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

Question 9

Economic Activity

Answer 9

All the transactions that take place in the economy, in terms of volume of production, income and expenditure in an economy

Question 10

Point of Difference Between Positive and Normative Economics

Answer 10

Whether it is based on fact or opinion.

Question 11

Macroeconomics focuses on factors that…

A. Relate to the domestic economy
B. Relate to the global economy
C. Influence the smaller bits making up the Australian economy
D. Relate to the whole economy

Answer 11

D

Also considers factors such as imports and exports, so is not limited to the domestic economy

Question 12

Normative economics can…

A. be proven beyond doubt
B. be based on personal opinions
C. only involve facts
D. not be based on personal opinions

Answer 12

B