Economics 1

Question 1

Explain needs

Answer 1

The essential items required for survival ex. Basic clothing, shelter, food, water

Question 2

Explain wants

Answer 2

Any items we would like to have in addition to our needs

Question 3

Explain factors of production

Answer 3

The factors of production are the resources that help to produce a product or provide a service

Question 4

Give the four factors of production

Answer 4

Land
Labour
Capital
Enterprise

Question 5

Explain land in relation to the factors of production

Answer 5

Anything provided by nature that helps produce a product. Payment: rent

Question 6

Explain labour in relation to the factors of production

Answer 6

Human effort required to help produce a product or service.

Payment: wages

Question 7

Explain capital in relation to the factors of production

Answer 7

Anything made by humans that helps the production of a good ex. (Machinery, money, roads, trucks)
Payment: interest

Question 8

Explain enterprise in relation to the factors of production

Answer 8

The entrepreneur that organises the other factors of production and takes the risk the produce and product /service
Payment: profit

Question 9

Explain economics

Answer 9

This is the study of how we use the worlds scarce resources in order to satisfy the requirements of people, this includes needs and wants.

Question 10

Explain a free enterprise system

Answer 10

All resources are owned by private individuals or by companies and used for their benefit only. Ex. America

Question 11

Explain centrally planned system

Answer 11

All resources are public ally owned by the government and they control all economic activity. Ex. North Korea

Question 12

Explain mixed economy

Answer 12

Most of the major economic decisions to be made by the private sector but the government intervenes to ensure the supply of essential goods to the public. Ex. Ireland

Question 13

Explain financial cost

Answer 13

The amount of money paid for something

Question 14

Explain opportunity cost

Answer 14

The opportunity cost is the item we must do without when forced to make a decision between two or more actions/products

Question 15

Explain inflation

Answer 15

The increase in the general level of the price of goods and services over a period of time

Question 16

What is the formula for inflation

Answer 16

The increase in price in year 2
————————————— X 100
The level of prices in year 1.

Question 17

Give three causes of inflation

Answer 17

Increases in cost of production
The demand for goods is greater than the supply
Increase in indirect taxes (VAT)

Question 18

Give four effects of inflation

Answer 18

Increases the cost of living
It causes demand for wage increases
It discourages saving
It may cause Irish people to buy cheaper imports

Question 19

What does GDP stand for

Answer 19

Gross domestic product

Question 20

What does GNP stand for

Answer 20

Gross national product

Question 21

Explain GDP

Answer 21

The total amount of goods and services produced in an economy in one period

Question 22

Explain GNP

Answer 22

This is the GDP less the profits sent out of the country from foreign companies set up in Ireland and plus the profit of Irish companies which have set up abroad

Question 23

Explain economic growth

Answer 23

This occurs when more goods are produced in a country in one year then were the previous year

Question 24

Give four benefits of economic growth

Answer 24

Improves standard of living
It creates employment
It improves the government finances
It alleviates poverty

Question 25

Explain Negetive economic growth

Answer 25

This occurs when the amount of goods and services produced in one year is less than the amount produced in the previous year

Question 26

Explain economic recession

Answer 26

This happens when less goods and services are produced in an economy in two consecutive quarters

Question 27

What is the measure of inflation in ireland

Answer 27

Consumer price index