U1 AOS1 - Lesson 1 - Intro to Economics

Question 1

What is economics?

Answer 1

Economics is the study of how our scarce resources are allocated to maximise societies living standards

Question 2

Microeconomics

Answer 2

Are the smaller parts which make up the whole economy.

Eg. The price of a particular good or service, the profitability of an individual business.

Question 3

Macroeconomics

Answer 3

Is the study of factors which impact the whole economy.

Eg. The inflation rate, unemployment rate, economic growth rate etc.

Question 4

Positive Economics

Answer 4

When economic decisions are based on evidence. For example A leads to B occurring. If the price of apples increased to $10 per kilo, demand would decrease.

Question 5

Normative economics

Answer 5

When internal factors impact economic decision making.

E.g., if someone was to buy a red car because they thought it would drive faster.

Question 6

Production

Answer 6

The creation of goods and services

Question 7

Income

Answer 7

What is earned by selling resources to the business sector

Question 8

Expenditure

Answer 8

The total spending on goods and services