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Economy > Economic Basics > Flashcards

Economic Basics Flashcards

1
Q

What is economics?

A

The study of human action and how they should make choices

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2
Q

What choices can economics help with? (4)

A
  • education
  • raising children
  • career path
  • investing in the stock market
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3
Q

What is scarcity?

A

The tension between infinite wants and finite resources

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4
Q

When does scarcity exist?

A

When there is not enough of something to satisfy everyone’s wants at a zero price

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5
Q

What is a free good?

A

A good that is not scarce and can satisfy everyone’s wants (e.g air)

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6
Q

How does money affect scarcity?

A

Charging money decides who gets the limited products on offer

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7
Q

What is relative scarcity?

A

The way that choices must be made so that scarce resources are allocated

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8
Q

What is an opportunity cost?

A

The idea that you always have to give up something to do another thing

(Cost and benefit)

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9
Q

What are economic resources?

A

Things used to produce goods and services

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10
Q

What are the four economic resources?

A
  • land
  • labour
  • capital
  • entrepreneurial ability
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11
Q

What is included in the ‘land’ resource, and what are examples? (2)

A
  • any natural resources
  • trees/plants
  • livestock
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12
Q

What is in the ‘labour’ resource and what are examples? (1)

A
  • any human service (physical or intellectual)

- jobs

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13
Q

What is in the ‘capital’ resource and what are examples? (2)

A
  • machinery and equipment
  • factory machinery
  • factory itself
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14
Q

What is an example of the ‘entrepreneurial ability’ resource?

A

Small businesses

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15
Q

What is consumer sovereignty?

A

The idea that consumers hold the power to influence production decisions, based on what goods and services they purchase

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16
Q

What are the limitations to consumer sovereignty? (2)

A
  • deceitful marketing practices

- lack of information

17
Q

What is a producer?

A

Someone who creates and supplies goods and services

18
Q

What two economic resources do producers combine?

A

Labour and capital

19
Q

What work sectors are producers part of? (3)

A
  • primary (natural)
  • secondary (manufacturing)
  • tertiary (services)
20
Q

What are the six basic roles of the government in an economy?

A
  • maintaining legal and social framework
  • maintaining competition
  • providing public goods and services
  • redistributing income
  • correcting for externalities
  • stabilising the economy
21
Q

What type of government does Australia have?

A

Constitutional democracy

22
Q

What is an employee?

A

A person employed for wages or salary, especially at a non executive level

23
Q

What is an employer?

A

A person or organisation that employs people

24
Q

What are the two aspects of trade?

A

Imports and exports

25
Q

What is trade between countries based on? (4)

A
  • demand
  • political stability
  • interest rates
  • exchange rates
26
Q

What is a net export?

A

The annual difference between a country’s exports and imports

27
Q

What is a trade surplus?

A

When exports are greater than imports

28
Q

What is a trade deficit?

A

When imports are greater than exports

  • not necessarily bad
29
Q

What is protectionism?

A

Placing high tariffs on imports and limiting the number of foreign goods to protect local businesses

30
Q

What does the World Trade Organisation do?

A

Deals with global rules of trade between nations

31
Q

What is a Balance of Payments and what are the two aspects?

A
  • records by a country
  1. Current account
  2. Financial aid
32
Q

What is a Current Account (balance of payments)?

A

Records the sale and purchase of goods and services, investment income abroad, and other transfers like donations and foreign aid

33
Q

What is Financial Aid? (Balance of payments)

A

Records the purchase and sale of financial assets like stocks and bonds

34
Q

What is macroeconomics?

A

The study of production, employment, price and policies on a nationwide scale

35
Q

In macroeconomics, what are the three economic goals?

A
  • keep the economy growing over time
  • limit unemployment
  • keep prices stable
36
Q

What are the three measures of macroeconomic goals?

A
  • GDP
  • unemployment rate
  • inflation rate
37
Q

What is microeconomics?

A

The study of how consumers, workers and firms interact to generate outcomes in specific markets

Economy (8 decks)

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