Macroeconomics

Question 1

Scarcity

Answer 1

The condition in which available resources are limited; they are not enough to produce everything that human beings need and want.

Question 2

Choice

Answer 2

Econs is a study of choices, or selecting amongst alternatives, due to the scarcity of resources.

Question 3

Efficiency

Answer 3

Involves making the best possible use of scarce resources to avoid waste.

Question 4

Allocative Efficiency

Answer 4

An allocation of resources that results in producing the combination and quantity of goods and services mostly preferred by customers

Question 5

Productive Efficiency

Answer 5

A situation in which a good or service is produced at the lowest possible cost/ smallest input per output.

Question 6

Equity

Answer 6

The condition of being fair or just.

Question 7

Economic well-being

Answer 7

Refers to the levels of prosperity, economic satisfaction and standard of living among the members of society.

Question 8

Sustainability

Answer 8

Refers to maintaining the ability of the environment and the economy to continue to produce and satisfy needs and wants into the future for future generations.

Question 9

Interdependence

Answer 9

Refers to the idea that economic-decision makers interact with and depend on each other, arises from the fact that no one is self-sufficient.

Question 10

Intervention

Answer 10

Typically refers to government intervention, when the government becomes involved with the workings of the market.

Question 11

FOP/ Resources

Answer 11

All inputs used to produce goods and services (land, labour, capital and entrepreneurship)

Question 12

Human capital

Answer 12

The skills, abilities and knowledge acquired by people, as well as good levels of health, all which make them more productive.

Question 13

Opportunity cost

Answer 13

The value of the next best alternative forgone.

Question 14

Free good

Answer 14

Any good that is not scarce and therefore has 0 opportunity cost.

Question 15

Resource allocation

Answer 15

Assigning available resources, or factors of production, to specific uses chosen among many possible and competing alternatives. It involves answering “What to produce” and “How to produce”

Question 16

Distribution of income

Answer 16

Concerned with how much of an economy’s total income different individuals or different groups in the population receive, and involves answering the ‘for whom’ basic economic question.

Question 17

Redistribution of income

Answer 17

Refers to changing the distribution of income, giving rise to a new distribution.

Question 18

Free market economy

Answer 18

An ‘ideal type’ of economy based on the market approach to making economic decisions; involves private sector and ownership and decision-making, and price rationing.