Chapter 2

Question 1

Economics

Answer 1

The study of how society chooses to employ resources to produce goods and services and distribute them

Question 2

Macroeconomics

Answer 2

Whole economy

Question 3

Microeconomics

Answer 3

Behavior of people and business for products and services

Question 4

Resource Development

Answer 4

The study of how to increase resources and to create better conditions

Question 5

Invisible Hand

Answer 5

A phrase by Adam Smith used to describe the process that turns a self-directed gain into social and economic benefits for all

Question 6

Capitalism

Answer 6

All or most factors of production and distribution are privately owned and operated for profit

Question 7

State Capitalism

Answer 7

A combo of freer markets and some government control

Question 8

Supply

Answer 8

Quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

Question 9

Demand

Answer 9

Quantity of products that people are willing to buy at different prices at a specific time

Question 10

Market Price

Answer 10

The price determined by supply and demand

Question 11

Equilibrium Point

Answer 11

The place where quantity demanded and quantity supplied meet

Question 12

Perfect Competition

Answer 12

The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product

Question 13

Monopolistic Competition

Answer 13

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different

Question 14

Oligopoly

Answer 14

The degree of competition in which just a few sellers dominate the market

Question 15

Monopoly

Answer 15

The degree of competition in which only one seller controls the total supply of a product or service and sets the price

Question 16

Socialism

Answer 16

An economic system based on the premise that some if not most businesses should be owned by the government. So that profits can be more evenly distributed among the people

Question 17

Brain Drain

Answer 17

Loss of the best and brightest people to other countries

Question 18

Communism

Answer 18

An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production

Question 19

Free-market Economies

Answer 19

Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows

Question 20

Command Economies

Answer 20

Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow

Question 21

Mixed Economies

Answer 21

Economic systems in which some allocation of resources is made by the market and some by the government

Question 22

Gross Domestic Product (GDP)

Answer 22

Total value of final goods and services produced in a country in a given year

Question 23

Gross Output (GO)

Answer 23

A Measure of total sales volume at all stages of production

Question 24

Unemployment Rate

Answer 24

Number of civilians at leat 16 years old who are unemployed and tried to find a job within the prior four weeks

Question 25

Inflation

Answer 25

General rise in the prices of goods and services over time

Question 26

Disinflation

Answer 26

A situation in which prices are declining

Question 27

Stagflation

Answer 27

A situation when the economy is slowing but the prices are going up anyhow

Question 28

Consumer Price Index (CPI)

Answer 28

Monthly statistics that measure the pace of inflation or deflation

Question 29

Core Inflation

Answer 29

CPI minus food and energy costs

Question 30

Producer Price Index (PPI)

Answer 30

Index that measures prices at the wholesale level

Question 31

Business Cycles

Answer 31

The periodic rises and falls that occur

Question 32

Recession

Answer 32

Two or more consecutive quarters of decline in the GDP

Question 33

Depression

Answer 33

A severe recession, usually accompanied by deflation

Question 34

Fiscal Policy

Answer 34

The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending

Question 35

National Dept

Answer 35

Sum of government deficits over time

Question 36

Monetary Policy

Answer 36

The management of the money supply and interest rates by the Federal Reserve