S.D.L

• What do specialisation and the division of labour lead to in terms of productivity?

  Large gains in productivity
• Into how many sectors can the economy be divided?

  Three sectors
• What are the three sectors of the economy?

  Primary, secondary, and tertiary sectors
• What is the role of markets in the economy?

  To facilitate the exchange of goods and services
• What are the four functions of money?

  Medium of exchange, unit of account, store of value, standard for deferred payment
• What are neor monies?

  Monies that are good units of account and stores of value but cannot be used immediately as a medium of exchange
• What is specialisation in economics?

  • Production of a limited range of goods by an individual, firm, or country
  • Cooperation with others to produce a complete range of goods
• How does specialisation occur between nations? Give an example.

  Countries trade specific goods, like Honduras producing bananas and trading for cars from the US
• What are the advantages of specialisation within economies?

  • Increased productivity
  • Development of specialized skills
  • Cost-effective provision of tools
• What did Adam Smith illustrate in his book regarding the division of labour?

  He described how dividing tasks among workers increases productivity, using pin manufacturing as an example
• What is the impact of over-specialisation on workers?

  It can lead to tedious and monotonous work, resulting in poorer quality and less output
• What can cause chaos in a system of specialisation?

  A breakdown in part of the chain of production
• What are the three main sectors of the economy?

  Primary, secondary, and tertiary sectors
• What does the primary sector of the economy involve?

  Extraction of raw materials and food production
• What is the role of the secondary sector in the economy?

  Transformation of raw materials into goods
• What does the tertiary sector produce?

  Services such as transport, education, and health
• What is the public sector?

  The state or government sector of the economy
• How does the private sector differ from the public sector?

  The private sector is owned by individuals and companies, while the public sector is government-owned
• What is the role of markets in economies?

  Markets facilitate the meeting of buyers and sellers
• What is a sub-market?

  A market within a larger market
• What is the significance of money in an economy?

  Money enables trade and specialisation, enhancing living standards
• What are the four functions of money?

  Medium of exchange, store of value, unit of account, standard for deferred payment
• What is barter?

  Swapping one good for another without using money
• What is a double coincidence of wants in barter?


  Both parties must want what the other has to trade
• How does high inflation affect money as a store of value?

  High inflation decreases the future value of money
• What is the relationship between specialisation and living standards?

  Specialisation leads to increased trade, which enhances living standards
• What are the disadvantages of over-specialisation?

  • High unemployment in declining industries
  • Lack of new job creation in emerging sectors
  • Vulnerability to disruptions in production
• What are the characteristics of the primary, secondary, and tertiary sectors?

  • Primary: Extraction of raw materials and food production
  • Secondary: Manufacturing and processing of goods
  • Tertiary: Provision of services
• What is the difference between the public and private sectors?

  • Public sector: Government-owned services and organizations
  • Private sector: Owned by individuals, companies, and charities
• How do markets function in an economy?

  • Facilitate exchange between buyers and sellers
  • Can exist in various forms (physical, online, etc.)
  • Interlinked but separate from each other
• What are the functions of money in an economy?

  • Medium of exchange
  • Store of value
  • Unit of account
  • Standard for deferred payment
• What is a store of value?

  It is an asset that maintains its value over time.
• How does high inflation affect the value of money in the future?

  High inflation destroys the value of money, making future money worth less than today.
• What happened during the German hyperinflation of 1923 regarding payment acceptance?

  People started to refuse payment in German money due to its rapid loss of value.
• What is a barter economy?

  A barter economy is one where goods are exchanged directly without money.
• What is required for a barter transaction to occur?

  A double coincidence of wants is required for a barter transaction.
• Why is barter considered costly and difficult?

  Because it requires both parties to want what the other has to trade.
• What is the relationship between barter and specialization?

  Without trade, there can be no specialization, which limits living standards.
• How does money facilitate transactions compared to barter?

  Money separates the two sides of a barter transaction.
• What role does money play as a measure of value?

  Money acts as a unit of account to compare the value of goods.