The basic economic problem
The basic economic problem is...
What is scarcity?
The PPC, as a curve drawn in a diagram, shows the ... of a nation.
What is maximum production capacity, or maximum output levels?
The money flow received by the household sector from the firm sector...
What is income?
The components of aggregate demand are investment expenditure, government expenditure, net export and...
What is consumption expenditure?
The intersection point between the downward-sloping demand curve and the upward-sloping supply curve is called...
What is market equilibrium?
Opportunity cost refers to the value of the...
What is the highest-valued (best) option given up?
In addition to the quantity of resources available in the nation, the position of the PPC is determined, or limited by...
What is technology?
The function of the financial sector is to channel household savings into...
The change in price level when the aggregate demand increases is called...
What is inflation?
If household income has increased, we illustrate the increase in demand for a good by shifting the demand curve...
What does the rightward shift of demand curve show?
Scarcity is a relative concept in that it means the limited quantity of resources is insufficient to satisfy...
What is unlimited wants?
If a nation is producing within the PPC...
What is underutilisation (or unemployment) of factors of production?
Government spending is to be mainly financed by...
What is taxation?
The aggregate supply curve has to be bent vertically upward at this point...
What is maximum production capacity, or maximum output levels?
When drawing the demand curve or the supply curve, the assumption that is made such that we can derive a linear relationship between price and quantity...
What does "holding other factors constant", or "ceteris paribus" mean?
What is non-money cost?
If a natural disaster is severe enough to cause an economy to shrink in size, the PPC will shift...
What does the leftward shift of PPC show?
The flows coming out from income - savings, taxation & imports - are called...
What are leakages or withdrawals?
To stimulate economic growth, the government can use fiscal policy by reducing tax rate and/or...
What is the direct impact of an increase in government expenditure?
The rising slope of the supply curve reflects that the ... of production is increasing when the output level increases.
What is marginal cost?
Common assumptions related to decision making are that the benefits should be maximised while...
What does it mean by "minimising the cost"?
The PPC is not drawn as a straight line because...
What is the different quality of factors of production?
When investment expenditure, government expenditure and exports are larger than the three corresponding flows on the other side of the model, the economy will...
What is economic growth?
To stimulate economic recovery from a recession, the central bank of the nation should use monetary policy and ... the interest rate.
What is the direct impact of an decrease in the interest rate?
Demand for goods and services are human wants for the item backed up back...
What is purchasing power?