Introduction to Economic Policy A Lecture 1 Flashcards

1
Q

where does the word ‘economy’ come from

A

the greek word meaning “the one who manages a household”

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2
Q

what is the definition of economics

A

the study of how society manages its scarce resources

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3
Q

examples of society’s scarce resources

A

time, capital, natural resources eg land, labour

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4
Q

what is capital

A

equipment and structures used to produce goods and services

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5
Q

what is labour

A

human effort both mental and physical

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6
Q

what is studied in economics (3 things)

A
  1. how people make decisions 2. how people interact with eachother 3. analyse trends that effect the economy as a whole
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7
Q

what is macro economics

A

forces and trends that affect the economy eg unemployment, inflation, economic growth

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8
Q

what is microeconomics

A

individuals and firms, households, how they make decisions and interact in markets

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9
Q

economic policy objectives

A

efficiency, equity, growth, stability

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10
Q

what is opportunity cost

A

what you had to give up in order to get the good. What else could we have done with the same time and money?

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11
Q

what are marginal changes

A

small adjustments to an existing plan of action eg. one more hour of study

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12
Q

why do we use margins

A

to make it easier to see the difference and make better decisions

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13
Q

what is economic activity

A

how much buying and selling goes on in the economy over a period of time

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14
Q

What is an economy

A

all the production and exchange activities that take place every day

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15
Q

What is capital

A

Man made things used to create wealth eg machinery, buildings

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16
Q

Define wealth

A

A stock of goods and services which have been accumulated

17
Q

What is a free good

A

Plentiful in supply eg air

18
Q

What is an economic good

A

A good that demands a price

19
Q

What is an economic model

A

A simplified representation of the real world

20
Q

What is a capital good

A

A good not wanted for itself but for the contribution it makes to produce goods and services