1.2

Question 1

who are the instigators of creative destruction?

Answer 1

consumers switching to new products and old products becoming obsolete

Question 2

what is creative destruction?

Answer 2

quality improving innovations ensuring a market is dynamic and leads to economic growth

Question 3

what is a disruptor?

Answer 3

a firm that initiates change across a market e.g. board games by online games

Question 4

what is added value?

Answer 4

selling the output for more than the cost of inputs e.g. paper by making a newspaper

Question 5

what is GDP?

Answer 5

the quarterly % figure to say how good the economy is doing

Question 6

how do you calculate GDP?

Answer 6

total expenditure (sales)
total income
total output

Question 7

what GDP accounts for rapid growth?

Answer 7

4% increase

Question 8

what is a recession?

Answer 8

2/4s in a row in negative GDP

Question 9

what are the 2 types of entrepreneurial motives?

Answer 9

financial or non-financial

Question 10

what is a financial entrepreneurial motive?

Answer 10

profit

Question 11

what is a non-financial entrepreneurial motive?

Answer 11

ethical stance
independence
home working
social entrepreneurship

Question 12

what is a social entrepreneur?

Answer 12

someone who comes up with innovative solutions to society’s most pressing social problems

Question 13

what is factors of production?

Answer 13

finite inputs that are used in the production of goods/services in the attempt to make an economic profit

Question 14

what are the 4 factors of production?

Answer 14

capital
enterprise
land
labour

Question 15

what is capital?

Answer 15

man-made tech used to produce goods
financial:when you buy a producer
physical:what you buy to produce

Question 16

what is enterprise?

Answer 16

the initiative used in organising the factors

Question 17

what is land?

Answer 17

natural resources/location

Question 18

what is labour?

Answer 18

human effort

Question 19

what is specialisation?

Answer 19

when individuals, firms and economies concentrate on producing goods/services in which they have an advantage

Question 20

what is the division of labour?

Answer 20

breaking the production process down into simpler more specialised tasks allowing more efficiency

Question 21

what are advantages of the division of labour?

Answer 21

quicker
cheaper
increased production
expertise
less training
being able to introduce technology

Question 22

what are the disadvantages of the division of labour?

Answer 22

repetitive and boring work
only gives employees one skill
workers have more power to disrupt production

Question 23

what are the 4 functions of money?

Answer 23

deferred payment
unit of account
medium of exchange
store of value

Question 24

what does deferred payment mean?

Answer 24

borrowing money to buy now and pay later

Question 25

what does unit of account mean?

Answer 25

a way to help compare prices of products

Question 26

what does medium of exchange mean?

Answer 26

using money as a way of trading goods

Question 27

what does store of value mean?

Answer 27

being able to store money and save for later

Question 28

what are interest rates?

Answer 28

the cost of borrowing and reward for saving decided by the Bank of England

Question 29

what are exchange rates?

Answer 29

the value of one currency in terms of another

Question 30

what is the floating exchange rate system?

Answer 30

when the central bank allows currency to find its own level

Question 31

what is government taxation (the fiscal policy)?

Answer 31

when government finance their expenditure by imposing charges

Question 32

what is direct taxation?

Answer 32

tax levied on income and profit

Question 33

what is indirect taxation?

Answer 33

tax levied on spending

Question 34

what are progressive taxes?

Answer 34

when tax rises as income rises

Question 35

what are regressive taxes?

Answer 35

when tax falls as income rises

Question 36

name 7 types of tax

Answer 36

corporation tax excise duty income tax capital gains tax inheritance tax VAT stamp duty

Question 37

what is corporation tax?

Answer 37

a percentage of profit made by firms direct progressive

Question 38

what is excise duty?

Answer 38

tax on specific goods/services at purchase indirect regressive

Question 39

what is income tax?

Answer 39

tax payable on all incomes direct progressive

Question 40

what is capital gains tax?

Answer 40

a tax paid by an investor upon selling, based on appreciation during time held direct progressive

Question 41

what is inheritance tax?

Answer 41

a tax on the estate of someone who died direct progressive

Question 42

what is VAT?

Answer 42

tax on most products indirect regressive

Question 43

what is stamp duty?

Answer 43

tax when buying a residential property indirect progressive

Question 44

what is unemployment?

Answer 44

(NEET+18)

Question 45

what does unemployment mean?

Answer 45

scarce human resources aren't being used and persistently high levels have damaging consequences

Question 46

what are the factors causing unemployment?

Answer 46

low demand for labour geographical and occupational immobility skills shortages

Question 47

what is inflation?

Answer 47

a sustained increase in the general price level and reduction in value of money

Question 48

what is inflation measured as?

Answer 48

retail price index (RPI) consumer price index (CPI)

Question 49

what does inflation lead to?

Answer 49

lender uncertainty more expensive exports shoe leather costs menu costs

Question 50

name 2 types of direct tax.

Answer 50

income tax as a % of income corporation tax as a % of revenue

Question 51

name 2 types of indirect tax.

Answer 51

specific ad valorem

Question 52

what is specific tax?

Answer 52

fixed amount of tax on each unit sold

Question 53

what is ad valorem tax?

Answer 53

tax charged as a % of a good

Question 54

what is the incidence of tax on consumers/consumer burden?

Answer 54

how much tax consumers pay

Question 55

what is the incidence of tax on producers/producer burden?

Answer 55

how much tax producers pay

Question 56

what do specific and ad valorem taxes mean for prices?

Answer 56

that they have to increase to make up for the tax

Question 57

what happens if their is inelastic demand when dealing with specific tax?

Answer 57

the demand curves steeper gradient will mean a bigger consumer burden because inelastic demands mean most specific tax is given to consumers

Question 58

what happens if their is elastic demand when dealing with specific tax?

Answer 58

the flatter demand gradient means a bigger producer burden as demand is responsive to price changes

Question 59

how do you calculate tax revenue?

Answer 59

size of specific/ad valorem tax x quantity sold