Topic 2 - Understanding the economics

Question 1

Market Economy

Answer 1

Decisions made by individuals and businesses with no government regulations.
(Prioritizes freedom growth and efficiency).

Question 2

Mixed Economy

Answer 2

All economic decisions made by government and individuals.

Question 3

Traditional Economy

Answer 3

Run by individuals. What is produced, how its made, who consumes it.
(Prioritizes stability and security).

Question 4

Command/Planned Economy

Answer 4

All economic decisions made by the government, usually by a dictator.
(Prioritizes stability)

Question 5

Economic Stability (6 Major Economic Goals)

Answer 5

All necessities are consistently available for public without uncertainty.

Question 6

Economic Efficiency (6 Major Economic Goals)

Answer 6

Reducing waste while making sure consumers can get what they want.

Question 7

Economic Growth (6 Major Economic Goals)

Answer 7

Improving standard of living through innovation and economic growth.

Question 8

Economic Freedom (6 Major Economic Goals)

Answer 8

Individuals make their own economic decisions without government interference.

Question 9

Economic Security (6 Major Economic Goals)

Answer 9

Supports and provides necessities for the poor or disadvantaged. (the MARGINALIZED)

Question 10

Economic Equity (6 Major Economic Goals)

Answer 10

Evenly distributing wealth of a nation to make sure there is fairness in allocating resources.

Question 11

5 Sectors of (Australian) Mixed Market

Answer 11

Household, business, financial, government, overseas.

Question 12

Household Sector (5 Sectors)

Answer 12

Consumers determine what will be produced because they are the ones who buy it.
They provide their time/skill/labor in exchange for income/wages.
Pay taxes to the government.
May borrow, save money with financial sector.

Question 13

Government Sector (5 Sectors)

Answer 13

Receive taxation from households and firms.
Spend this money on public goods and services, such as roads, parks, schools and hospitals.

Question 14

Financial Sector (5 Sectors)

Answer 14

Bank and insurance companies that permits the exchange of funds. (Allows access from other sectors to borrow or save money)

Question 15

Overseas Sector (5 Sectors)

Answer 15

Transactions of foreign trade

Question 16

Business Sector (5 Sectors)

Answer 16

Produce output (goods and services) which they sell to consumers.
Pay taxes to government.
May borrow and/or save money with financial sector

Question 17

Why does trade make people better off?

Answer 17

Allows people to focus on what they do well then trade with others who do other things. It makes people better off because it is inefficient to make everything we need.
(This allows certain people or countries to specialize in something then trade for what they want/need).

Question 18

An economic system is how a society determines…

Answer 18

Economic production, economic distribution and economic consumption.

Question 19

What is the tragedy of the commons?

Answer 19

A situation where individuals with access to a public resource act in their own way, ultimately using up the resource.

Question 20

Free trade agreement

Answer 20

International policy that allows inexpensive imports and exports.

Question 21

Division of labour

Answer 21

When the production of a good is broken down into separate tasks.
(With different workers performing each task).

Question 22

Specialization

Answer 22

When an individual or country focuses on producing one thing.

Question 23

The production process

Answer 23

Economic resources, land, labor, and capital are combined by entrepreneurs to create goods and services that meet our wants and needs.

Question 24

Capital goods

Answer 24

goods that are used in producing other goods (buildings, machines,)

Question 25

Consumer goods

Answer 25

goods that are used by consumers