Theme 1.1

Question 1

Identify the functions of money 1.1.5

Answer 1

medium of exchange
measure of value
store of value
method of deferred payment

Question 2

Define ceteris paribus 1.1.1

Answer 2

the effect of one variable on another whilst all other variables remain the same

Question 3

Define rare 1.1.1

Answer 3

when there’s a limited amount of resources

Question 4

Define positive and normative statements 1.1.2

Answer 4

positive: a statement of fact which can be proven/disproven
e.g Christmas is on December 25th

normative: a statement which is subjective and based on opinion so can’t be proven/disproven
e.g the gov should increase taxes

Question 5

Name the factors of production 1.1.3

Answer 5

CELL
Capital
Entrepreneurship
Labour
Land

Question 6

Define renewable and non-renewable resources 1.1.3

Answer 6

Renewable: a resource of economic value that can be replenished on a level equal to consumption
e.g solar, wind, tidal

Non-renewable: a resource of economic value that can’t be readily replaced
e.g fossil fuels

Question 7

State what the PPF shows 1.1.4

Answer 7

the trade off between two goods to solve a combination of maximum ouptut

Question 8

Define scarcity and mention its problems 1.1.3

Answer 8

when the demand for the resource > available supply of those resources ( resources are scarce in relation to the demand placed upon them).

problems: people have finite needs but infinite wants and resources are finite and limited

Question 9

Define opportunity cost 1.1.3

Answer 9

the value of the next best alternative foregone when a decision is made