Chapter 2 Economics

Question 1

Economics

Answer 1

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.

Question 2

MACROeconomics

Answer 2

The part of economics study that looks at the operation of a nation’s economy as a whole

Question 3

MICROeconomics

Answer 3

The part of economics study that looks at the behavior of people and organizations in paticular markets.

Question 4

Resource Development

Answer 4

The study of how to increase resources and to create the conditions that will make better use of those resources.

Question 5

Invisible Hand

Answer 5

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

Question 6

Capitalism

Answer 6

An economic system in which all or most of the factors of production and distribution are privatly owned and operated for profit.

Question 7

Supply

Answer 7

The quantity of products that manufactures or owners are willing to sell at different prices at a specific time.

Question 8

Demand

Answer 8

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

Question 9

Market Price

Answer 9

The price determined by supply and demand.

Question 10

Perfect Competition

Answer 10

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 11

Monopolistic Competition

Answer 11

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

Question 12

Oligopoly

Answer 12

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

Question 13

Monopoly

Answer 13

A degree of competition in which only one seller controls the total supply of a product or service, and sets the prices.

Question 14

Socialism

Answer 14

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

Question 15

Brain Drain

Answer 15

The loss of the best and brightest people to other countries.

Question 16

Communism

Answer 16

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

Question 17

Free-market Economics

Answer 17

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

Question 18

Command Economics

Answer 18

Economicsystems in which the government largely determines what goods and services get produced, who will get them, and how the economy will grow.

Question 19

Mixed Economics

Answer 19

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

Question 20

Gross Domestic Product (GDP)

Answer 20

The total value of final goods and services produced in a country in a given year.

Question 21

Unemployment Rate

Answer 21

The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.

Question 22

Inflation

Answer 22

A general rise in the prices of goods and services over time.

Question 23

Disinflation

Answer 23

A situation in which price increses are slowing. (the inflation rate is declining)

Question 24

Deflation

Answer 24

A situation in which prices are declining.

Question 25

Stagflation

Answer 25

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

Question 26

Consumer Price Index (CPI)

Answer 26

Monthly statistics that measure the pace of inflation and deflation.

Question 27

Poducer Price Index (PPI)

Answer 27

An index that measures prices at a wholesale level.

Question 28

Business Cycle

Answer 28

The periodic rises and falls that occur in economics over time.

Question 29

Recession

Answer 29

Two or more consecutive quarters of decline in the GDP

Question 30

Depression

Answer 30

A severe recession, usually accompanied by deflation.

Question 31

Fiscal Policy

Answer 31

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

Question 32

National Debt

Answer 32

The sum of government deficits over time.

Question 33

Keynesian Economic Theory

Answer 33

The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.

Question 34

Monetary Policy

Answer 34

The managment of the money supply and interest rates by the Federal Reserve Bank.