Economics FINAL :c

Question 1

economics

Answer 1

The scientific study of the allocation of scarce resources in order to fulfill society’s wants and needs

Question 2

scarcity

Answer 2

Limited quantities of resources to meet unlimited wants

Question 3

efficiency

Answer 3

the point at which the quantity demanded and the quantity supplied are equal

Question 4

demand

Answer 4

The quantity of a good or service that people are willing and able to purchase at a given price

Question 5

law of demand

Answer 5

As price rise, demand will decrease (Indirect relationship)

Question 6

supply

Answer 6

What producers are willing to produce at a certain price

Question 7

law of supply

Answer 7

As price goes up. supply does up (direct relationship)

Question 8

surplus

Answer 8

Any situation where quantity supplied exceeds the quantity demanded

Question 9

shortage

Answer 9

Any situation where quantity demanded exceeds the amount in supply

Question 10

factors of production

Answer 10

Land, labor, capital, and entrepreneurs

Question 11

“guns or butter”

Answer 11

Economists call the trade-off countries have to make between choosing to produce military or consumer goods.

Question 12

opportunity cost

Answer 12

value of the best alternative given up when a choice is made

Question 13

incentive

Answer 13

motivation to make a certain choice

Question 14

market

Answer 14

where goods are bought and exchanged

Question 15

entrepreneur

Answer 15

a person willing to take a financial risk by combining resources to produce a good or service

Question 16

laissez faire

Answer 16

“hands off” no government regulation in business

Question 17

production possibilities curve

Answer 17

the combination of goods that can be produced with a set of resources

Question 18

equilibrium

Answer 18

Point at which quantity demanded and quantity supplied are equal

Question 19

gross domestic product (GDP)

Answer 19

Useful in determining economic growth. Real GDP is used to measure economic growth

Question 20

stock

Answer 20

represents ownership of a company. It is a way for corporations to raise money.

Question 21

profit

Answer 21

provides incentive for entrepreneur to take risks, money made

Question 22

subsidy

Answer 22

a government payment to support a business or market

Question 23

IPO

Answer 23

Initial Public Offering, when a company “goes public”

Question 24

What are the three basic economics questions?

Answer 24

how to produce, what to produce, for whom to produce

Question 25

Define and explain the advantages and disadvantages of the following forms of business organization: sole proprietorship

Answer 25

Takes on the most liability

Question 26

Define and explain the advantages and disadvantages of the following forms of business organization: sole proprietorship Define and explain the advantages and disadvantages of the following forms of business organization: partnership

Answer 26

splits liability

Question 27

Define and explain the advantages and disadvantages of the following forms of business organization: corporation

Answer 27

provided limited liability

Question 28

Discuss the advantages and disadvantages of the Free Market Economy.

Answer 28

Consumers are in charge | Disadvantage: government regulation

Question 29

How does a nation improve its standard of living?

Answer 29

through innovation

Question 30

What is the difference between demand and quantity demanded? Give an example of what would cause a change in each.

Answer 30

Demand is a change in price that causes a good to move up or down on the demand curve. Change in quantity demanded would cause the entire curve to shift (i.e. a change in consumer income levels)

Question 31

What is the difference between supply and quantity supply? Give an example of what would cause a change in each.

Answer 31

Supply is a change in price that causes a good to move up or down on the supply curve. Chang is quantity supplied would cause the entire curve to shift (i.e. a change in the price of resources)

Question 32

How do credit card companies make money?

Answer 32

interest

Question 33

What is a minimum payment on a credit card?

Answer 33

2-3% of your balance that is required to be paid every month

Question 34

What is included on your credit report?

Answer 34

Payment history, lines of credit, current total debt

Question 35

What is the Rule of 72?

Answer 35

Divide 72 by the interest rate to ascertain number of years to double an investment

Question 36

What does a production possibilities curve illustrate?

Answer 36

The combination of goods that can be produced with a set of resources

Question 37

What role do competition and self interest play in the free market?

Answer 37

Motivating factors that affect supply and demand

Question 38

What are the features of a market economy?

Answer 38

Supply and demand determine price

Question 39

How do economists calculate inflation?

Answer 39

Consumer Price Index

Question 40

What affects growth of savings over time?

Answer 40

time, investment size and interest rate

Question 41

How does risk relate to investment?

Answer 41

The higher the risk the higher rate of return or loss

Question 42

What is the difference between common and preferred stock?

Answer 42

Preferred stock: you get paid first | Common stock: you get to vote

Question 43

In a traditional economy, what are economic decisions based on?

Answer 43

Habit, custom or ritual decide question or production and consumption of goods and services

Question 44

Who is in charge of fiscal policy?

Answer 44

Federal Government (Congress) through taxation and spending

Question 45

Who is in charge of monetary policy?

Answer 45

Federal Reserve Bank through the setting of interest rates, buying bonds

Question 46

When would the government practice expansionary policy?

Answer 46

during a recession

Question 47

When would the government practice contractionary policy?

Answer 47

during times of inflation

Question 48

What type of economic system does America have?

Answer 48

modified free enterprise system

Question 49

What is the purpose of government safety net programs?

Answer 49

ask rose