Unit 1

Question 1

economics?

Answer 1

study about how people interact with another in various ways, and with the environment

Question 2

capitalism?

Answer 2

• existence of private property, rights, markets and firms
• not democracy, can co-exist with different political governments
• leas to growth through specialisation and technology

Question 3

communism?

Answer 3

common ownership of means of production and the absence of classes

Question 4

socialism?

Answer 4

focus on socializing production

Question 5

GDP?

Answer 5

gross domestic product
measure of total good and services produced in a country

Question 6

GDP per capita?

Answer 6

income per person
used to determine living standards (does not measure wellbeing)

Question 7

hockey stick?

Answer 7

1700s (industrial revolution) = growing in living standards, technological advancement -> made many productions more productive

Question 8

african hockey stick?

Answer 8

does exist
delayed take-off due to colonialism, primary sectors, segregation, civil strife and flawed economic mpolicies (all of the above caused under-industrialisation)

Question 9

income inequality?

Answer 9

inequality between countries and within countries

Question 10

GDP per capita calc?

Answer 10

GDP / population
intermediate goods are not counted

Question 11

disposable income?

Answer 11

income after paying taxes and receiving transfers from goverment

not GDP per capita

good measure of living standards but still leaves out quality of social/ physical environment, amount of freetime, education, healthcare and goods produced within a household

Question 12

GDP better than disposable income?

Answer 12

GDP is better in respect of education, national defence and law enforcement because it is included

Question 13

growth rate calc?

Answer 13

change in income / original level of income

Question 14

no growths?

Answer 14

flatlands

Question 15

some countries experience sustained growth?

Answer 15

leads to difference in living standards around the world

Question 16

capitalism (1.6)?

Answer 16

economic system (way of organising production and distributions of goods) where the main economic institutions are private property, markets and firms

Question 17

capital goods?

Answer 17

non-labour inputs that is used in production

Question 18

different types of institutions?

Answer 18

1. private property (other than government -> air, knowledge, skills)
2. markets: reciprocated, voluntary, there is competition
3. firms: labour market (employers/ demand side offer wages to employeees/ supply side)

Question 19

technology?

Answer 19

we see a permanent technological revolution

firms compete, leads to improvement of technology

Question 20

specialisation?

Answer 20

specialising in procuding a specific output

will only specialise if other goods can be aquired somewhere else

Question 21

absolute advantage?

Answer 21

better at something if 100% time was spent on it

Question 22

comparative advantage?

Answer 22

relative cost of producing (who can produce it cheaper)

Question 23

capitalism fails when?

Answer 23

1. provate property is not secure
2. markets are not competitive
3. firms are owned by people with connections with government/ privileged birth

Question 24

monopolies?

Answer 24

reduces competition

Question 25

dynamic economic system?

Answer 25

- firms led by people proven to have the ability to produce goods at a low cost - public policies - stable society - private incentives for cost-reducing innovation (want to create cheaper) all this can lead to technological revolution