Domain 6 Econ

Question 1

Gross Domestic Product

Answer 1

is a monetary measure of the market value of all the final goods and services produced and rendered in a specific time period by a country or countries

Question 2

The business cycle

Answer 2

is the upward and downward movement of gross domestic product (GDP) and consists of recessions and expansions that end in peaks and troughs

Question 3

Expansion phase

Answer 3

typically have positive rates of GDP growth, lower unemployment, and sometimes have higher rates of inflation

Question 4

Peak phase

Answer 4

typically have positive rates of GDP growth (though often lower than in the expansion phase), lower unemployment, and sometimes higher rates of inflation.

Question 5

Recession phase

Answer 5

high unemployment rate, is experiencing contraction in its Gross Domestic Product (GDP), and has a relatively low inflation rate

Question 6

Recovery phase

Answer 6

Positive (or at least not so strongly negative) rates of GDP growth, lower unemployment, and sometimes higher rates of inflation

Question 7

Traditional economy

Answer 7

is a system that relies on customs, history, and time-honored beliefs. The five characteristics of a traditional economy are:

Centering around a family or tribe
Existing in a hunter-gatherer and nomadic society
Producing only what it needs
Relying on a barter system
Evolving once it starts farming and settling

Question 8

Market Economy

Answer 8

an economy in which most goods and services are produced and distributed through free markets

Question 9

free market

Answer 9

is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers

Question 10

monopoly

Answer 10

is when a single company produces goods with no close substitute

Question 11

Competitive market

Answer 11

is a market where there are a large number of buyers and sellers where no single buyer or seller can affect the price of goods being sold.

Question 11

oligopoly

Answer 11

is when a small number of relatively large companies produce similar but slightly different goods.

Question 12

Absolute advantage

Answer 12

is the ability of an individual or entity to produce a good or service more efficiently than its competitors.

Question 13

Comparative advantage

Answer 13

is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners.

Question 14

Voluntary exchange

Answer 14

the process of willingly trading one valuable commodity (good, service or resource) for another

Question 15

Elasticity of demand

Answer 15

is a measure of the change in the demand for a product in relation to a change in its price

Question 16

An elastic good

Answer 16

typically has substitutes and is considered a luxury good rather than a necessity. A few examples of elastic goods include watches, cars, and clothes.

Question 17

An inelastic product

Answer 17

s one that consumers continue to purchase even after a change in price. Inelastic goods typically don’t have substitutes and are considered a necessity rather than a luxury. Examples: prescription medications, gas

Question 18

Federal-Aid Highway Act in 1956

Answer 18

President Eisenhower signed the Federal-Aid Highway Act in 1956, which he promoted as a benefit to national defense. The act also had the benefit of promoting the national goal of full employment

Question 19

Key features of a free enterprise economy

Answer 19

Owning private property, entering into contracts, making personal choices, engaging in free enterprise and competition, and self-interest.