should be produced in such a way that they can be repaired rather than thrown out

59
Q

19th Century

A

Classical Economics, Utility, Marginal, Marginal Utility, Say’s Law, Laissez-Faire

60
Q

what does the circular flow of income look like with injections and leakages?

A

through the financial market(saving-investing), government(taxes-gov spending), and other countries(spending on imports-spending on exports).

61
Q

21st Century

A

Behavioral economics, Circular Economy

62
Q

20th Century

A

John Maynard Keynes, monetarism, new classical economics, Macroeconomics policy

63
Q

18th Century

A

Adam Smith, Laissez-Faire

64
Q

1)actual growth vs. 2)growth in Production possibilities

A

1) Growth inside the PPC. caused by decrease in unemployment, and increase in efficiency. 2) new technologies, increased resource quality, increase in resource quantity.

65
Q

Circular Flow of income model in a closed economy with no government

A

https://i.gyazo.com/8afda797b6da2885a66c53fe51f9040e.png

66
Q

Circular Flow of income model with leakages and injections

A

https://i.gyazo.com/bcc1fdc7dfc40704970d088f854f96e6.png

IB Economics DP1 (5 decks)

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