economics

Question 1

Describe why supply curves usually slope upwards from left to right.

Answer 1

there will be a higher profit per unit so existing firms are willing to supply more at the higher price.
new firms will enter the market after switching resources from less profitable alternatives

Question 2

Describe 2 reasons for possible shifts in the demand for Stanley Cups as an increase

Answer 2

population increases. Price of subsititue products increase. Complementry product prices decrease.

Question 3

Describe the Basic Economic Problem.

Answer 3

Basic economic problem is one of scarcity. our wants for goods and services are unlimited. However resources are limited. The economic problem will always occur. this is true in all countries – rich and poor. It will always occur due to changing trends and fashion.

Question 4

Define “economic growth”.

Answer 4

An increase of GDP and output value of goods and servives over a peroid of time. This relates to an increase in the productive capacity of an economy, and can be caused due to new resources.

Question 5

Explain 2 ways in which a government may attempt to create economic growth.

Answer 5

Improve quality and quantity of resources
Invest in technology
Improve education

Question 6

Outline 2 reasons why consumers may decide to save rather than
spend their income.

Answer 6

Attractive interest rate on savings.
For expensive purchases they save for longer.

Question 7

What are 4 reasons of unemployment.

Answer 7

frictional, structual, cyclical, seasonal, technological

Question 8

frictional

Answer 8

someone inbetween jobs or starting to look out for a job

Question 9

structural

Answer 9

happens when an industry is in decline or changes the way it produces goods and services. eg moving away or Ai takeover.

Question 10

cyclical

Answer 10

occurs when the economy slows down from low customer spending or during a recession

Question 11

technoloical

Answer 11

human labour is replaced by Ai

Question 12

Describe benefits to a government of a decrease in the level of unemployment.

Answer 12

Increase Vat, income tax, and increase in GDP as more output.

Question 13

Explain the effects of an increase in the rate of income tax on an
individual.

Answer 13

as fewer people are spending businesses may close due to a fall in demand, therefore people will dip into savings to fund regular spending

Question 14

Distinguish, using examples, the difference between a direct tax and and indirect tax.

Answer 14

indirect tax is usually through 3rd party sources such as VAT.
direct tax is usally first party sources such as income tax.

Question 15

current expenditure

Answer 15

money spent on day to day running of bodies like the NHS. Eg wages and maitenence

Question 16

capital expenditure

Answer 16

money spent on long term projetcs that have future benefits. eg schools, roads

Question 17

transfer payments

Answer 17

this is money the government gives to another without anything in return. eg pensions