Chap 1

Question 1

the study of how humans make decisions under conditions of scarcity

Answer 1

economics

Question 2

human wants for goods, services, and resources exceed the available supply

Answer 2

scarcity

Question 3

the father of economics

Answer 3

Adam Smith

Question 4

what book did Adam Smith write

Answer 4

The Wealth of Nations

Question 5

what topics did Adam Smith introduce

Answer 5

division of labor and specialization; self interest; the invisible hand of the marketplace

Question 6

the way in which different workers divide required tasks to produce a good or service

Answer 6

division of labor

Question 7

_______ in a particular small job allows workers to focus on the parts of the production process where they have an advantage

Answer 7

specialization

Question 8

when the average cost of producing each individual unit declines as total output increases

Answer 8

economies of scale

Question 9

when workers or firms focus on particular tasks for which they are well suited within the overall production process

Answer 9

specialization

Question 10

the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance

Answer 10

macroecomics

Question 11

the branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms

Answer 11

microeconomics

Question 12

economic policies that involve government spending and taxes

Answer 12

fiscal policy

Question 13

policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing

Answer 13

monetary policy

Question 14

one of the greatest economists of the twentieth century who said that economics is a way of thinking and advocated for the government to tweak the economy to get it back on track

Answer 14

John Maynard Keynes

Question 15

a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market

Answer 15

circular flow diagram

Question 16

a market in which firms are sellers of what they produce and households are buyers

Answer 16

goods and services market

Question 17

the market in which households sell their labor as workers to business firms or other employers

Answer 17

labor market

Question 18

a representation of an object or situation that is simplified while including enough key features to help us understand the object or situation

Answer 18

theory/model

a theory is sometimes a more abstract representation while a model is a more applied or empirical representation

Question 19

an economy where economic decisions are passed down from government authority and where the government owns the resources

Answer 19

command economy

Question 20

products (goods and services) made domestically and sold abroad

Answer 20

exports

Question 21

the trend in which buying and selling in markets have increasingly crossed national borders

Answer 21

globalization

Question 22

measure of the size of total production in an economy

Answer 22

gross domestic product (GDP)

Question 23

products (goods and services) made abroad and then sold domestically

Answer 23

imports

Question 24

interaction between potential buyers and sellers; a combination of demand and supply

Answer 24

market

Question 25

an economy where economic decisions are decentralized, private individuals own resources, and businesses supply goods and services based on demand

Answer 25

market economy

Question 26

system where private individuals or groups of private individuals own and operate the means of production (resources and businesses)

Answer 26

private enterprise

Question 27

typically an agriculture economy where things are done the same as they have always been done

Answer 27

traditional economy

Question 28

a market where the buyers and sellers make transactions in violation of one or more government regulations

Answer 28

underground economy