T1.1.5 - 1.1.6: Economies, DOL and Specialisation

Question 1

Adam Smith

Answer 1

• Founding father of modern econ
• created wealth of nations —> idea that people act on self-interest benefiting the public

Question 2

Alienation

Answer 2

Describes the enstrangement many workers feel in their work
- reduces motivation and productivity
- perhaps a result of divisions of labour —> workers not involved in entirety of product manufacturing

Question 3

Division of labour

Answer 3

Specialisation of labour in specific tasks, used to increase productivity

Question 4

Measure of value

Answer 4

A function of money where it can be used to judge the value of a good or service.

Question 5

Medium of exchange

Answer 5

Money is any asset that is widely acceptable as a medium of exchange when buying goods and services in markets. It facilitates transactions between buyer and seller.

Question 6

Method of deferred payment

Answer 6

A function of money that allows a system of making payments at a later date.

Question 7

Money

Answer 7

a medium of exchange, a unit of account, a store of value and a standard of deferred payment.

Question 8

Specialisation

Answer 8

A method of production where a business or area focuses on the production of a limited scope of products or services to gain greater productive efficiency.

Question 9

Standard of deferred payment

Answer 9

A function of money - the accepted way, in a given market, to settle a debt.

Question 10

Store of value

Answer 10

A function of money in that it can be used to save and be exchanged at a later time.

Question 11

Unit of account

Answer 11

A function of money, a nominal unit of measure or currency used to value/cost products, assets (e.g. houses), debts, incomes and spending.

Question 12

Adam smith

Answer 12

One of the founding fathers of modern economics. His most famous work was the Wealth of Nations (1776) - a study of the progress of nations where people act according to their own self-interest - which improves the public good.

Question 13

Capitalist economy

Answer 13

An economic system organised along capitalist lines uses market-determined prices to guide our choices about the production and distribution of goods. One key role for the state is to maintain the rule of law and protect private property.

Question 14

Command economy

Answer 14

An economic system where most factor resources are allocated by the government, with few officially sanctioned private markets

E.g. ex-Soviet bloc countries, Venezuela’s and North Korea

Question 15

Consumer sovereignty

Answer 15

Consumer sovereignty exists when an economic system allows scarce resources to be allocated to producing goods and services that reflect the wishes of consumers. Sovereignty can be distorted by the effects of persuasive or misleading advertising.

Question 16

Economic planning

Answer 16

Government policies aimed at influencing trends in the economy.

Question 17

Economic system

Answer 17

Government policies aimed at influencing trends in the economy.

Question 18

Free market

Answer 18

System of buying and selling that is not under the control of the government, and where people can buy and sell freely, or an economy where free markets exist, and most companies and property are not owned by the state.

Question 19

Friedrich Hayek

Answer 19

economist criticizing the Keynesian welfare state. From Austrian school of economics that emphasises the limited nature of knowledge.

Question 20

Karl Marx

Answer 20

A German philosopher, economist and political theorist. He was a hugely influential thinker and co-authored the pamphlet ‘The Communist Manifesto’ which was published in 1948 and asserted that all human history has been based on class struggles

Question 21

Mixed economy

Answer 21

Where resources are partly allocated by the market and partly by the government.

Question 22

Planned economy

Answer 22

In a planned economy, decisions about what to produce, how much to produce and for whom are decided by central planners working for the government rather than allocated using the price mechanism.

Question 23

Transition economies

Answer 23

Transition economies are involved in a process of moving from a centrally planned economy to a mixed or free market economy.