Economics Test

Question 1

Define income

Answer 1

Money received, especially on a regular basis for work or through investment

Question 2

What are the functions of money

Answer 2

Medium of exchange
Measure of value
standard of deferred payment
store of value

Question 3

What is an economy

Answer 3

The organization of a society where goods and services are produced and consumed.

Question 4

Income tax

Answer 4

An amount of money payed to the government by an individual depending on the amount of income they receive in the financial year.

Question 5

Define currency

Answer 5

A system of money in general use of a particular country.

Question 6

What is Economics

Answer 6

Economics is the social science that describes the factors that determine the production, distribution and consumption of goods and services.

Question 7

What is a Need

Answer 7

Needs refer to those things that a necessary for survival.

Food\water\clothing\shelter

Question 8

What is a Want

Answer 8

Wants refer to all the material things we wish to have to make our lives more enjoyable or comfortable.

Question 9

What is a Recurrent want

Answer 9

wants that occur repeatedly

Question 10

What is a Complementary want

Answer 10

Two wants that pair together, like a car and petrol

Question 11

What is a Unlimited Want

Answer 11

Wants that we keep on desiring, like a phone or laptop

Question 12

What is a changeable want

Answer 12

A want that changes over time, like the style of clothing we would want to wear.

Question 13

Things that influence our wants

Answer 13

• Age -Culture
• Income -Values and Attitudes
• Environment - Fashion and taste

Question 14

Define Resources

Answer 14

Resources are anything that can be used in the production process to create goods and services.

Question 15

What is a Collective want

Answer 15

Collective wants are wants that is desired by the whole community, These wants are known as public goods and services. the government provides for these wants by using the money gained from taxation.

Question 16

What does it mean when a resource is exhaustible

Answer 16

When a resource is exhaustible, it is limited in its supply and cannot be replaced; it will eventually run out.

Question 17

What does it mean when a resource is renewable

Answer 17

When a resource is renewable, it is available as long as they are not abused or overused.

Question 18

What is an Enterprise

Answer 18

An enterprise is a business or company

Question 19

what is an Entrepreneur

Answer 19

An Entrepreneur is a person with the skills to create economic opportunities, to produce a product that satisfy needs and wants.

Question 20

Define Capital

Answer 20

Capital refers to the other goods or products we use in assets to mass produce or help produce more goods and services that are purchased by consumers

Question 21

What is Economic scarcity

Answer 21

It is the fundamental problem of having unlimited wants, but a limited amount of resources to fulfill every want and need.

Question 22

What are the four Economic questions

Answer 22

1. What to produce
2. How to produce it
3. How much to produce
4. Who to produce it for

Question 23

What is a Durable good

Answer 23

Durable goods are goods that last a long time, such as television sets, cars or computers.

Question 24

What is a non-durable good

Answer 24

Non-durable goods do not last for a long time or are consumed quickly such as food, petrol, cosmetics and laundry products.

Question 25

What is a tradition economy

Answer 25

A economy based on allocation of resources through inheritance and rituals

Question 26

What is a Command economy

Answer 26

A economy where the government controls factors of production.

Question 27

What is a Market Economy

Answer 27

An Economy where decisions about production is driven by business and consumers or "the market"

Question 28

What is a Mixed economy

Answer 28

A Economy which contains both privately owned enterprises or combines elements of a market economy and command economy.

Question 29

What is Gross domestic product

Answer 29

GPD is the most common determinant of a nations economic performance and measures the total value of all goods and services produced in a year.

Question 30

What is the business cycle

Answer 30

a cycle or series of cycles of economic expansion and contraction.

Question 31

What is a Peak or Boom in the economic cycle.

Answer 31

A peak is when the economy is producing at its full capacity with high GDP and unemployment is at its lowest.

Question 32

What is contraction in the economic cycle

Answer 32

Contraction is when GDP declines as consumers reduce their spending due to their lack of confidence in the economy

Question 33

What is a Recession

Answer 33

Recession is the lowest point of the business cycle, production output is below capacity, causing prices to fall, and unemployment levels to rise.

Question 34

What is Expansion

Answer 34

Expansion is when consumers and business spending rises, causing GDP to increase and unemployment levels to decrease.

Question 35

Things that cause a shift in the supply curve

Answer 35

- a change in the cost of resources - technological changes - Natural disasters and other events - government actions - number of suppliers or markets - seasonal conditions

Question 36

What is market Equilibrium

Answer 36

the point of intersection of the demand and supply curves; at this point or price, the quantity demanded equals the quantity supplied and there is no shortage or excess of a product.

Question 37

What is the Law of supply

Answer 37

It states the higher the price of a product, the more suppliers will provide and vise versa.

Question 38

What is the Law of Demand

Answer 38

It states that as the price of a product rises, the quantity demanded will fall, and vise versa.

Question 39

What is Elasticity

Answer 39

The responsiveness of the quantity demanded or supplied to a change in price or, put simply, how much the quantity changes when the prices changes.

Question 40

What is a economic bubble

Answer 40

a market event in which the prices of an item is traded up an exceedingly high level which quickly collapses.

Question 41

What is unemployment

Answer 41

A situation that arises when those who are willing and able to work cannot secure a job.

Question 42

What are the different types of unemployment

Answer 42

- Structural unemployment - Cynical unemployment - Frictional unemployment - Seasonal unemployment - long term unemployment - Hardcore unemployment

Question 43

Define Globalization

Answer 43

The process of increasing economic interactions of economies around the world by removing trade restrictions and improving transportation and technology.

Question 44

What is Fair trade

Answer 44

Fair trade is the approach to trading which aims to ensure that manufacturers, farmers and workers in poor countries get a fair deal. This includes a fair price for good s and services, decent working conditions and a commitment from buyers so there is reasonable security for the producers.