Chapter 1

Question 1

What is Economics part of?

Answer 1

Social Sciences

Question 2

Who is the founder of economics and what book did they write?

Answer 2

Adam Smith, “The Wealth of Nations” 1776

Question 3

What are the branches of Economics?

Answer 3

Macro and Micro

Question 4

What is Macro Economics?

Answer 4

Macro takes a look at the Economy as a whole

Question 5

What is Micro Economics?

Answer 5

Micro takes a look at the smaller picture in Economics

Question 6

What are the 3 economic systems to answer 3 questions?

Answer 6

Systems- Command control (central planning), Price system (market system), and mixed economic system
Questions- What to produce? How to produce? Who to produce for?

Question 7

Central Planning?

Answer 7

Central planning is commonly associated with socialist or communist forms of government. (Ex. North Korea)

Question 8

Price system (market system)?

Answer 8

a system through which the valuations of any forms of property (tangible or intangible) are determined

Question 9

Mixed economic system

Answer 9

A blend where the government and the private sector play big parts (Ex. US)

Question 10

Positive Economics

Answer 10

Deals with facts (Ex. Unemployment rate is a fact)

Question 11

Normative Economics

Answer 11

Deals with Opinion rather than fact, (contains the words “ought to or should”

Question 12

Rationality Assumption

Answer 12

assuming we make rational decisions, decisions that will leave us better off, assuming we pursue self interest

Question 13

Ceteris Paribus

Answer 13

other things constant and equal, allows them to look at one factor holding other factors constant