Econ Vocab test

Question 1

Economics

Answer 1

Economics is a social science that studies human
behavior as a relationship between ends and scarce
means which have alternative uses.

Question 2

Positive statements

Answer 2

Statement of fact which can be tested and proved true or

false. China has a RGDP growth rate of 6.9% in 2017.

Question 3

Normative statements

Answer 3

Statements which are based on value judgements and are
subjective.( India should have a more aggressive
population policy)

Question 4

Scarcity

Answer 4

Limited in supply in relation to our unlimited wants.

Question 5

Opportunity cost

Answer 5

Cost of the alternative forgone. The opportunity cost of
attending the party on Friday night was missing football
practice.

Question 6

Production possibility curve

Answer 6

A production possibilities curve (PPC) shows the
maximum combinations of goods and services that can be
produced by an economy in a given time period, if all the
resources in the economy are being used fully and
efficiently and the state of technology is fixed.

Question 7

Factors of production

Answer 7

The inputs used in the production of goods and services

such as land, labor, capital and entrepreurial ability

Question 8

Land

Answer 8

All natural resources used to produce goods and services.

Water resources, Minerals, Marine animals, Air etc.

Question 9

Labor

Answer 9

Any mental or physical effort used in production for which

income is received. An engineer/construction worker.

Question 10

Capital

Answer 10

Man-made aid to production. Tractor, Hammer, Software

technology

Question 11

Entrepreneur

Answer 11

A person who coordinates the land , labor and capital to

produce goods and services. Jack Ma

Question 12

Economic systems

Answer 12

The economic system refers to the organized method by
which a country allocates its scarce resources towards the
production of goods and services in the economy. 3 main
systems…Capitalism, Socialism & mixed economy.

Question 13

Capitalism

Answer 13

Capitalism is an economic system in which capital goods
are owned by private individuals or businesses. The
production of goods and services is based on supply and
demand in the market rather than through central planning
(as in planned economy or command economy). Canada

Question 14

Socialism( planned economy/command economy)

Answer 14

Socialism is an economic and political system based on
the public ownership (also known as collective or common
ownership) of the means of production. The production of
goods and services is based on central planning rather
than supply and demand in the market as in an market
economy. Vietnam

Question 15

Mixed economies

Answer 15

A mixed economic system is a system that combines
aspects of both capitalism and socialism. A mixed
economic system protects private property and allows a
level of economic freedom in the use of capital, but also
allows for governments to interfere in economic activities
in order to achieve social aims. All economies are mixed
economies.

Question 16

Transitional economies

Answer 16

A transition economy or transitional economy is an
economy which is changing from a centrally planned
economy to a market economy. China

Question 17

Economic growth

Answer 17

Increases in the real GDP over time.

Question 18

Economic development

Answer 18

Economic development is the process by which a country
improves the economic, political, and social well-being of
its people.

Question 19

Consumer goods

Answer 19

Goods and services bought and used by consumers,
rather than by manufacturers for producing other
goods.( cars, pizza)

Question 20

Producer goods

Answer 20

Goods & services (such as tools and raw materials) used

to produce other goods & services.

Question 21

Micro economics

Answer 21

Study of the economic behavior of individual units of an

economy (such as a person, household, firm, or industry)

Question 22

Macro economics

Answer 22

Study of totals or aggregate economy. ( Inflation,

economic growth )

Question 23

Circular flow of income

Answer 23

The circular flow of income is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction.

Question 24

Injections

Answer 24

Injections are variables in an economy that add to the circular flow of income, and include investment (I) government spending (G) and exports (X).

Question 25

Leakages

Answer 25

In economics, leakage refers to capital or income that diverges from some kind of iterative system. … Within this depiction, leakages are the non-consumption uses of income, including saving, taxes, and imports.

Question 26

Real GDP

Answer 26

The % yearly change in the real GDP of an economy