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EBS 2018 > Term 1 > Flashcards

Term 1 Flashcards

Leaen stuff

1
Q

What is the basic economic problem?

A

Not enough resources to fufill everyone’s wants.

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2
Q

Define opportunity cost

A

The next best altrrnative after making a choice.

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3
Q

What is the rule of 72?

A

72/i=time to double assuming interest is all reinvested.

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4
Q

Is opportunity cost always expressed in monetary terms?

A

Usually it isn’t but it can be.

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5
Q

What is a consumer good?

A

A good that is used to satisfy a consumer’s wants and needs.

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6
Q

What is an economic goods?

A

A good that has a degree of scarcity and therefore an opportunity cost.

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7
Q

What is a free/abundant good?

A

A plentigul good that can be reproduced at no cost.

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8
Q

When a choice is made there will always be an…

A

opportunity cost.

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9
Q

Choiced are made based on…

A

Limited means

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10
Q

If scarcity was eliminated there would be no…

A

Economic problem

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11
Q

Give examples of free goods…

A

Rain
Sunshine
Stars
etc..

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12
Q

What is an alternative name for opportuniry cost?

A

Real cost

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13
Q

What is a tangible good?

A

An object with a physical presence.

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14
Q

What is the Law Of Demand

A

Price up = QD down
Price down = QD up
Assuming CP

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15
Q

What does a shift in the demand curve mean?

A

Change in demand (Ceteris Parabus factors affected)

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16
Q

What are limited means?

A

Income, Time, Skill

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17
Q

What is a command econonmy?

‘Planned’ economy

A
  • Controlled by government
  • Less private sector

eg. North Korea

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18
Q

What is a Market economy?

‘Freedom’ ‘ liberal society’

A
  • Limited role for government
  • Many private property rights
  • Not many over 100 people as government always involved.
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19
Q

What is a Mixed economy?

‘Freedom’ ‘ liberal society’

A

-A mix of Command and market based allocation
-A mix of private and state with varying degrees
contributing to GDP
-Some state welfare, planning, education, health
-Role for market enterprises

eg. New Zealand 70% Private, 30% State

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20
Q

How can values and character affect decision making?

A

People base decisions on their values and can therefore determine consumer demand for goods and services.

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21
Q

Define Demand

A

Being willing and able to pay for a good or service.

NB: Demand ISNT Wants

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22
Q

What is a demand schedule?

A

A table linking P and QD for a particular product.

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23
Q

What is market demand?

How is it calculated?

A

A summation of all individual demand.

Add up QD from each consumer at each price

24
Q

Change in price causes a change in…

A

Quantity demanded

25
What are the Ceteris Parabus factors?
Tastes, Income, P of substitutes, P of complements.
26
What is an inferior good?
A good that decreases in demand as income rises. Vice Versa
27
What is saving?
All money not spent on current consumption.
28
In economic terms, is buying property and shares an investment?
No, Investment is purcase of capital.
29
Name the types of earned income...
1. Salary - Calculated anually, Paid fortnightly 2. Wages - Calculated hourly, Paid Weekly 3. Commision - Usually Percentage value 4. Fees - Set amount charged for a service 5. Bonuses - Not guaranteed
30
Name types of unearned income (Y from ownership)
1. Ownership of property 2. Capital (Money)-lent out for interest 3. Royalties 4. Shares/Financial assets.
31
How do you earn money from shares?
- Dividends paid out by company in cents per share (Not guaranteed) - Capital Gain when shares is sold at a higher price than which it was bought for.
32
What is gross income and net income?
- Gross income is income earned before tax | - Net income is income earned after tax
33
What are the main factors that affect income?
- Age - Educatiom - Performance
34
What is credit?
A form of deterred payment | ie take possesion of product immediately and pay off overtime.
35
What are some sources of credit?
- Banks - Finance companies - Sotres - Credit card companies - Loan sharks
36
What is a mortgage?
- Long term loan | - To purchase house
37
What is interest?
The cost of borrowing.
38
What is the difference between Finance Rate and Interest Rate?
Finance rate includes interest and other fees and costs.
39
What interest free loans are there?
Student loans, credit cards within time limit etc.
40
If not stated otherwise, what is interest rate in?
% per year
41
What is the principal in a loan?
The original amount borrowed
42
What is a person who has insuffiicient funds to pay back debts?
Bankrupt
43
Is layby a form of credit?
Nooo
44
What is a service?
When activities are done for someone else.
45
What makes you bankrupt in NZ?
A person whi has a combined debt of $1000+ and cannot pay it off can be made bankrupt.
46
What can faliure to control credit lead to?
- Repossession of assets - Personal bankruptcy - Mortgage sale of home
47
What are 2 subcategories of expenditure in a budget?
Necessary Spending and Discretionary Spnding.
48
What is another name for necessary spending?
Fixed spending
49
What is surplus?
When income is greater than expenditure.
50
Does expenditure include savings?
No
51
What is another name for discretionary spending?
Variable spending.
52
What is defecit?
When expenditure is greater than income.
53
What can a budget do?
- Help people allocate their income - Help people save and plan for the future - Identifies areas of spending that may be able to be reduced. - Provides guidance on how much to spend.
54
Whate is aggregate household spendkng?
Combine all money that households use to buy goods and services.
55
Are capital gains a form of income?
YES
56
What is income earned by the hour?
Wages
57
Did You Learn A Very Much?
Nyes

EBS 2018 (3 decks)

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