Unit 1-Area of Study 2-Economic Issues

Question 0

In what way can material and non-material wellbeing be conflicting?

Answer 0

Higher production results in more pollution

Question 1

In what way can material and non-material wellbeing be compatible?

Answer 1

Higher income can raise access to health

Question 2

How can economic growth occur?

Answer 2

Expanding PPF; producing more G+S

Question 3

What is the problem with analysing the market based purely on GDP?

Answer 3

GDP by itself does not take into consideration the number of people, therefore it must be valued by GDP per capita

Question 4

What is the problem with analysing the market based purely on GDP per capita?

Answer 4

• assumes G+S are spread evenly

- fails to account for negative externalities

Question 5

What are:

5 influences in material living standards?

Answer 5

• amount of G+S produced
• economic growth
• equitable distribution of G+S and income
• inflation
• employment

Question 6

What are:

8 influences on non-material wellbeing?

Answer 6

• happiness
• environment
• working hours
• job satisfaction
• crime
• family relationships
• freedom
• overcrowding

Question 7

What are 2 benefits and 1 costs of economic growth on:

Employment?

Answer 7

• benefits:
  
  • creates jobs which keeps unemployment low
  • results in structural unemployment which leads to greater efficiency of resources
• cost:
  
  • increases structural unemployment; machinery replacing jobs

Question 8

What are 2 benefits and 1 costs of economic growth on:

Personal income?

Answer 8

• benefits:
  
  • raises personal income
  • lifts government tax collection
• cost:
  
  • leads to inequitable distribution of income

Question 9

What are 3 benefits and 3 costs of economic growth on:

International trade?

Answer 9

• benefits:
  
  • strengthen trading position
  • cheaper G+S
  • attracts foreign investment
• costs:
  
  • leads to trade deficit
  • leads to inflation
  • raises competition too high for local suppliers to compete

Question 10

What is 1 benefit and 2 costs of economic growth on:

Inflation?

Answer 10

• benefit:
  
  • cost inflation can fall if growth results from better efficiency
• costs:
  
  • demand inflation can increase if production capacity is stretched
  • cost inflation can increase if inflated cost of resources causes suppliers to raise prices

Question 11

In what 2 ways can PPF grow?

Answer 11

• more resources

- greater efficiency