saturday- second hour of AS revision

Question 1

what are the 4 functions of money

Answer 1

medium of exchange
unit of account
store of value
method of deferred payment

Question 2

how can money act as a medium of exchange

Answer 2

Question 3

how can money act as a unit of account

Answer 3

Question 4

how can money act as a store of value

Answer 4

Question 5

how can money act as a method of deferred payment

Answer 5

Question 6

what are the 3 types of economies?

Answer 6

free market
command
mixed

Question 7

what is a command economy?

Answer 7

Question 8

what is a free market?

Answer 8

Question 9

adv of command economy

Answer 9

Question 10

disadv of command economy

Answer 10

Question 11

what is a mixed economy

Answer 11

Question 12

which type of economy does adam smith favour and why

Answer 12

Question 13

which economy did Karl Marx favour and why

Answer 13

Question 14

adv of free market economy

Answer 14

Question 15

disadv of free market economy

Answer 15

Question 16

what is the role for the state in a mixed economy

Answer 16

Question 17

what is utility?

Answer 17

welfare or satisfaction gained from consumption of goods/ services

Question 18

what is rational behaviour

Answer 18

Question 19

what is total utility?

Answer 19

the total amount of wellbeing a person gains from one product

Question 20

what is marginal utility

Answer 20

wellbeing gained from consuming another unit

Question 21

what do firms and consumers seek?

Answer 21

firms seek to maximise profits
consumers seek to maximise their utility

Question 22

what is the law of diminishing marginal utility?

Answer 22

explanation for the inverse relationship between price and quantity demanded
which is why demand curve is downward sloping
as consumption increases, the utility derived from each additional unit declines

Question 23

what is demand

Answer 23

something youre willing and able to buy

Question 24

what is supply

Answer 24

Question 25

why is the supply curve upward sloping

Answer 25

Question 26

recall the factors affecting supply

Answer 26

productivity of labour indirect tax number of firms technology subsidy weather

Question 27

how does indirect tax affect supply

Answer 27

is a tax on production increase indirect tax, decrease supply

Question 28

what is the definition of AD

Answer 28

the total demand for goods and services produced in an economy at a given price level measures how much is being spent by all economic agents in the economy

Question 29

formula for AD

Answer 29

C + I + G + (X-M)

Question 30

what is investment

Answer 30

covers investment spending on fixed capital by firms and also working capital (purchases required to produce goods)

Question 31

what are the characteristics of AD?

Answer 31

purchasing power interest rates exports/imports

Question 32

why is purchasing power of peoples incomes higher when price is low?

Answer 32

Question 33

why are interest rates lower when prices are low?

Answer 33

Question 34

why are UK prices more competitive when prices are low?

Answer 34

Question 35

what does ceteris paribus mean?

Answer 35

all other influencing factors are held constant

Question 36

what sorts of goods does consumption include?

Answer 36

Question 37

what is MPC

Answer 37

measure of how much an additional unit of income is spent richer= lower MPC as they have lots of money poorer= higher MPC

Question 38

how do you calculate MPC

Answer 38

Question 39

how can MPC be used as evaluation

Answer 39

if govt wants to increase consumption by e.g reducing taxes, depends on MPC

Question 40

what are the factors affecting consumption

Answer 40

changes in taxation consumer confidence interest rates availability of credit populations wealth effect inflation expectations employment

Question 41

what is capital stock

Answer 41

the capacity of a firm to produce

Question 42

how are C + I linked

Answer 42

Question 43

how does animal spirits and the paradox of thrift affect investment

Answer 43

Question 44

how does economic growth affect investment

Answer 44

Question 45

how does business expectations and confidence affect investment

Answer 45

Question 46

how does demand for exports affect investment

Answer 46

Question 47

how does interest rates affect investment

Answer 47

Question 48

how does access to credit affect investment

Answer 48

Question 49

how does regulation affect investment

Answer 49

Question 50

what is the accelerator effect

Answer 50

The accelerator effect happens when an increase in national income (GDP) results in a proportionately larger rise in capital investment spending. In other words, we often see a surge in capital spending by businesses when an economy is growing quite strongly