Economics

Question 1

Economics

Answer 1

the science of how and why people, businesses, and governments make the choices that they do.

Question 2

Insatiability

Answer 2

the condition of having unlimited wants and thus never being satisfied.

Question 3

Scarcity

Answer 3

the condition of a good or service being finite or limited in quantity.

Question 4

Economic Goods

Answer 4

items that bear a positive economic cost.

Question 5

Intrinsic Values

Answer 5

value ascribed to a good or service be- cause of its nature.

Question 6

Subjective Value

Answer 6

the worth of a good or service as deter- mined by its usefulness to the buyer

Question 7

Microeconomics

Answer 7

the level of economic study that is concerned with choices made by individual units

Question 8

Macroeconomics

Answer 8

The level of economic study that is concerned with large-scale economic choices and issues.

Question 9

Line Graph

Answer 9

a graph formed by the plotting of data involv- ing two variables and the connecting of the resulting points to form a line of infinite information from the data.

Question 10

Circular Flow Model

Answer 10

a model depicting the flow of economic goods and services between households, business firms, the government, and financial markets.

Question 11

Consumption Expenditures

Answer 11

the total expenditures made by all households.

Question 12

Budget Surplus

Answer 12

Is a situation in which a government, business firm, or individual receives more income than is paid out in expenses.

Question 13

Dissaving

Answer 13

the action of withdrawing money from an account or borrowing money.

Question 14

Demand

Answer 14

the number of units of a product that will be bought at a given price.

Question 15

Demand Curve

Answer 15

a graph illustrating the various quantities of an item that are demanded at various prices.

Question 16

Normal Goods

Answer 16

an item for which demand typically increases when the buyers’ incomes increase.

Question 17

Inferior Goods

Answer 17

an item that typically experiences a de- crease in demand as buyers’ incomes increase.

Question 18

Substitute Goods

Answer 18

Items that resemble one another and that may be used in place of each other.

Question 19

Capitalism

Answer 19

an economic system in which private individuals own most of the factors of production and make most economic decisions.

Question 20

Nationalization

Answer 20

the government’s acquisition of the ownership of major industries.

Question 21

Market Equilibrium Point

Answer 21

The point at which the demand curve and the supply curve for an item intersect.

Question 22

Surplus

Answer 22

an excess of unsold products resulting from a price above the market equilibrium price.

Question 23

Price Floor

Answer 23

a barrier preventing the price of an item from falling lower than a certain price.

Question 24

Shortage

Answer 24

an insufficient supply of an item as a result of a

price below the market equilibrium prices.

Question 25

Price Ceilings

Answer 25

a barrier preventing the price of an item | from rising above a certain price.

Question 26

Labor Intensive

Answer 26

describes a business firm that uses a great deal of human labor relative to real capital.

Question 27

Mercantilism

Answer 27

an economic philosophy commonly held in Europe from the sixteenth to the eighteenth centuries that advocated the accumulation of gold and silver as national wealth.

Question 28

Economic Growth

Answer 28

an increase in the quantity of goods | and services a nation can produce.

Question 29

Privatization

Answer 29

the government’s selling of nationalized businesses back to private owners.

Question 30

Laissez Faire

Answer 30

the idea that the government should generally leave the economy of a nation alone and allow the people to seek their own profit.

Question 31

Limited Partner

Answer 31

a partner in a limited partnership who has no management responsibilities and no liabilities in the firm other than his total investment.

Question 32

Surety

Answer 32

one who obligates himself to pay the debts of an- other; a cosigner.

Question 33

Stock

Answer 33

shares or portions of ownership in a corporation.

Question 34

Mutual Funds

Answer 34

privately managed stock portfolios.

Question 35

Stock Portfolio

Answer 35

a collection of stocks from different individual corporations.

Question 36

Speculative Bubble

Answer 36

Stock prices rising in an industry or across the entire market simply because of expectations and rising in excess of the corporations’ true values.

Question 37

SEC

Answer 37

(Securities and Exchange Commission) a govern­ mental agency founded to ensure that corporations pro­ vide accurate and current information to the public about their financial situations and their business dealings.

Question 38

NYSE

Answer 38

(New York Stock Exchange) | the most well- known and reputable stock market in the world.

Question 39

Market

Answer 39

arrangements people have developed for trading with one another.

Question 40

Savings and Loans

Answer 40

A financial institution designed to collect savings and use that capital to make loans.

Question 41

Subsidy

Answer 41

a government’s payment to a producer to help with manufacturing costs.

Question 42

Peak Phase

Answer 42

That part of the business cycle in which rapid expansion comes to a halt as shortages in natural resources, high wages, low unemployment, and rising interest rates combine to create higher prices for consumers.

Question 43

Underemployed

Answer 43

those workers who have a job but earn insufficient income for them to be able to provide a living for themselves.

Question 44

Recessions Phase

Answer 44

that part of the business cycle in which consumer purchases decline and unemployment increases.

Question 45

Tarrif

Answer 45

a tax on an imported product.

Question 46

Federal Reserve System

Answer 46

the governmental institution that serves as the central bank of the United States.

Question 47

Elastic Currency

Answer 47

a money supply that can be expanded or contracted.

Question 48

FICA

Answer 48

( Federal Insurance Contribution Act ) | legisla­tion requiring the deduction of social security taxes from workers’ paychecks.

Question 49

GDP Gross Domestic Product

Answer 49

the total dollar value of all final goods and services produced by a nation in one year

Question 50

Free Trade

Answer 50

a condition in which governments do not im­ pose trade legislation and people are free to buy and sell products regardless of the nation that produced them.

Question 51

Fiat Money

Answer 51

money that is not backed by anything of value but serves as money because of governmental decree.

Question 52

What are the Seven Baby Steps?

Answer 52

- $1,000 to start an Emergency Fund - Pay off all debt using the Debt Snowball - 3-6 months of expenses in savings - Invest 15% of household income into Roth IRAs and pre-tax retirement - College funding for children - Pay off home early - Build wealth and give

Question 53

Law of Supply

Answer 53

a law stating that the higher the price buy- ers are willing to pay, other things being held constant, the greater the quantity of the product a supplier will produce and vice versa.