Basics

Question 1

Consumer Surplus

Answer 1

Difference between what a consumer is willing to pay and what they do pay for a good or service

Question 2

Scarcity

Answer 2

unlimited wants but limited resources

Question 3

Opportunity Cost

Answer 3

most desirable alternative given up when you have to make a choice

Question 4

FoP

Answer 4

Land, Labour, Capital, Enterprise

Question 5

What shifts the PPC curve

Answer 5

Increase in the FoP

Question 6

Private Sector

Answer 6

Part of the economy run by individuals and businesses

Question 7

Public Sector

Answer 7

Part of the economy run by the government

Question 8

Factor Payments

Answer 8

Payments for the FoP

Question 9

Transfer Payments

Answer 9

When the government redistributes income e.g welfare, child support

Question 10

Subsidies

Answer 10

Governments money to businesses

Question 11

Law of Demand

Answer 11

There is an inverse relationship between price and quantity demanded

Question 12

Law of Supply

Answer 12

There is a direct relationship between price and quantity supplied

Question 13

Movements

Answer 13

Changes in price will cause a movement of a point along the supply and demand curves

Question 14

Substitutes

Answer 14

Two goods that are similar e.g different brands of porridge
Increase in price of one good increases the demand for another

Question 15

Complements

Answer 15

Two good thats are sold together e.g computer and mouse
Increase in price of one, decreases demand of the other

Question 16

Normal Goods

Answer 16

As income increases, demand increases

Question 17

Inferior Goods

Answer 17

As income increases, demand decreases

Question 18

Law of Diminishing Marginal Returns

Answer 18

As variable resources are added to fixed resources, the additional output produced from each additional worker will eventually fall

Question 19

GDP

Answer 19

Gross Domestic Product
Dollar value of all final goods and services produced within a country’s borders in one year

Question 20

GDP per capita

Answer 20

GDP divided by the population
How much each person makes on average

Question 21

Nominal GDP

Answer 21

measured in current prices
doesn’t account for inflation

Question 22

Real GDP

Answer 22

Adjusts for inflation
Best measure of economic growth

Question 23

Unemployment

Answer 23

Workers actively looking for a job but don’t have one

Question 24

Labour Force

Answer 24

Number of people over 16 who are able and willing to work

Question 25

Frictional Unemployment

Answer 25

Temporary unemployment when people are between jobs

Question 26

Seasonal Unemployment

Answer 26

Due to time of year e.g x-mas jobs

Question 27

Structural Unemployment

Answer 27

Changes in labour force make some skills obsolete Workers must learn new skill to get a new job Technological - where tech replaces some jobs

Question 28

Cyclical Unemployment

Answer 28

Unemployment caused by a recession As demand falls, demand for labour falls and workers are fired

Question 29

Aggregate Demand

Answer 29

All the goods and services buyers are willing and able to buy at different price levels Inverse relationship between rGDP and PL