Economics, Money and Banking

Question 1

Economy

Answer 1

The sum of all econmic activity within a given region, from city to a country tothe entire world

Question 2

Economics

Answer 2

• The study of how a society uses its scarce resources to produce and distribute goods and services
• Divided into a small-scale and large-scale perspective

Question 3

Microeconomics

Answer 3

how consumers, businesses and industries determine the
quantity of good and services at different prices

Question 4

Macroeconomics

Answer 4

The study of the big picture issues in an economy involving government policies and firms behavior

Question 5

Factors of production

Answer 5

Economic resources, including natural resouces, HR, capital, entrepreneurship and knowledge

Question 6

Economic System

Answer 6

the basic set of rules for allocating resources to satisfy its citizens’ needs.

Question 7

Types of Economic Systems

Answer 7

1. Free-Market System
2. Socialism
3. Communism

Question 8

Free-Market System

Answer 8

AKA Capitalism. When private parties operate the majority of the business and competition is what
determines the price of goods and services. Government policies support
entrepreneurship.

Question 9

Socialism

Answer 9

when the state owns certain productive resources and tries to minimize the differences
between economic classes

Question 10

Communism

Answer 10

When the state owns all major productive resources with few or no oppurtunities for entrepreneurship

Question 11

Scaricity

Answer 11

given resource has a finite supply

Question 12

Effects of Scarcity

Answer 12

It creates competition for resources, and it forces trade-offs on the part of every participant in the economy

Question 13

Economic Indicators

Answer 13

are statistics such as interest rates, unemployment rates, housing data, and industrial productivity that let business and political leaders measure and monitor economic performance

Question 14

Gross Domestic Product (GDP)

Answer 14

Measures a country’s outputs (products and services) in
a year. The products can be produced by a domestic or foreign company, as long as the production takes place within that country.

Question 15

What does GDP measure?

Answer 15

Monitoring GDP helps a nation evaluate its economic policies and compare current performance with prior periods or with the performance of other nations.

Question 16

Consumer Price Index (CPI)

Answer 16

measures the rate of inflation by comparing the changes in prices in certain product categories.

Question 17

Unemployment Rate

Answer 17

indicates the percentage of the labor force currently without
employment.

Question 18

Demand

Answer 18

is the amount of a good or service that customers will buy at a certain
price

Question 19

Demand Curve

Answer 19

a graph that shows the amount of product that buyers will purchase at various prices, all other factors being equal. Demand curves typically slope downward, implying that as price drops, more people are willing to buy.

Question 20

Supply

Answer 20

is the amount of a good or service that producers will provide at various
prices

Question 21

Supply Curve

Answer 21

The relationship between prices and quantities that sellers will offer for sale, regardless of demand. Movement along the supply curve typically slopes upward: As prices rise, the quantity that sellers are willing to supply also rises.

Question 22

The Equillibirium Price

Answer 22

when the amount of the product that suppliers are willing to sell at a certain price equals the amount that customers are willing to buy at that price.

Question 23

Pure Competition

Answer 23

is when multiple buyers and sellers can coexist and sell at various prices.

Question 24

Monopoly

Answer 24

when one company dominates the market and controls prices

Question 25

Oligoploy

Answer 25

when a small number of suppliers (even two) control the market and prices. Barriers to entry tend to be high.

Question 26

Business Cycles

Answer 26

Fluctuations in the rate of growth that an economy experiences over a period of several years

Question 27

Recession

Answer 27

a period during which national income, employment and production all fall; often defined as at least six months of decline in the GDP