economy

Question 1

scarcity?

Answer 1

is a central problem which is faced by all individuals
the gap between limited resources and limitless wants

Question 1

how to tackle scarcity

Answer 1

consumption - how much the economy spends
production - how much the economy produces
increase supply - the more goods and services available to all less scarcity there will be

Question 2

three main categories of choice made in society

Answer 2

1. what goods and services are going to be produced
2. how they will be produced
3. who are we going to produce things for

Question 3

opportunity cost

Answer 3

what you have to give up to get something else

Question 4

rational choices

Answer 4

weighing out the benefits and negatives of an activity

Question 5

microeconomics

Answer 5

branch of economics that studies individual units e.g., households, firms

Question 6

macroeconomics

Answer 6

determines the of national output and its growth over time

Question 7

the circular flow of income

Answer 7

the movement of money between households and firms
1. households demand goods and services and firms demand these
2. firms demand the use of factors of production owned by householders e.g., labor and land
3. services such as labor go from households to firms and in exchange firms pay householders e.g., wages