The nature of economics: edexcel theme1 Alevel

"High income taxes discourage effort". This statement is

• Normative

• Positive

"People should save more". This statement is

• Normative

• Positive

A normative statement

• Can be shown to be true or false using evidence

• Is an opinion

• Is a value judgement

The Production Possibilities Frontier shows the various combinations of output:

• consumers would like to consume

• producers would like to produce

• an economy can produce

• an economy should produce

Which point represents an underutilization of a country's resources?

• B

• C

• A & D

• E

What does the difference in the curve of the PPF represent?

• the straight line represents increasing opportunity cost between the production of corn & wheat

• the curved line represents constant opportunity cost between the production of cactus & pineapples

• both

• neither

When a country is coming out of a recession into a time with lower unemployment, the country is moving from a point

• outside the PPF to point inside the PPF

• close to the PPF to a point inside the PPF

• inside the PPF to a point closer to the PPF

• outside the PPF to a point closer to the PPF

Assuming all other variables remain constant

• Ceteris Paribus

• Status Quo

• Cetris Parimbus

• Allocation efficiency

In which economic system is the economy COMPLETELY controlled by the government?

• mixed

• free market

• Planned

Who is known as the father of capitalism, whose 1776 book "The Wealth of Nations" advocated laissez-faire theory?

• Karl Marx

• Adam Smith

• John Maynard Keynes

• F. A. Hayek