Economic 2

Question 1

Deregulation

Answer 1

The process of removing government controls from free markets

Question 2

Derived demand

Answer 2

When the demand for one good or service comes from the demand for another good or service. The demand for cars stimulates the demand for steel therefore the demand for steel is derived demand

Question 3

Discouraged workers

Answer 3

Workers who leave the labour market because despite numerous attempts they are unable to find a job

Question 4

Discretionary fiscal policy

Answer 4

The deliberate manipulation of government spending in taxation to influence the economy

Question 5

Diseconomies of scale

Answer 5

Where any increase in the scale of production leads to increase is an average total cost for firms

Question 6

Disequilibrium

Answer 6

The situation within the market where supply does not equal demand

Question 7

Disposable income

Answer 7

Income available to households after the payment of income tax and national insurance contribution

Question 8

Division of labour

Answer 8

Breaking the production process down into a sequence of tasks with workers assigned to particular tasks

Question 9

Economic goods

Answer 9

Goods that are scarce and therefore have an opportunity cost

Question 10

Economic growth

Answer 10

The capacity of the economy to produce more goods and services over time

Question 11

Economic indicators

Answer 11

Economic statistics that provide information about the expansions and contractions of business cycles

Question 12

Economic models

Answer 12

These are used to show the essential characteristics of complicated economic conditions in order to analyse them and predict the result of changes of variables

Question 13

Economic welfare

Answer 13

Refers to the benefit all satisfaction and individual or society gets from the allocation of resources. we can attempt to measure the welfare of individuals but we really want to understand the overall effects on society as a whole. this will include how well off people feel, how much they have but also might consider other factors such as their environment and standard of living their physical well-being although this is hard to define

Question 14

Economies of scale

Answer 14

Where an increase in the scale of production leads to reduction in average total cost for firms

Question 15

Effective demand

Answer 15

Demand supported by the ability to pay for a good or service

Question 16

Employment

Answer 16

Where labour is actively engaged in a productive activity usually in exchange for payments such as wages

Question 17

Equilibrium

Answer 17

The price at which demand is equal to supply and there is no tendency for change

Question 18

Ex ante

Answer 18

A term that refers to future events

Question 19

Ex post

Answer 19

A term that refers to after the event

Question 20

Excess demand

Answer 20

When demand is greater than supply at a given price

Question 21

Excess supply

Answer 21

When supply at a particular price is greater than demand this should signal to producers to lower prices

Question 22

Exchange rate

Answer 22

The price at which one currency e.g. the pound exchanges for another e.g. the US dollar

Question 23

Expansionary fiscal policy

Answer 23

Increasing levels of government spending relative to text revenue appropriate to stimulating I can get them on during a downturn in economic activity

Question 24

Exporting

Answer 24

The sale of goods or services to a foreign country generates income for the home country

Question 25

Exports

Answer 25

Goods or services sold abroad

Question 26

Extension in supply

Answer 26

When there is an increase in supply because the market price has risen

Question 27

Extensions in demand

Answer 27

Increases in demand caused by changes (falls)in price

Question 28

Externalities

Answer 28

Course open to fit set spill over to 3rd parties external to a market transaction

Question 29

Factor market

Answer 29

The market for the factors of production that make other goods and services such as labour or raw materials

Question 30

Failure of information

Answer 30

Or information failure where economic agents do not properly perceive the benefits or disadvantages of the transaction

Question 31

Fiscal policy

Answer 31

The policy of the government regarding taxation and government expenditure

Question 32

Fixed costs

Answer 32

Costs of production that do not vary as output changes

Question 33

Flow

Answer 33

Measured over a specified period of time

Question 34

Free goods

Answer 34

Goods that have no opportunity cost, for example air

Question 35

Free market economy

Answer 35

One in which there is very limited government involvement in providing goods and services. Its main role is to ensure that the rules of the market are fair so that for example, people cannot steal each other's property

Question 36

Free rider problem

Answer 36

Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods

Question 37

Fictional search unemployment

Answer 37

People between jobs

Question 38

Geographical immobility

Answer 38

Where workers find it difficult to move to wear employment opportunities may be due to family ties and differences in housing costs

Question 39

Globalisation

Answer 39

The ability to produce goods anywhere in the world and sell them in any country

Question 40

Goods and services

Answer 40

Goods are considered to be tangible products that we can touch such as CDs or a car. These are distinct from services which are not tangible such as a trip to the cinema or train journey. We do not buy the train or the cinema but do receive intangible benefits from watching the film or travelling

Question 41

Government failure

Answer 41

When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. The costs of government intervention may therefore exceed the benefits

Question 42

Gross domestic product

Answer 42

The total value of goods and services produced in the country

Question 43

Demerit good

Answer 43

A good that would be over consumed in a free market as it brings less overall benefit to consumers than they realise

Question 44

Market demand

Answer 44

Total demand in the market for a good sum of all individuals demand at each given price

Question 45

Market failure

Answer 45

Where the market fails to produce work of consumers require at the lowest possible cost

Question 46

Indices

Answer 46

Have no idea what they are