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[OBSELETE] S - Econ > saturday- second hour of AS revision > Flashcards

saturday- second hour of AS revision Flashcards

1
Q

what are the 4 functions of money

A

medium of exchange
unit of account
store of value
method of deferred payment

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2
Q

how can money act as a medium of exchange

A
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3
Q

how can money act as a unit of account

A
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4
Q

how can money act as a store of value

A
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5
Q

how can money act as a method of deferred payment

A
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6
Q

what are the 3 types of economies?

A

free market
command
mixed

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7
Q

what is a command economy?

A
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8
Q

what is a free market?

A
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9
Q

adv of command economy

A
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10
Q

disadv of command economy

A
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11
Q

what is a mixed economy

A
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12
Q

which type of economy does adam smith favour and why

A
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13
Q

which economy did Karl Marx favour and why

A
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14
Q

adv of free market economy

A
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15
Q

disadv of free market economy

A
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16
Q

what is the role for the state in a mixed economy

A
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17
Q

what is utility?

A

welfare or satisfaction gained from consumption of goods/ services

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18
Q

what is rational behaviour

A
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19
Q

what is total utility?

A

the total amount of wellbeing a person gains from one product

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20
Q

what is marginal utility

A

wellbeing gained from consuming another unit

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21
Q

what do firms and consumers seek?

A

firms seek to maximise profits
consumers seek to maximise their utility

22
Q

what is the law of diminishing marginal utility?

A

explanation for the inverse relationship between price and quantity demanded
which is why demand curve is downward sloping
as consumption increases, the utility derived from each additional unit declines

23
Q

what is demand

A

something youre willing and able to buy

24
Q

what is supply

A
25
Q

why is the supply curve upward sloping

A
26
Q

recall the factors affecting supply

A

productivity of labour
indirect tax
number of firms
technology
subsidy
weather

27
Q

how does indirect tax affect supply

A

is a tax on production
increase indirect tax, decrease supply

28
Q

what is the definition of AD

A

the total demand for goods and services produced in an economy at a given price level
measures how much is being spent by all economic agents in the economy

29
Q

formula for AD

A

C + I + G + (X-M)

30
Q

what is investment

A

covers investment spending on fixed capital by firms and also working capital (purchases required to produce goods)

31
Q

what are the characteristics of AD?

A

purchasing power
interest rates
exports/imports

32
Q

why is purchasing power of peoples incomes higher when price is low?

A
33
Q

why are interest rates lower when prices are low?

A
34
Q

why are UK prices more competitive when prices are low?

A
35
Q

what does ceteris paribus mean?

A

all other influencing factors are held constant

36
Q

what sorts of goods does consumption include?

A
37
Q

what is MPC

A

measure of how much an additional unit of income is spent
richer= lower MPC as they have lots of money
poorer= higher MPC

38
Q

how do you calculate MPC

A
39
Q

how can MPC be used as evaluation

A

if govt wants to increase consumption by e.g reducing taxes, depends on MPC

40
Q

what are the factors affecting consumption

A

changes in taxation
consumer confidence
interest rates
availability of credit
populations
wealth effect
inflation expectations
employment

41
Q

what is capital stock

A

the capacity of a firm to produce

42
Q

how are C + I linked

A
43
Q

how does animal spirits and the paradox of thrift affect investment

A
44
Q

how does economic growth affect investment

A
45
Q

how does business expectations and confidence affect investment

A
46
Q

how does demand for exports affect investment

A
47
Q

how does interest rates affect investment

A
48
Q

how does access to credit affect investment

A
49
Q

how does regulation affect investment

A
50
Q

what is the accelerator effect

A

The accelerator effect happens when an increase in national income (GDP) results in a proportionately larger rise in capital investment spending. In other words, we often see a surge in capital spending by businesses when an economy is growing quite strongly

[OBSELETE] S - Econ (42 decks)

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