Economics

Question 0

Ceteris paribus

Answer 0

In economics, everything outside of the relationship you are examining remains constant

Question 1

Economic question

Answer 1

What to create, how to make it, the needs and wants

Question 2

Command economy

Answer 2

Government regulation, focus on basic needs, wants ignored. Much focus in military

Question 3

Market economy

Answer 3

Resources owned by individuals. Economic question answered by supply and demand

Question 4

Mixed economy

Answer 4

Aspects owned by government but big free aspect

Question 5

Traditional Market

Answer 5

LLCR might be lacking

Question 6

normative economics

Answer 6

“what ought to be”

Question 7

Positive economics

Answer 7

“what is”

Question 8

“fallacy of compositions”

Answer 8

what is true for the individual or the part is necessarily true for the group of the whole. This is an error of “generalizing from the particular to the general”.

Question 9

“post hoc fallacy”

Answer 9

happenstance or coincidence is not causality. The fallacy is saying that because “A” precede event “B” , “A” is necessarily the cause of “B”

Question 10

Correlation v causation

Answer 10

because two event occur together, one event has caused the other

Question 11

“PPC”

Answer 11

Production possibilities curve

Question 12

The slope of the PPC is your?

Answer 12

opportunity cost

Question 13

PPC line means…

Answer 13

we are operating at full capacity with best available resources/ technology and producing at its full potential. All the resources are being maximized.

Question 14

The curve indicates…

Answer 14

a changing trade-off. Obtaining more of one good requires giving up larger amounts of the alternative good.

Question 15

Four assumptions on PPC Model:

Answer 15

1) Resources are fixed- there is no way to increase the availability of LLCE
2) all resources are fully employed
3) Technology is fixed
4) Only two things can be produced in PPC model

Question 16

Economic Growth

Answer 16

Curve moves outward

Question 17

Five PPC Concepts

Answer 17

1) Scarcity is represented by the frontier line
2) Choices are represented by the points ABCD
3) Opportunity cost is illustrated by the slope
4) Efficiency producing maximum output with available resources and technology.
5) Economic growth- A) more resources are available or B) technology improves.

Question 18

types of income:

Answer 18

land: rental income, or rent
labor: wages
capital: Intrest payments
entrepreneurship: Profits

Question 19

Types of spending

Answer 19

Households: Consumption
Firms: Investment (all spending by firms on capital goods)
Government: Government Spending (injection into circular flow, taxes are a leakage from the circular flow)
Foreigners: Exports (Exports are an injection into the circular flow, Imports are a leakage from the circular flow)

Question 20

Real GDP =

Answer 20

nominal GDP / GDP deflator price index

Question 21

total expenditures =

Answer 21

C + I + G + (X - M) where X is total exports and M is total imports

Question 22

GDP growth rate =

Answer 22

(GDP2 - GDP1 / GDP1) * 100

Question 23

Disposable income =

Answer 23

Income - taxes

Question 24

Most economies are ________

Answer 24

cyclical

Question 25

marginal benefit

Answer 25

A person’s marginal benefit is the maximum amount they are willing to pay to consume that additional unit of a good or service.

Question 26

marginal cost

Answer 26

The change in total cost that comes from making or producing one additional item.

Question 27

Scarcity

Answer 27

people have unlimited wants but resources are limited.

Question 28

real wages =

Answer 28

nominal wages - inflation

Question 29

nominal wages =

Answer 29

real wages + inflation

Question 30

trade off

Answer 30

exchange for one thing in return for another. Opportunity cost is the value of the next highest valued alternative or the foregone cost