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Economics National 5 Exam 2019 > Unit 2 > Flashcards

Flashcards in Unit 2 Deck (23)
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1

Define fixed and variable cost

A cost that does and doesn’t vary due to level of output

2

The returns for land,labour,capital,enterprise

Land - rent
Labour - wages
Capital - interest
Enterprise - profit

3

What’s productivity

Productivity is the level of output based on input

4

Draw a cost curve and an average cost curve

.

5

What’s optimum output

Where the firms is most efficient(not profit wise)

6

Draw a circular flow diagram

Yesi

7

What is inflation and gdp

GDP is the value of output within an economy over a year
Inflation is a general rise in the level of prices within a year
Rate of inflation is the percentage rise

8

Measures of inflation

Cpi takes a measure of a basket of goods and weights it calculating the percentage of inflation
Rpi is the same but includes housing costs

9

Causes of inflation

Demand pull too much demand for a good causes excess demand which makes prices go up

Cost push costs of production go up so firms put up their product prices

10

Impacts of inflation on
Individuals
Firms

Individuals - reduces purchasing power if wages don’t keep up
It affects lower income earners as prices are more costly to them
Demands for firms product goes down so people are made unemployed


Firms
Costs of production rises so profits decrease
Workers demand pay rise so don’t lose purchasing power

11

Define unemployment

A person who is willing and able to work but can not find a job

12

Measures of unemployment

Claimant count - this is the number of people seeking job seekers allowance. It’s not always accurate as not everyone claims

Labour force survey - 150,000 are surveyed about their employment status quarterly. This is then scaled up and represents the country

13

Causes of unemployment

Technological - people are made unemployed due to an advance in technology
Seasonal - only need work at certain times of the year e.g. a sailing instructor not in winter
Regional - where people are made unemployed in a certain area e,g, Aberdeen for oil

14

What is economic growth and what’s it measured in

Economic growth is an increase in the level of output within an economy in a year
GDP is used to measure economic growth

15

Benefits of economic growth are?

Better standards of living
More government tax revenue
Government spend less on benefits

16

Disadvantages of economic growth

Demand pull inflation
Increased climate change e,g.pollution

17

Tax is collected for what reasons?

Pay for healthcare and education
Redistribute income
To provide welfare support for those on low incomes

18

3 types of government spending

Current expenditure - the money spent on day to day things such as the nhs or wages
Capital expenditure is spending in long term basis such as building a new school


Transfer payments are what one person earns and the government gives it to someone else

19

Define direct and indirect tax

Direct tax - a tax levied on income and wealth e.g, income tax
Indirect tax - a tax levied on expenditure e.g, vat

20

Reasons for tax

Redistribute income
Reduce demand for goods
To pay for public and merit goods

21

What’s the físicas policy

This is the use of taxation in order to affect aggregate demand in the economy

22

What the monetary policy

The use of interest rates or money supply in order to influence ggregate demand. Controlled by Bank of England

23

Name and define the three sectors of industry

Primary industry - his is industry employed in the extractions if raw material such as oil

Secondary industry this catergory of industry is involved with taking the raw material and manufacturing it into a
product e.g. whisky refining


Tertiary industry this is the selling of manufactured goods if providing a device e.g. retail or banking