Question: What is Money?
Answer:
Money is anything that is generally acceptable as a
means of payment for the settlement of all transactions including debt.
Functions
of money
Ø Money as a medium of
exchange
Ø Money as a unit of account
Ø Money as a standard of
deferred payment.
Ø Money as a store of value.
Question: What is Money Supply?
Answer:
Money
supply is the amount of money that is in circulation in the economy.
Two
measures
Narrow Money (M1)
= Currency outside banks + Demand Deposits
Broad Money (M2) = M1 + Time Deposits
Question: What is Economic Risk?
Answer:
In project
financing, the risk that the project’s output will not be salable at a price
that will cover the project’s operating and maintenance costs and its debt
service requirements.
Question: What is indifferent curve?
Answer:
An indifference curve is a line that shows all the
possible combinations of two goods between which a person is indifferent. In
other words, it is a line that shows the consumption of different combinations
of two goods that will give the same utility (satisfaction) to the person.
For example, if a consumer was
equally satisfied with 1 apple and 4 bananas, 2 apples and two bananas, or 5
apples and 1 banana, these combinations would all lie on the same indifference
curve.
Question: What is Economies of Scale?
Answer:
Economies of scale arise when the cost per unit falls as
output increases.
Economies of scale is the main advantage of increasing the scale of production
and becoming ‘big’.
Question: What is Internal Economies of Scale?
Answer:
Internal economies of scale relate to the lower unit
costs a single firm can obtain by growing in size itself. There are
five main types of internal economies of scale :
Ø Bulk-buying economies
Ø Technical
economies
Ø Financial
economies
Ø Marketing
economies
Ø Managerial
economies
Question: What is External Economies of
Scale?
Answer:
External economies of scale occur when a firm
benefits from lower unit costs as a result of the whole industry growing in size.
The main types are:
Ø
Transport and communication links improve
Ø
Training and education becomes more focused
on the industry
Ø
Other industries grow to support this
industry
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