Basic Concepts

Question 1

Economics

Answer 1

Study of scarcity and choice

Question 2

Individual choice

Answer 2

Decisions by individuals about what to do, which involves what not to do

Question 3

Economy

Answer 3

A system for coordinating a society’s productive and consumptive activities

Question 4

Market Economy

Answer 4

Decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement

Question 5

Command Economy

Answer 5

Industry is publicly owned and a central authority makes production and consumption decisions

Question 6

Incentives

Answer 6

Rewards/Punishments that motivate a particular choice

Question 7

Property Rights

Answer 7

Establish ownership and grant individuals the right to trade goods and services with each other

Question 8

Marginal Analysis

Answer 8

The Study of the costs and benefits of doing a little more or a little less of an activity

Question 9

Resource

Answer 9

Anything that can be used to produce something else

Question 10

Entrepreneurship

Answer 10

Describes the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production values

Question 11

Scarce

Answer 11

Something that is not available in sufficient quantities to satisfy all the various ways society wants it

Question 12

Opportunity Cost

Answer 12

What you must give up in order to get something

Question 13

Microeconomics

Answer 13

Study of how people make decisions and how those decisions interact

Question 14

Macroeconomics

Answer 14

Overall ups and downs of economy

Question 15

Economic Aggregates

Answer 15

Economic measures that summarize data across many different markets

Question 16

Positive Economics

Answer 16

How the economy actually works

Question 17

Normative Economics

Answer 17

How economy should work

Question 18

Business Cycle

Answer 18

Short run alteration between economic downturns and upturns

Question 19

Depression

Answer 19

Deep, prolonged economic downturn

Question 20

REcession

Answer 20

Periods of economic downturns when output and employment are falling

Question 21

Expansions

Answer 21

Recoveries, economic upturn where output and employment are rising

Question 22

Employment

Answer 22

Number of people currently employed in the economy

Question 23

Unemployment

Answer 23

Number of people looking for work but aren’t employed

Question 24

Labor Force

Answer 24

Sum of employed and unemployed

Question 25

Unemployment Rate

Answer 25

Percent of labor force that is unemployed

Question 26

Output

Answer 26

Quantity of goods and services produced

Question 27

Aggregate Output

Answer 27

Economy’s total production of goods and services for a given time period

Question 28

Inflation

Answer 28

Rise in overall price

Question 29

Deflation

Answer 29

Fall in overall prices

Question 30

Price Stability

Answer 30

Aggregate price level changes slowly

Question 31

Economic Growth

Answer 31

Increase in maximum amount of goods and services an economy can produce

Question 32

Model

Answer 32

Simplified representation used to better understand a real life situation

Question 33

Other Things Equal

Answer 33

(Ceteris Paribus) Condition in which all other relevant factors remain unchanged

Question 34

Trade Off

Answer 34

Idea that you have to give up something for something else

Question 35

PPC

Answer 35

Tradeoffs facing an economy that produces goods

Question 36

Efficent

Answer 36

Condition that is satisfied when there is no way to make anyone better without making at least one person worse

Question 37

Technology

Answer 37

Technical means for producing goods and services

Question 38

Trade

Answer 38

Provide goods and services to others to receive in return

Question 39

Gains from Trade

Answer 39

People get more goods/services through trade than if than if they were self sufficient

Question 40

Specialization

Answer 40

Specializing in one skill/area that one is good at

Question 41

Comparitive Advantage

Answer 41

Producing a good at a lower opportunity cost than others

Question 42

Absolute Advantage

Answer 42

If a person can make more of a good with the same amount of given time and resources

Question 43

Capital

Answer 43

Manufactured goods that are used to produce other goods

Question 44

Opportunity Cost Formula

Answer 44

What you are sacrificing/What you are gaining