IGCSE Economics Full Course Review

Comprehensive set of practice question-and-answer flashcards covering all 7 chapters of IGCSE Economics concepts based on the lecture transcript.

What is the economic problem?

The economic problem occurs when there are fewer resources and unlimited wants.

What is the distinction between economic goods and free goods?

Economic goods have opportunity costs, whereas free goods do not have opportunity costs (for example, sunlight).

What are the four factors of production and their corresponding rewards?

The four factors of production are Land (reward: rent), Labor (reward: wages), Capital (reward: interest), and Enterprise (reward: profits).

What is geographical mobility and what reasons prevent people from relocating?

Geographical mobility refers to someone's willingness to relocate for employment purposes. Reasons preventing relocation include family ties, related commitments, and the cost of living.

What is occupational mobility and what factors cause it to vary?

Occupational mobility refers to someone changing jobs. It varies according to cost, training period, and educational profession.

What is opportunity cost?

Opportunity cost is the cost of the next best alternative of choosing a good.

How are points located inside and outside the Production Possibility Curve (PPC) interpreted?

A point inside the PPC represents inefficiency, while a point outside the PPC is unattainable.

What causes outward and inward shifts of the Production Possibility Curve (PPC)?

An outward shift is caused by discovering raw materials, new technology, or increasing the labor force. An inward shift is caused by natural disasters, very low investments in technology, or running out of resources.

What are the three key questions of economics?

What to produce, how to produce, and for whom to produce?

What is the price mechanism?

The price mechanism is when economic decisions are made according to the equilibrium point where the supply and demand curves meet.

What factors affect demand?

Price, advertising, government policies, consumer tastes, consumer income, price of substitutes, and interest rates.

What is the difference between a movement along the demand curve and a shift of the demand curve?

A movement along the demand curve is caused by a change in price, whereas a shift of the curve (right or left) is caused by non-price factors of demand.

What factors affect supply?

Cost of factors of production, prices of other goods, global factors, technology advances, and business optimism.

What is the formula for Price Elasticity of Supply (PES)?

$$\text{PES} = \frac{\text{percentage change in quantity supplied}}{\text{percentage change in price}}$$

What factors affect Price Elasticity of Supply (PES)?

Time, availability of resources, supply available to meet demand, spare production capacity available, and factor substitution available.

What is market failure?

Market failure occurs when the price mechanism or market mechanism fails to allocate scarce resources.

What are the four functions of money?

Medium of exchange, unit of account, store of value, and standard for deferred payment.

What are the five characteristics of money?

Acceptability, durability, portability, divisibility, and scarcity.

What factors cause occupational wage differentials?

Job satisfaction, fringe benefits, and labor immobility.

What is specialization?

Specialization refers to production processes that are broken up into a series of different tasks.

What are the main types of business merging?

Horizontal integration, vertical integration (forward and backward), and lateral integration.

What are the macroeconomic aims of the government?

Economic growth, low unemployment, low inflation and stable prices, balance of payment stability, and redistribution of income.

What is the difference between expansionary fiscal policy and contractionary fiscal policy?

Expansionary fiscal policy reduces taxes and increases government spending, while contractionary fiscal policy increases taxes and reduces government spending.

What are the types of taxes mentioned in the lecture?

Progressive tax, regressive tax, proportional tax, direct tax, and indirect tax.

How do contractionary and expansionary monetary policies work?

Contractionary monetary policy increases interest rates to reduce price inflation. Expansionary monetary policy cuts interest rates during a recession to increase employment.

What are examples of supply-side policies?

Tax incentives, subsidies and grants, education and training, competition policy, free trade agreements, and deregulation.

What are the four types of unemployment?

Cyclical unemployment, structural unemployment, frictional unemployment, and seasonal unemployment.

What is the difference between inflation and deflation?

Inflation is the general and sustained increase in the price level of goods and services over time. Deflation is the decrease in the general price level of goods and services, occurring when the inflation rate falls below 0%.

What is the difference between absolute poverty and relative poverty?

Absolute poverty refers to the number of people living below a certain income threshold or unable to afford basic goods and services. Relative poverty measures the extent to which a household's financial resources fall below an average income level.

What is the difference between absolute advantage and comparative advantage?

A country has an absolute advantage if it can produce a good with less resources. A country has a comparative advantage if it can produce a good at a low opportunity cost.

What are the four methods of trade protection?

Tariffs, subsidies, quotas, and embargoes.

What is the difference between a trade deficit and a trade surplus?

A trade deficit means people are buying more imports and spending less on domestically produced products. A trade surplus means people are buying fewer imports and spending more on products made by domestic firms.