Economics

Question 1

Opportunity cost

Answer 1

Cost of the next best forgone opportunity

Question 2

Mercantilism

Answer 2

16th-18th century 
More gold = better/stronger economy
More exporting than importing
Take all goods from colonies
Colonies serve mother country

Question 3

Capitalism

Answer 3

Means of production are privately owned and used to make a profit
Free individuals dictate the market
Individuals will make rational decisions to better their lives
Results in the betterment of everybody

Question 4

Adam smith

Answer 4

Father of economics
Individuals seek their own interest = invisible hand leads them to benefit society
Against mercantilism

Question 5

Invisible hand

Answer 5

Economy is led by individuals working towards their own self interest

Question 6

Communism

Answer 6

Eliminates classes
Society owns everything equally
Eliminates needs for wages and private property
Karl Marx - communist manifesto

Question 7

Russia revolution of 1917

Answer 7

Lenin placed communism in Russia
Stalin took over
Party in power oppresses poor and government officials use money to live luxurious lives while the populace remains poor

Question 8

Socialism

Answer 8

Significant amount of common ownership of national resources where the government plans the allocation of resources to meet demands of society
Eliminate poverty and social class
High taxes, redistribution of wealth, complex tax systems with financial incentives
Government provides basic needs and heavy regulation on the economy

Question 9

John Maynard Keynes

Answer 9

British economist of 1900
Government intervention = stable economy
Stimulate economy by reducing interest rates and investing in infrastructure
Borrow large sums and allocate resources to increase economy productivity

Question 10

Perfect competition

Answer 10

Products are exactly the same
Infinite competitors
No profit made
Consumers go with the cheapest product

Question 11

Monopolistic competition

Answer 11

Many firms present
Distinction of products = increased prices and innovation
Barriers to entry are few
Market advantages are short-lived

Question 12

Oligopoly

Answer 12

Few sellers present

Compete with each other but each provider is aware of others actions

Question 13

Monopoly

Answer 13

One firm controls the price, production, and supply of a good
Sets price and demand is inelastic
Inefficient = no need for innovation

Question 14

Absolute advantage

Answer 14

Ability by an entity to produce more of a good or service than another entity using the same amount of resources

Question 15

Comparative advantage

Answer 15

Ability of an entity to produce a good or service at a lower opportunity cost than another entity

Question 16

World currency

Answer 16

Important in international trade

Change in value of the currency can significantly affect international trade

Question 17

Free trade

Answer 17

Ability for one country to trade with another without the hindrance of regulation such as a tariff

Question 18

Trade barrier

Answer 18

Obstacle in trade

Tariff, trade cap, subsidization

Question 19

Tariffs

Answer 19

Tax on import or export

Question 20

Retaliatory tariff

Answer 20

One country taxing a popular important from another country that placed a tariff on the first country
Done in order to get the first country to take off the original tariff
Lose-lose situation

Question 21

Voluntary exchange

Answer 21

Voluntary exchange of one good or another

Promotes economic efficiency

Question 22

Private property

Answer 22

One person owns and is responsible for the upkeep of land or capital
Encourages individuals to use their resources for the owners benefit

Question 23

Competition

Answer 23

Firms will strive for a greater share of the market to sell or buy goods/services
Innovate and gain comparative advantage
Gives consumers the best product for a cheaper price

Question 24

Barrier to entry

Answer 24

Entry to market is hindered by an obstacle
Ex: government regulation, higher start up cost
Reduce competition

Question 25

Industrial revolution

Answer 25

Increase in economic productivity in the 1800s
Rise of standard of living
Rise of city populations
Increase in governmental activity in individual lives

Question 26

Sherman antitrust act

Answer 26

Government to investigate, regulate, and control large companies for the purpose of preventing circumstances that restrict competition in the US

Question 27

Smoot-Hawley tariff act

Answer 27

Largest tariff act in the US
20,000 tariffs placed on imports
Significant rise in unemployment and a depression of stock prices
Influential in Great Depression

Question 28

WW1

Answer 28

Allowed US to maximize their economic capacity
Allowed America to lay and industrial foundation
Factories built to fulfill government contracts
Later used for civilian uses

Question 29

Law of supply

Answer 29

As price increase, supply increases

As pride decreases, supply decreases

Question 30

Law of demand

Answer 30

As price increases, demand decreases

As price decreases, demand increases

Question 31

Scarcity

Answer 31

Humans do not have enough resources to meet every humans desires
Nothing is unlimited