Introduction to economics definitions

Question 1

social sciences

Answer 1

academic disciplines that study human society and social relationships

Question 2

microeconomics

Answer 2

branch of economics examining behaviour of individual decision-making units in the economy

Question 3

macroeconomics

Answer 3

branch of economics examining the economy as a whole to obtain an overall picture of the economy

Question 4

scarcity

Answer 4

the condition in which available resources are insufficient to satisfy unlimited human needs and wants

Question 5

choice

Answer 5

selecting among alternatives due to scarcity of resources

Question 6

efficiency

Answer 6

making the best possible use of scarce resources to avoid resource waste

Question 7

allocative efficiency

Answer 7

an allocation of resources that results in producing the combination and quantity of goods and services most preferred by customers

Question 8

equity

Answer 8

the idea of being fair or just, often used in connection with income distribution

Question 9

economic wellbeing

Answer 9

refers to levels of prosperity, economic satisfaction and standards of living among members of a society

Question 10

sustainability

Answer 10

refers to the long-term maintenance or viability of any particular activity or policy

Question 11

interdependence

Answer 11

refers to the idea that economic decision-makers interact and depend on each other

Question 12

intervention

Answer 12

typically refers to government intervention, where the government becomes involved with the workings of markets

Question 13

resources

Answer 13

factors of production, used by firms as inputs in the production process

Question 14

factors of production

Answer 14

all resources, or inputs (land, labour, capital, entrepreneurship) used to produce goods and services

Question 15

economics

Answer 15

the study of choices leading to the best possible use of resources in order to best satisfy unlimited human needs and wants

Question 16

land

Answer 16

consists of all natural resources, including all agricultural and non-agricultural land, and everything above or below land

Question 17

labour

Answer 17

includes the physical and mental input that people contribute to the production of goods and services

Question 18

capital

Answer 18

refers to resources that can provide a future stream of benefits

Question 19

physical capital

Answer 19

a man-made resource used to produce goods and services that enable production of more output

Question 20

human capital

Answer 20

refers to the skills, abilities and knowledge acquired by people

Question 21

natural capital

Answer 21

expand meaning of ‘land’, including everything involved in land, as well as additional natural resources in the environment

Question 22

financial capital

Answer 22

refers to investments in financial instruments, like stocks, bonds and funds

Question 23

entrepreneurship

Answer 23

a special human skill possessed by some people, who organise the other factors of production, innovating and taking risks

Question 24

opportunity cost

Answer 24

the value of the next best alternative that must be sacrificed in order to obtain something else

Question 25

free good

Answer 25

a good that is not scarce, and therefore has zero opportunity cost

Question 26

economic good

Answer 26

any good that is scarce, and has an opportunity cost greater than zero

Question 27

resource allocation

Answer 27

assigning available resources to specific uses chosen among many possible alternatives

Question 28

redistribution of income

Answer 28

when income distribution or output changes so that different social groups now receive more or less than previously

Question 29

distribution of income

Answer 29

idea concerned with how much of an economy's total income different individuals or groups in a population receive

Question 30

government intervention

Answer 30

where the government changes the allocation of resources (and distribution or output and income) from what markets would have achieved on their own

Question 31

free market economy

Answer 31

an 'ideal' economy based on the market approach to economic decision-making, involving private sector ownership and decision-making

Question 32

planned economy

Answer 32

an economy where all decision-making is carried out by government planning, rather than reliance on prices determined in markets

Question 33

mixed economy

Answer 33

an economy that combines the command approach with the market approach to resource ownership, decision-making and rationing

Question 34

rationing

Answer 34

a method used to apportion something between its interested users

Question 35

model

Answer 35

simplified representation of something in the real world being investigated that allows us to focus on important relationships

Question 36

Economic growth

Answer 36

refers to increase in the production of goods and services, as resources are rearranged so as to be more valuable

Question 37

Actual growth

Answer 37

increase in the real national income of the economy (movement inside curve due to increased demand and long-term productive capacity)

Question 38

Potential growth

Answer 38

increase in the productive capacity of the economy (curve itself shifts), due to greater quantity/quality of resources of new technology.

Question 39

Consumer goods

Answer 39

Goods that satisfy present wants/needs

Question 40

Capital goods

Answer 40

Goods that satisfy future wants/needs, extending production possibilities

Question 41

Leakages

Answer 41

money or resources removed from the main flow of income, through savings, taxes, or imports

Question 42

Injections

Answer 42

money of resources added to the main flow of income, through investment, gvt spending or exports

Question 43

Closed economy

Answer 43

an economy with no imports/exports, with only a four-level model

Question 44

Open economy

Answer 44

An economy that is freely importing/exporting, containing all 5 levels

Question 45

Market

Answer 45

any kind of arrangement where buyers and sellers of goods, services or resources are linked together to carry out an exchange

Question 46

Demand

Answer 46

the various quantities of a good or service the consumer is willing and able to buy at different possible prices during a particular time period, ceteris paribus (about behaviour of buyers of goods/services/resources)

Question 47

PPC

Answer 47

represents all combinations of the maximum amount of 2 goods that can be produces by an economy, given its technology and resources, where there is full employment of resources and efficiency in production.

Question 48

Production possibilities

Answer 48

all possible combinations of maximum amount of 2 goods that can be produced by an economy, given a fixed and unchanging resources and technology, where there is full employment of resources and efficiency in production.

Question 49

Logic

Answer 49

a method of reasoning which involves making a series of statements each of which is true if the preceding statement is true.

Question 50

Hypothesis

Answer 50

An educated guess, indicating a cause-and-effect relationship about an event. Predictions are made through empirical evidence.

Question 51

Empirical evidence

Answer 51

Real world information, observation and data obtained from our senses and experience

Question 52

Theory

Answer 52

A general explanation of a set of interrelated evens, usually (though not away) based on several hypothesis that have been tested successfully.