Economics

Question 1

Needs

Answer 1

Something essential that a person needs in order to survive

Basic food, clothes and water, shelter

Question 2

Want

Answer 2

Items a person doesn’t need to have in order to survive

Question 3

The Factors of Production

Answer 3

The resources that are needed to produce a product or provide a service
Land, labour, capital, enterprise

Question 4

Land

Answer 4

Anything provided by nature that helps to produce goods and services
Reward is rent

Question 5

Labour

Answer 5

Any human effort that helps produce goods and services

Reward is wages

Question 6

Capital

Answer 6

Anything made by humans that helps to produce other goods and services
Reward is interest

Question 7

Enterprise

Answer 7

The special form of human activity that organises the other factors of production and bears the risk involved in production
Reward is profit

Question 8

Economics

Answer 8

The study of how we make the best possible use of scarce resources in order to satisfy the requirements of as many people as possible

Question 10

Mixed economic system

Answer 10

Most of the economic decisions to be made by the private sector, but the government intervenes to ensure the supply of essential goods to everybody
E.g. Ireland

Question 11

Financial cost

Answer 11

The amount of money paid for something

Question 12

Opportunity cost

Answer 12

The item that is not chosen when deciding between two or more actions

Question 13

Inflation

Answer 13

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

Increase in prices
———————— X 100
Prices in Year 1

Question 14

Official measure of Inflation

Answer 14

Consumer Price Index

CPI

Question 16

Effects of inflation

Answer 16

• The cost of living increases
• There is more demand for an increase in wages
• It discourages saving
• The price of exporting increases
• Irish people buy cheaper imports

Question 17

Economic growth

Answer 17

When more goods are produced in a country one year that were produced the previous year

Question 18

Official measure of economic growth in Ireland

Answer 18

GNP (Gross National Product)

GDP (Gross Domestic Product)

Question 19

Negative Economic Growth

Answer 19

When less goods are produced in a country than were produced the previous year

Question 20

Benefits of economic growth

Answer 20

• Unemployment rate decreases
• Tax revenue increases
• Social benefit decreases
• Increase in the standard of living

Question 21

Department that prepares the national budget

Answer 21

Department of Finance

Question 22

Economic Recession

Answer 22

When less goods and services are produced in an economy two consecutive quarters

Question 23

Current expenditure

Answer 23

Spending on day-to-day items

Social welfare payments, debt servicing, wages for government employees

Question 24

Capital expenditure

Answer 24

Spending on items that last long (durable items)

Building new schools/hospitals/roads

Question 25

Capital income examples

Answer 25

Sale of semi-state bodies. e.g. Aer Lingus
EU grants
Borrowings

Question 26

Causes of inflation

Answer 26

• The cost of indirect tax goes up e.g. VAT
• The demand for goods is greater than the supply of goods
• The cost of importing goods increases
• An increase in the cost of producing goods

Question 27

Excise duties

Answer 27

Tax on certain items that discourages the consumption

Alcoholic drinks

Question 28

Corporation tax

Answer 28

Tax on the profits made by companies

Question 29

Customs duties

Answer 29

Tax placed on goods imported from non-EU countries

Question 30

Debt servicing

Answer 30

Paying interest on the national debt

Question 32

Free-enterprise system

Answer 32

The factors of production are owned by private individuals or by companies and used for their benefit only
Eg. The USA

Question 33

Limited resources

Answer 33

A certain amount of goods and services that cannot be exceeded

Question 34

National Budget

Answer 34

A money plan of the government’s estimate of its income and expenditure for the coming year

Question 35

Centrally planned system

Answer 35

All factors of production are publicly on behalf of the state and the government controls all economic activity
Eg. China