How does the economy works?

Question 1

How else is the country generates income?

Answer 1

1) Imports
2) Tourism
3) Taxation

Question 2

Factors of Production

Answer 2

1) Capital
2) Enterprise
3) Land
4) Labour

Question 3

2 Problems with “land” that might stop you from improving everyone’s standard of living

Answer 3

1) Temperature
2) Quality of land - the resources you find on the land (food, animals) and underneath (oil, coal, gas)
3) Not every country have same amount of resources

Question 4

2 UK issues with “Labour” that stop them being as productive as they could be

Answer 4

1) Ageing population

2) Shortage of skills

Question 5

4 ways to make “labour” more productive and create economic growth

Answer 5

1) Education
2) Training
3) Health
4) Immigration

Question 6

What is “Capital”

Answer 6

Describe money that is used to set up a business and keep it going

Question 7

Capital can come from

Answer 7

1) Savings that are put into shares

2) Money that banks or very rich people lend to companies as loans

Question 8

Factors that effect how much capital is available in an economy

Answer 8

1) Interest rate - currently low to encourage economic activity
2) Exchange rate - (currency)

Question 9

What is “Enterprise”?

Answer 9

Person who takes risk, organises the land, labour and capiral

Question 10

Why do prices rise?

Answer 10

1) Inflation
2) Availability
3) Interest rate -eg Bread/ house price

Question 11

Define “inflation”

Answer 11

A sustained increase in the cost of living or the average/ general price level leading to a fail in the purchasing power of money