Economics

Question 1

What Drives the Economy?

Answer 1

Wants and Needs

Question 2

Wants

Answer 2

Are things you do not have to have to survive, but would like to have.

Question 3

Needs

Answer 3

Are things you need to survive.

Question 4

Volunteer

Answer 4

Provides a service without being paid

Question 5

Opportunity Cost

Answer 5

Deciding to use a resource for one purpose means giving up the opportunity to use it for something else.

Question 6

Supply

Answer 6

Amount of goods and services that producers will provide (the product)

Question 7

Demand

Answer 7

The amount or quantity of goods and services consumers are willing to buy

Question 8

The Business Cycle/Economic Cycle

Answer 8

Overall trends in GDP

Question 9

GDP

Answer 9

Gross Domestic Product (Production of goods)

Question 10

4 Stages of Business Cycle

Answer 10

1. Boom
2. Recession
3. Slump/Depression
4. Recovery

Question 11

Boom

Answer 11

Demand for goods and services is high
- High demand
- High production
- Increased business investment

Question 12

Recession

Answer 12

Business reduce output in spending money to workers
- Reduced labor cost
- Decreased production
- Decreased employment

Question 13

Slump/Depression

Answer 13

Many firms will go out of business (depression)
- Lowest part of the economy
- High unemployment
- Low demand

Question 14

Recovery

Answer 14

Output (GDP) begins to rise
- Production rises
- Demand increases back up
- Consumer spending increases

Question 15

Inflation

Answer 15

The general increase in price of goods and services
- Customer buying power decreases

Question 16

Deflation

Answer 16

A general decrease in the price of goods and services
- When the economy producers more goods than what is wanted sellers have to lower prices.