Economics Exam Study Guide

Question 1

Profits

Answer 1

The reward for taking the risk

Question 2

GDP

Answer 2

the sum of all goods and services

Question 3

Productivity

Answer 3

total output over total input

Question 4

Invisible Hand

Answer 4

the force of everyone voting with their dollars

Question 5

economics

Answer 5

social science that analyzes the choices made by people and governments

Question 6

entrepreneur

Answer 6

someone who takes a business risk

Question 7

Price

Answer 7

what a business charges

Question 8

cost

Answer 8

what a business pays

Question 9

stocks

Answer 9

predictors of the future economy

Question 10

pure competition

Answer 10

a lot of suppliers where all products are the same

Question 11

monopolistic

Answer 11

a lot of suppliers trying to differentiate

Question 12

Oligopoly

Answer 12

only a few suppliers

Question 13

Monopoly

Answer 13

only one business offers a certain product

Question 14

Monopsony

Answer 14

a lot of suppliers, only one buyer

Question 15

Capitalism

Answer 15

freedom to create companies/let them fail

Question 16

Socialism

Answer 16

the government owns the big businesses

Question 17

Communism

Answer 17

the government owns all businesses

Question 18

Inflation

Answer 18

rising prices caused by people having more money

Question 19

CPI

Answer 19

measures the monthly average change in prices of goods and services

Question 20

Index

Answer 20

a number invented to measure something

Question 21

Real

Answer 21

describe a measure with inflation subtracted out

Question 22

hyper inflation

Answer 22

inflation increases dramatically

Question 23

Unemployment

Answer 23

the number of people looking for jobs who can’t find them

Question 24

Seasonal unemployment

Answer 24

caused by seasonal variations

Question 25

Frictional unemployment

Answer 25

caused by labor market turnovers

Question 26

Cyclical unemployment

Answer 26

caused by the business cycle

Question 27

Structural unemployment

Answer 27

caused by worker not having appropriate skills

Question 28

Recession

Answer 28

occurs approximately every 8 years

Question 29

monetary policy

Answer 29

government controlling the economy by controlling the money supply

Question 30

Federal Reserve

Answer 30

produces money and sets interest rates

Question 31

fiscal policy

Answer 31

government controlling the economy by taxing and spending

Question 32

Spending

Answer 32

takes money from one pocket and puts it in another

Question 33

imports

Answer 33

things we bring into the country

Question 34

exports

Answer 34

things we send out of the country

Question 35

balance of trade

Answer 35

the measure of how our economy is doing, difference between a nations exports and imports

Question 36

Surplus

Answer 36

when exports are greater than imports

Question 37

deficit

Answer 37

when imports are greater than exports

Question 38

floating exchange rate

Answer 38

when the supply and demand determines what the exchange rate will be

Question 39

foreign currency

Answer 39

worth whatever someone is willing to pay for it

Question 40

hard currency

Answer 40

no limit on the amount of money you can exchange

Question 41

soft currency

Answer 41

limit on how much money can be exchanged

Question 42

tariff

Answer 42

tax on imports

Question 43

quota

Answer 43

limit on the number of a product that can be imported

Question 44

embargo

Answer 44

halting all imports to a country with intent to hurt them economically

Question 45

Private enterprise system

Answer 45

economic system in which business success or failure depends on how well firms match and counter the offerings of competitors

Question 46

Recession

Answer 46

cyclical economic contraction that lasts for at least six months

Question 47

Cost-push inflation

Answer 47

Generated by rises in costs of factors of production

Question 48

Demand-pull inflation

Answer 48

Excess consumer demand

Question 49

Unemployment rate

Answer 49

an indicator of a nation's economic health

Question 50

Tariff wars

Answer 50

When countries put tariffs on each other back and forth

Question 51

common market

Answer 51

countries deciding to treat all their products as one

Question 52

NAFTA

Answer 52

North American Free Trade Agreement

Question 53

TPP

Answer 53

Trans-Pacific Partnership

Question 54

World Bank

Answer 54

allows countries to borrow money for projects

Question 55

IMF

Answer 55

loans money to countries to help bail them out

Question 56

Antitrust laws

Answer 56

designed to protect us/businesses

Question 57

Competitors

Answer 57

cannot talk about prices and cannot agree to compete

Question 58

Liability

Answer 58

the responsibility a company has for its actions

Question 59

intellectual property

Answer 59

things that aren't always tangible

Question 60

copyrights

Answer 60

one way to protect intellectual property

Question 61

patents

Answer 61

protect inventions, gives a person a legal monopoly