Econ AI Flashcards
What is the definition of economics?
Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
True or False: Microeconomics focuses on the behavior of individual consumers and firms.
True
Fill in the blank: The law of ______ states that as the price of a good increases, the quantity demanded decreases.
demand
What is the primary goal of a firm in a competitive market?
To maximize profit.
What does GDP stand for?
Gross Domestic Product
Multiple Choice: Which of the following is NOT a factor of production? A) Land B) Labor C) Money D) Capital
C) Money
What is opportunity cost?
The value of the next best alternative that is foregone when making a decision.
True or False: Inflation is a sustained increase in the general price level of goods and services.
True
What is the difference between nominal and real GDP?
Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.
Fill in the blank: A ______ is a market structure characterized by a single seller.
monopoly
What is a price floor?
A minimum price set by the government that must be paid for a good or service.
Multiple Choice: Which of the following is an example of a public good? A) A sandwich B) National defense C) A car D) A smartphone
B) National defense
What does the term ‘price elasticity’ refer to in economics?
The responsiveness of quantity demanded or supplied to changes in price.
True or False: A recession is defined as two consecutive quarters of negative GDP growth.
True
What is the role of the central bank in an economy?
To regulate the money supply and maintain financial stability.
Fill in the blank: The ______ curve shows the relationship between the price level and the quantity of goods and services supplied.
supply
What is a trade deficit?
When a country’s imports exceed its exports.
What are the 5 characteristics of perfect competition?
1) Many buyers and sellers
2) Homogenous goods, firms are price takers
3) No barriers to entry/exit
4) Perfect information of market conditions
5) Firms are profit-maximisers
What is fiscal policy?
Government adjustments to spending and taxation to influence the economy.
True or False: A tariff is a tax imposed on imported goods.
True
What does the term ‘aggregate demand’ refer to?
The total demand for all goods and services in an economy at a given price level.
Fill in the blank: The ______ is the interest rate at which banks lend to each other overnight.
federal funds rate
What is the purpose of antitrust laws?
To promote competition and prevent monopolies in the marketplace.
Multiple Choice: Which of the following is a consequence of inflation? A) Decreased purchasing power B) Increased real interest rates C) Increased savings D) None of the above
A) Decreased purchasing power
What is the balance of payments?
A record of all economic transactions between residents of a country and the rest of the world. It includes the value of trade flows, investment incomes and other financial transactions.
