Economics 3

Question 1

Human capital

Answer 1

The skills abilities, motivation and knowledge of labour. Improvements in human capital productivity and can shift the PPBto the right

Question 2

Importing

Answer 2

The purchase of goods and services from abroad leads to expenditure for the home country

Question 3

Imports

Answer 3

Goods or services purchased from abroad

Question 4

Incidence of tax

Answer 4

The proportion of attacks that is passed on to the consumer. If most of the tax rise is added to the consumer and the incidence of tax is said to be high. When demand is price inelastic than the incidence of tax tends to be high.

Question 5

Income

Answer 5

I flow of earnings to a factor of production over a period of time e.g. wages or salaries

Question 6

Income elasticity of demand

Answer 6

The proportion to which demand changes when there is a change in income

Question 7

Income induced

Answer 7

Will increase as income increases and decreases as income decreases

Question 8

Index numbers

Answer 8

I waited average of a group of items compare to a given base value of 100

Question 9

Indirect tax

Answer 9

A tax on spending

Question 10

Inferior goods

Answer 10

Goods or services that will see demand fall when income rises

Question 11

Inflation

Answer 11

A persistent increase in the level of prices

Question 12

Inflationary pressure

Answer 12

Occurrences that are likely to lead to increased prices

Question 13

Injections

Answer 13

Money that originates outside the circular flow and so will increase national income output expenditure

Question 14

Interest rate

Answer 14

The cost of borrowing all the reward for saving

Question 15

Investment

Answer 15

Spending by firms on buildings, machinery and improving the skills of the labour force

Question 16

Investment good

Answer 16

A product that will increase in value over time

Question 17

Invisibles

Answer 17

Intangibles such as the provision of insurance or banking services

Question 18

Joint supply

Answer 18

When the production of one good also results in the production of another

Question 19

Keynesian

Answer 19

The view of John Maynard Keynes and very influential UK Economist 1883 to 1946 who suggested how governments could cure mass unemployment

Question 20

Labour market

Answer 20

And example of a factor markets in this case where labour is bought and sold

Question 21

Law of unintended consequences

Answer 21

When the actions of consumers, producers and governments have effects that are on unanticipated

Question 22

Long run aggregate supply

Answer 22

The economy’s productive capacity

Question 23

Marginal external benefit

Answer 23

The spillover benefit to 3rd parties of an economic transaction

Question 24

Marginal external cost

Answer 24

Spillover cost to 3rd parties of an economic transaction

Question 25

Marginal private benefit

Answer 25

The benefit to an individual firm of an economic transaction

Question 26

Marginal private cost

Answer 26

The cost to an individual or firm of an economic transaction

Question 27

Marginal social benefit

Answer 27

The full benefit to society of economic transaction including private and external benefits

Question 28

Marginal social cost

Answer 28

The full cost to society of an economic transaction including private and external costs

Question 29

Market clearing price

Answer 29

The price at which all goods that are supplied will be demanded

Question 30

Hot money

Answer 30

Money that is liable to rapid transfer from one country to another

Question 31

What is the interest rate?

Answer 31

The right the bank charges