U1 AOS 1 - Revision 2 Flashcards
In Australia resources are allocated by the market with some government intervention. (True/False)
True
What does the production possibility curve (PPC) illustrate?
The PPC illustrates the maximum efficient production levels of two goods or services that an economy can achieve given its resources and technology.
True or False: Points inside the production possibility curve indicate efficient use of resources.
False
Which of the following represents an unattainable point on the production possibility curve? a) A point on the curve b) A point inside the curve c) A point outside the curve
c) A point outside the curve
What happens to the production possibility curve when there is an increase in resources or technology?
The production possibility curve shifts outward, indicating an increase in the potential production capacity of the economy.
What is relative scarcity?
Relative scarcity refers to the limited availability of resources compared to the unlimited wants and needs of individuals or society.
Fill in the blank: When resources are scarce, individuals must make choices, leading to __________.
opportunity cost
What is the relationship between relative scarcity and opportunity cost?
Relative scarcity forces individuals to make choices, resulting in opportunity costs for the alternatives that are not chosen.
What is a trade-off in the context of economic growth?
A trade-off in economic growth refers to the sacrifices made in one area to achieve benefits in another, often involving resource allocation.
Fill in the blank: When a country invests more in capital goods to stimulate growth, it may have to _______ spending on consumer goods.
reduce
What are two common trade-offs faced by countries pursuing economic growth?
Increased environmental degradation and income inequality.
Multiple Choice: Which of the following is a potential negative consequence of prioritizing economic growth? A) Job creation B) Resource depletion C) Increased savings
B) Resource depletion
True or False: Cost benefit analysis only considers monetary costs and benefits.
False.
Which of the following is NOT a step in conducting a cost benefit analysis? A) Identify costs and benefits B) Calculate net present value C) Assess market competition D) Compare alternatives
C) Assess market competition
True or False: Normative economics involves value judgments and opinions about what the economy should be like.
True
Fill in the blank: Positive economics deals with __________ statements that can be tested against real-world data.
factual
Which of the following is an example of a normative economic statement? A) The unemployment rate is 5%. B) The government should increase the minimum wage.
B) The government should increase the minimum wage.
Short answer: How do positive and normative economics differ in their approach to economic analysis?
Positive economics analyzes what is, while normative economics prescribes what ought to be.
