Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics Unit 1 > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

What is a positive statement?

A

Objective and can be backed up with evidence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a normative statement?

A

A value judgement based on a persons opinion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the wealth effect?

A

People have more money so spend more money on better quality goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

4 factors of production?

A

Land, labour, capital, enterprise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Name an example of land

A

Natural gas, oil, wheat etc

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Example of labour

A

Engineers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Example of capital

A

Tractor, design software

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Example of enterprise

A

Universities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the primary and secondary employment involve?

A 
Primary= collection of natural resources
Secondary= production of goods from these resources
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does the PPF show?

A

The point when an economy is most efficient and produces the most it can with the resources available. Opportunity cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Why would the PPF curve shift?

A

Outwards if new factors of production found

Inwards if factors of production lost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Why are workers specialised in a job?

A

Give efficiency, better quality goods, greater output, higher prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is an absolute advantage?

A

Producing more with the same resources as another country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a comparative advantage?

A

Producing at a lower opportunity cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a free market?

A

The market can do what it likes and fixes itself without any government intervention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Mixed economy

A

Combination of free market and government intervention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Command economy

A

All resources distributed by the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Advantages of free market

A

Competition between firms- resources not wasted,more choice for consumers, consumers determine what goods are produced, clears excess supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Disadvantages of free market

A

Services that are not profitable will not be produced eg. Rural bus routes, large firms still dominate over small firms, profit is put before environment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is a public good?

A

Goods and services provided for everyone by the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Advantages of command economy

A

Reduced poverty, healthcare for everyone, higher literacy rate due to free education

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Problems with command economy

A

No reason to work hard as everyone can still get by, corrupt government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is consumer surplus?

A

Difference between price you have to pay and price you are willing to pay

24
Q

What is producer surplus?

A

Difference between what you are willing to sell a good at and what they were actually sold at

25
What is a subsidy?
Payment made to encourage more production
26
Why do the government subsidise us?
Need for more skilled workers, higher incomes for more tax
27
What is an indirect tax?
A tax passed on to another group eg. VAT from government to producer to consumer
28
What is a minimum price?
Guaranteed price that is set which cannot be dropped below
29
Benefits of minimum price
Tax revenue, reduce externalities, suppliers get a fair price
30
Problems of minimum pricing
Producers cannot make as much profit as before, businesses may lose customers, poor become poorer, consumers pay more
31
What is an external cost?
Cost to a third party outside the transaction
32
How do you measure unemployment?
Claimant count- unemployed but seeking a job and available for work International labour organisation- 16-70 out of work for 4 weeks
33
What is inflation?
A general price rise
34
Effects of high inflation
Fall in income, high interest rates, less competitive businesses, business uncertainty
35
Macroeconomic objectives
Reduce unemployment, inflation between 1%-2%, economic growth,improve BoP, environmental sustainability, reduce,equality gap, reduce debt
36
What is nominal GDP?
GDP without inflation
37
What is real GDP?
GDP with inflation
38
What is the multiplier effect?
Increase in final income arising from new injection of spending
39
What is supply side policies?
Government attempt to increase productivity (supply) by shifting aggregate supply to the right
40
Name some supply side policies
More schools and universities, cuts in social welfare, better infrastructure, invest in healthcare for workers,increase immigration, subsidy
41
Problems with supply side policies
Time lag- years for university degree, not useful if goods are non competitive and Monday wants them
42
What is quantitative easing?
Introducing new money to stimulate the economy
43
Problem with quantitative easing?
Inflation
44
What is asymmetrical info?
Principle agent has more information than the consumer
45
What is market failure?
When allocation of goods and services is not efficient
46
What can the government do to solve market failure eg. Tobacco
Raise tax to make it harder to sustain living on, advertisement, education in schools, regulations
47
Why do things to solve market failure in tobacco fail?
High tax leads to people turning to the black market for cheaper goods, people are stubborn and do not care, people do not abide by laws
48
Types of market failure
No public goods, demerit good- good that's is bad for you eg. Tobacco, poor wages, lack of information, externalities
49
What is a normal good?
Income increases so does demand
50
What is an inferior good?
Increase in income leads to fall in demand- more money means better quality goods so value range demand falls
51
What is the price mechanism?
Where demand and supply determine the prices of the goods
52
What is the free rider problem?
When someone uses a public good but allows others to pay for it
53
What is a merit good?
One that is under provided by the market eg. Education | Produces positive externalities
54
What is a demerit good?
Over provided by mechanism like tobacco or alcohol. Gives off negative externalities
55
What is government failure?
When the government intervenes in the market but makes it worse
56
Types of government failure?
Inadequate information, conflicting objectives,market distortion- subsidy to increase production but demand does not increase so you have excess supply
57
What is direct tax?
A tax paid directly to the government eg income tax

Economics Unit 1 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions