Economics

Question 1

What are needs?

Answer 1

Essential items needed for survival in life.

Question 2

What are wants?

Answer 2

Any items we would like to have in addition to our needs

Question 3

What are the 4 factors of production and their payment?

Answer 3

Land - Rent
Labour - Wages
Capital - Interest
Enterprise - Profit

Question 4

What is economics?

Answer 4

Economics is the study of the best possible use of the world’s scarce resources to satisfy the requirements of as many people as possible

Question 5

What is a free enterprise system?

Answer 5

An economic system where all resources are owned by private individuals or companies and used for their own benefit only

Question 6

What is a centrally planned system?

Answer 6

An economic system where all resources are publicly owned and the government controls all economic activity

Question 7

What is a mixed economy?

Answer 7

An economic system where most of the major economic decisions are made by the private sector, but the government intervenes to ensure the supply of essential goods and services to everybody.

Question 8

What is financial cost?

Answer 8

The financial cost of anything is the amount of money that is paid for it

Question 9

What is opportunity cost?

Answer 9

The opportunity cost of anything is the item that is done without when we have to make a choice between two or more actions

Question 10

What is inflation?

Answer 10

Inflation is the increase in the general level of prices

Question 11

What does GDP stand for?

Answer 11

Gross Domestic Product

Question 12

What does GNP stand for?

Answer 12

Gross National Product

Question 13

Name 3 causes of inflation

Answer 13

• An increase in the cost of producing goods
• The demand for goods is greater than the supply of goods
• Increase in indirect taxes e.g. VAT

Question 14

Name 5 effects of inflation

Answer 14

• It increases the cost of living
• It causes demands for wage increases
• It discourages saving
• It causes the price of our exports to increase
• It may cause Irish people to buy cheaper imports

Question 15

What is economic growth?

Answer 15

When more goods are produced in a country in one year than the previous

Question 16

Name 4 benefits of economic growth

Answer 16

• It improves the standard of living
• It creates employment
• It improves the government’s finances
• It alleviates poverty

Question 17

Name 4 reasons why the government gets involved in the economy

Answer 17

• To provide an income for people who cannot provide one for themselves
• To provide services that are too important to be controlled by the private sector
• To provide finance for industries when the private sector is unable to provide it
• To make regulations concerning the running of the economy