Theme 1.1.5

Question 1

Identify the functions of money

Answer 1

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

Question 2

Describe the function of money: a medium of exchange

Answer 2

It can be used to buy and sell goods and services

Question 3

Describe the function of money: a measure of value

Answer 3

Can compare the value of goods and put a value on labour

Question 4

Describe the function of money: a store of value

Answer 4

Able to keep its value and can be kept for a long time

Question 5

Describe the function of money: a method of deferred payment

Answer 5

Money can allow for debts to be created. People can pay for things without having money present and can pay for it later.

Question 6

Define money

Answer 6

Anything that is acceptable in the payment of a good/service/debt

Question 7

Define specialisation

Answer 7

The concentration of production on a narrow range of good services

Question 8

Define division of labour

Answer 8

Breaking down the production process into separate tasks for specialisation

Question 9

Give the advantages of specialisation

Answer 9

Higher output

Wider range of goods/services

Greater A.E

Higher productivity

Question 10

Explain the following advantage of specialisation: higher output

Answer 10

Inefficient production is ceased and the theory of comparative advantage states countries should specialise in producing those goods/services where they have a lower opportunity cost & so they’re relatively best at producing . This will help them boost their economy-> greater output globally.

Specialisation requires mutually beneficial trade countries specialising in few goods and services must import what they aren’t good at producing an export what they are-> ⬆️ X revenue = ⬆️Eco.growth + greater choice for consumers

Question 11

Give an example to support the following advantage of specialisation: Wider range of g/s

Answer 11

Dyson focus on air tech yet still offer a range

Question 12

Explain the following advantage of specialisation: High productivity

Answer 12

It leads to greater efficiency, lowering cost of production and decreasing price for consumers

Question 13

Give the disadvantages of specialisation

Answer 13

Change in taste

national interdependence

finite resources- countries specialising in non-renewable resources which could run out of-> income and rev lost

Over dependence on one particular export and if this fails, so does their economy

Question 14

Explain the following advantage of specialisation: change in taste

Answer 14

Businesses who haven’t diversified will struggle when consumers taste changes

Question 15

Explain the following advantage of specialisation: national interdependence

Answer 15

Specialisation requires mutually beneficial trade so countries having international issues affect specialisation

Question 16

Give the advantages of division of labour

Answer 16

Highly productive workforce-> ⬆️wages, greater efficiency, lower C.O.P, lower prices for consumers

specialist capital for workers-> ⬆️productivity

lower prices for consumers, high quality choice

Question 17

Give the disadvantages of division of labour

Answer 17

Demotivation of workers

risk of long-term unemployment

high worker turnover

Question 18

Explain the following disadvantage of division of labour : demotivation of workers

Answer 18

Leads to low productivity which increases cost of production

Question 19

Explain the following disadvantage of division of labour: risk of long-term unemployment

Answer 19

As tech advances, jobs become automated which makes it difficult for workers to transfer into another job due to being highly skilled.

This leads to long term unemployment which decreases gov finances through benefit payments and decreases living standards.

Question 20

AO2- Benefit cuts

Answer 20

In 2025, the UK government announced benefit cuts aimed at reducing welfare spending by £5 billion by 2029. The reforms mainly target disability benefits, including changes to Personal Independence Payment (PIP) and Universal Credit. PIP eligibility is being tightened, and the extra health-related payment in Universal Credit will be frozen or reduced for many claimants. The Work Capability Assessment will also be scrapped by 2028.

Impact:

Up to 1.2 million disabled people could lose £4,200–£6,300 per year.
Around 250,000 people, including 50,000 children, may fall into poverty as a result.
The government argues the changes will encourage people to work, but critics say the cuts will increase poverty and inequality, especially during the ongoing cost-of-living crisis.

Question 21

Explain the following disadvantage of division of labour : high worker turnover

Answer 21

Workers leaving as they become too bored of their job

Question 22

Which economist came up with the concept of specialisation & division of labour and what was found

Answer 22

Adam Smith

He stated the concept and showed how it can increase labour productivity (output per worker) allowing firms to ⬆️ efficiency and lower C.O.P.

In his example, one untrained worker could only make a few pins a day, but when the work was divided into separate tasks — like drawing out the wire, cutting it, sharpening the point, and attaching the head — a small group of workers could produce thousands of pins per day.