NESA Verbs: Guide to Exam Questioning

NESA Verbs

• NESA verbs, or "wordbank" are terms that give instruction on how to approach questions from an exam, test, or assessment

Account

• Account for: Provide reasons
• Give an account of: Narrate a series of events or transactions

Analyse

• Identify components and relationships between them
• Draw out and relate implications

Apply

• Use or employ in a particular situation

Appreciate

• Form a judgement about the value of something

Assess

• Form a judgement of value, quality, outcomes, results or size

Calculate

• Ascertain or determine from given facts, figures or information

Clarify

• Make clear or plain

Classify

• Arrange or include in classes or categories

Compare

• Show how things are similar or different

Construct

• Make or build something
• Put together items or arguments

Contrast

• Show how things are different or opposite

Critically (analyse/evaluate)

• Add a degree or level of accuracy depth, knowledge and understanding, logic, questioning, reflection and quality to (analyse/evaluate)

Deduce

• Draw conclusions

Define

• State meaning and identify essential qualities

Demonstrate

• Show by example

Describe

• Provide characteristics and features

Discuss

• Identify issues and provide points for and/or against

Distinguish

• Recognise or note/indicate something as being distinct or different from something else
• Note differences between things

Evaluate

• Make a judgement based on criteria
• Determine the value of something

Examine

• Inquire into something

Explain

• Relate cause and effect
• Make relationships between things evident
• Provide why and/or how

Extract

• Choose relevant and/or appropriate details

Extrapolate

• Infer from what is known

Identify

• Recognise and name

Interpret

• Draw meaning from

Investigate

• Plan, inquire into and draw conclusions about

Justify

• Support an argument or conclusion

Outline

• Sketch in general terms; indicate main features

Predict

• Suggest what may happen based on available information

Propose

• Put forward, for example a point of view, idea, argument, or suggestion, for consideration or action

Recall

• Present remembered ideas, facts or experiences

Recommend

• Provide reasons in favour of something

Recount

• Retell a series of events

Summarise

• Express concisely the relevant details

Wordbank Definitions

• Transfer payment: A payment of money for which no goods or services are exchanged. Common examples include local, state, and federal government redistribution efforts to those in need, such as Social Security and unemployment insurance
• Marginal propensity to save: Change in savings/change in income
• The average propensity to save: the ratio of total saving to total income
• The marginal propensity to save: Ratio of a change in saving to a change in income
• Economic Problem: The fundamental issue of scarcity, where limited resources must be allocated to satisfy unlimited human wants. Individuals, businesses, and governments must make choices about resource use
• Production Possibilities Frontier (PPF): A graphical representation of the maximum possible combinations of two goods or services an economy can produce with available resources and technology. Illustrates trade-offs, efficiency and opportunity cost
• Specialization: Individuals, businesses, or countries focus on producing specific goods or services in which they have an advantage, leading to increased efficiency and reduced opportunity cost
• Scarcity: The condition where limited resources (land, labor, and capital) are insufficient to satisfy all human wants, making choices necessary
• Choice: Selecting one alternative over another due to scarcity, leading to trade-offs and opportunity costs
• Opportunity Cost: The value of the next best alternative foregone when making a decision. Represents the cost of choosing one option over another
• Needs: Essential goods and services required for survival, such as food, water, clothing, shelter, and healthcare
• Wants: Non-essential goods and services that improve quality of life, such as entertainment, luxury items, and vacations
• Commodity: A raw material or primary agricultural product that can be bought and sold, such as copper or coffee
• Subsidy: A sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low
• Land: Natural resources used in production, such as oil, soil, animals, vegetation, wood, metals, and water. Rent is the income received for providing land
• Labour: Human effort (mental or physical) in production. Limited in supply but can be improved through training and development. Wages is the return for labour (income received)
• Capital: Produced means of production used to produce other goods and services, such as factories and machinery. Interest is the return on capital as funds used to purchase capital could otherwise earn in a bank account
• Enterprise: An entrepreneur organizes production using the other 3 factors of production and takes the risk of success or failure. Profits are their return
• Provision of income: People's income is largely determined by the resources they possess and how much of those resources they need to sell to the market. Governments provide pensions and public housing to support those with limited resources. Parks and libraries are also provided to the community and funded through taxation

Economic Problems

• Economic problems arise because of unlimited wants and limited resources
• The limitation of resources forces choices about how to efficiently allocate them
• Choices create opportunity cost or the cost of choosing one thing over another
• Scarcity means human resources (land, labour, capital) are limited, while wants aren't
• PPFs show the maximum possible output combinations of two goods that an economy can produce with available resources and technology
• Governments must allocate resources efficiently to maximise social welfare
• Economic problems force societies to prioritize needs over wants due to limited resources
• Specialization is when individuals, businesses, or countries focus on production of efficient goods and services
• Allows resources to be used in the most productive ways
• Businesses can compare expected benefits of two investment options and choose the one with the higest return relative to the next best alternative
• All societies face economic problems because everyone has needs and wants
• Economic problems exist due to infinite wants but finite resources to satisfy them
• Due to scarcity, individuals, businesses, and governments must make choices about how resources are allocated
• opportunity cost is the best alternative forgoing
• Opportunity cost influences decision making by helping evaluate trade-offs
• When deciding how to spend money, people consider the best use of their limited income
• Firms must decide how to allocate resources; the opportunity cost could be wages of additional employees
• At PPF, using 2 sets of products on the x and y axes, choosing to make more of one product means making less of the other
• PPF graph shows the maximum possible output combinations of two goods an economy can produce with resources and technology
• With full efficiency, moving production from one good to another requires sacrificing the first good; the slope indicates opp cost of shifting resources
• When making economic decisions, governments use opportunity cost to make the best decision
• They consider opp cost to ensure the best possible outcomes
• Needs are essential for survival; food, water, shelter, healthcare
• Wants are non-essential items that improve quality of life; luxury cars, entertainment, vacations
• Economic problems force prioritizing needs over wants

Considerations

• Opportunity cost applies to any decision where resources; time, effort, or materials are allocated to one activity over another
• Specialization is related to opp cost because focusing on one specific area means a larger opp cost
• Businesses can weigh up which has the larger opportunity cost
• Fundamental economic problems are from limited resources and unlimited wants

Production Possibility Frontier

• The PPF shows the maximum amount that can be produced in an economy, and is used to demonstrate how opportunity costs arise when decisions are made
• Assumptions in the PPF include only 2 goods, technology being constant, resources avilable that remain unchanged, all resources are fully employed, production of both items
• One can choose to produce only one resource or a combination of both

Opportunity Cost

• Opportunity cost applies to individuals, businesses, and governments when their resources are scarce
• Opportunity cost can include time, effort, or benefits lost
• Scarcity contributes to opportunity cost
• Good rational decision-making considers opp cost to maximise benefits
• One doesnt include all alternatives when measuring opportunity costs because only the best alternative is assessed
• consumer sovereignty
• Business practices such as manipulated preferences, restricted product durability, or competitive behavior can diminish consumer sovereignty
• Consumers base decisions on satisfaction or utility which effects production
• Marginal utility may fall when consuming additional units

Consumer Sovereignty

• Consumer sovereignty is the understanding that consumers have the ultimate power in determining produced goods and services
• This concept aligns that producers must cater to consumers for market outcomes
• Common methods to diminish consumer sovereignty include: marketing, misleading actions, planned obsolescence, and anti-competitive behavior
• Consumer sovereignty may vary due to country

Technical, Allocative & Dynamic Efficiency

• Technical Efficiency refers to the ability to reduce input quantities proportionally without affecting output quantities (input-oriented) or to increase output quantities proportionally without changing input quantities (output- oriented) in order to achieve cost, revenue, or profit efficiency in a given system
• Allocative efficiency is a state of the economy in which production is aligned with consumer and producer preferences
• Dynamic efficiency is achieved when an economy invests less than return to capital

Circular Flow

• National Income(Y) = Consumption Expenditure(C) + Investment (I)+ Government Expenditure(G) + Exports(X) - Imports(M)
• This is also known as aggregate demand
• When leakages outweigh total injections there will be a downturn in the economy
• With a downturn in economic activity, consumer spending will also decrease
  • This is due to less income to be used on imports, savings, or taxes

Patterns of Consumer Spending and Saving

• Consumers spend or save their income, which changes based on income and age
• After taxes, consumers split income to either spend or save
  • Which is depicted with Y = C + S
• The proportion of consumption is known as APC or Average Propensity to Consume
  • APC = C/Y
  • The proportion of saving is know as APS or Average Propensity to Save
    • APS = S/Y
• When incomes are higher, it's likely that a higher APS will be seen
  • APC + APS = 1
• MPC or Marginal Propensity to Consume is the proportion of consumed income
  • MPC = AC / ΔΥ
• MPS or Marginal Propensity to Save is the proportion of saved income
  • MPS = AS / ΔΥ
  • The relationship depicts since any extra income will either be saved or spent that there addition will = 1
• Consumption decisions are influenced by current income, savings, borrowing, interest rates, credit avaliability, wealth, the amount of people, and consumer expectations
• Saving is the choice to purchase consumer durables at a later time, provide, accumulate, or leave it as a bequest
• Decisions about consumption or saving are also influenced by cultural or personality factors, the ability to plan spending, tax, or credit system

Factors About the Life Cycle

• Wealth gradually increases during working career and then gradually decreasing after retirement
• saving is highest during the middle stages of of the career
• With the life cycle wealth is sought to maintained with the help of debt or assets

The Role of Business in the Economy

• A firm is an organinzation that transforms inputs into goods and services that meet consumer needs
• A firm can be profit seeking or non-profit
• A sole trader consist solely of the responsibility of owner to debts etc
• 2 to 20 owners is a partnership which has shared risks
• A private company has 1 to 50 shareholders and has reduced risk
• A public company has 5+ shareholders and is regulated by the ASX

Industry Breakdown

• A collection of firms that all produce similar products is known as an industry
• An industry can be categorized between primary, secondary, tertiary, quaternary, and quinary

What Firms Take Into Account

• Consumer demand
• Government intervention
• Available resources
• Competitors

What Quantities To Produce Are Based On

• consumer demand
• Resource avalability
• government policies
• environmental factors

When And How To Effectively Produce

• Capital intensive uses heave resources and lowers labor costs
• Labour intenstive uses minimal machinery
• Firms want to cut costs by using machines instead of labor

To Define Economic Growth

• One seeks a increase of goods and services in a country
• With the higher production, job employment and standars are created
• Gross Domestic Product (GDP) shows the value of goods and services
• With growth businesses aim to maximize profits like cuttting costs, increasing revenue, or eliminating competition

Central Planning, Free & Mixed Economies

• With Centrally Planned Economies the government makes economic decisions opposed to individual
• Mixed Economies uses interactions in private and public businesses
• Free Market Economies are runned and mostly major decisions are made by private firms