econ 2 quiz

Question 1

factors of production

Answer 1

Inputs used to produce a good or service in order to produce income.
- Land, labor, capital, entrepreneurship

Question 2

market economies

Answer 2

Economic system where supply and demand direct the production of goods and services.

Question 3

planned economies

Answer 3

Economic system where the industry is controlled by the government, and they make the decisions about what to do with the money made.

Question 4

invisible hand

Answer 4

Adam Smith: Individual self-interest in a free market leads to overall societal benefits.

Question 5

circular flow model

Answer 5

Economic model that presents how money, goods, and services move between sectors in an economic system.

Question 6

voluntary exchange

Answer 6

free and unregulated exchange of goods and services

Question 7

competition

Answer 7

Process by which various sellers try to offer better products, lower prices, and other advantages to choosing their products over a rivals.

Question 8

principal

Answer 8

Original sum of money that’s borrowed in a loan or placed into an investment.

Question 9

interest

Answer 9

Charge for borrowing money.

Question 10

fixed rate interest

Answer 10

Unchanging rate charged on a liability, like a loan or mortgage.

Question 11

variable rate interest

Answer 11

Interest rate on a loan or security that fluctuates over time.

Question 12

macroeconomics

Answer 12

Part of economics concerned with large scale / general economic factors.

Question 13

nominal gdp

Answer 13

Market value of all goods and services produced in a country’s economy over a given period, without inflation.

Question 14

real gdp

Answer 14

Market value of all goods and services produced in a country’s economy over a given period, adjusted with inflation.

Question 15

per capita gdp

Answer 15

GDP divided by the midyear population.

Question 16

business cycle

Answer 16

Fluctuating levels of economic activity in an economy over a period of time measured from the beginning of one recession to the beginning of the next.

Question 17

expansion

Answer 17

Upward trend in business cycle. Increase in production and employment.

Question 18

recession

Answer 18

Sustained period of negative growth in GDP with rise in unemployment rate.

Question 19

frictional unemployment

Answer 19

Unemployment caused by people being in the process of moving from one job to another.

Question 20

structural unemployment

Answer 20

Unemployment caused when workers skills do not match jobs available.

Question 21

cyclical unemployment

Answer 21

Unemployment caused by changes in the business cycle

Question 22

natural unemployment rate

Answer 22

Unemployment rate that persists in a well functioning, healthy economy.

Question 23

productivity

Answer 23

measure of how efficiently an economy produces goods and services.

Question 24

inflation

Answer 24

the rate at which prices for goods and services increase over time

Question 25

deflation

Answer 25

sustained decrease in the prices of goods and services across an economy

Question 26

human capital

Answer 26

economic value of a worker’s skills and experience.

Question 27

labor force

Answer 27

total number of people in a population who are working or looking for work

Question 28

labor supply

Answer 28

the hours an employee is willing to work initially increases as wages increase

Question 29

labor demand

Answer 29

number of workers a firm, industry, or economy is willing to hire at a given time and wage rate

Question 30

collective bargaining

Answer 30

process where employees and their chosen union representatives negotiate with their employer to determine terms of employment

Question 31

labor unions

Answer 31

association of workers who bargain collectively with their employer regarding the terms and conditions of employment

Question 32

minimum wage

Answer 32

the lowest legal amount an employer can pay an employee for their work