Final

Question 1

Economics

Answer 1

the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources

Question 2

Scarcity

Answer 2

the condition that results from society not having enough resources to produce all the things people would like to have

Question 3

The Factors of Production (4)

Answer 3

• Land
• Capital
• Labor
• Entrepreneurs

Question 4

Entreprenuer

Answer 4

a risk taker in search of profits who does something new with existing resources

Question 5

Division of Labor

Answer 5

work is arranged so that individual workers do fewer tasks than before

Question 6

Specialization

Answer 6

factors of production perform tasks that they can do relatively more efficiently than others

Question 7

Trade-Offs

Answer 7

alternative choices whenever people make an economic decision

Question 8

Opportunity Cost

Answer 8

the cost of the best alternative use of money, time, resources when one choice is made rather than another

Question 9

Production Possibilities Frontier

Answer 9

a diagram representing various combos of goods and/or services an economy can produce when all productive resources are fully employed

Question 10

Traditional Economy

Answer 10

the allocation of scarce resources, and nearly all other economic activity, stems from ritual, habit, or custom

Question 11

Command Economy

Answer 11

a central authority makes most of the WHAT, HOW, and FOR WHOM decisions

Question 12

Market Economy

Answer 12

people and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM questions

Question 13

Economic Freedom

Answer 13

people are able to choose their occupations, employers, and uses for their money

Question 14

Private Property

Answer 14

people can own and control their property

Question 15

Voluntary Trade

Answer 15

the acts of buyers and sellers freely and willingly engaging in market transactions

Question 16

Profit Motive

Answer 16

the driving force that encourages people and organizations to improve their material well-being

Question 17

Competition

Answer 17

the struggle among sellers to attract consumers while lowering costs

Question 18

Law of Demand

Answer 18

states that the quantity demanded of a good or service varies inversely with its prices

Question 19

Law of Supply

Answer 19

states that suppliers with normally offer more for sale at all possible prices that could prevail in the market

Question 20

Demand Elasticity

Answer 20

the extent to which a change in price causes a change in the quantity demanded

Question 21

Total Cost

Answer 21

the sum of the fixed and variable costs

Question 22

Fixed Cost

Answer 22

the cost that a business incurs even if the plant is idle and output is zero

Question 23

Variable Cost

Answer 23

a cost that changes when the business rate of operation or output changes

Question 24

Surplus

Answer 24

a situation in which the quantity supplied is greater than the quantity demanded

Question 25

Shortage

Answer 25

a situation in which the quantity demanded is greater than the quantity supplied

Question 26

Price floor

Answer 26

lowest legal price that can be paid for a good or a service

Question 27

Rationing

Answer 27

a system under which an agency such as the government decides everyone’s fair share

Question 28

Criteria of Effective Taxes (3)

Answer 28

• Equity
• Simplicity
• Efficiency

Question 29

Progressive Tax

Answer 29

higher tax rate for higher income people

Question 30

Regressive Tax

Answer 30

lower tax rate for lower income people

Question 31

Mandatory Spending

Answer 31

spending authorized by law that continues without the need for annual approvals of Congress

Question 32

Discretionary Spending

Answer 32

programs that must receive annual authorization

Question 33

The President’s Role in the Federal Budget Process (2)

Answer 33

• establishes the general guidelines for a multi-year period

- approves final budget

Question 34

Federal Debt

Answer 34

total amount borrowed from investors to finance the government’s deficit spending

Question 35

Federal Deficit

Answer 35

an excess of expenditures over revenues

Question 36

Entitlements

Answer 36

broad social programs that use established eligibility requirements to provide health, nutritional, or income supplements to individuals

Question 37

Office of Management and Budget

Answer 37

the division of the executive branch primarily responsible for assembling the budget under presidential guidelines

Question 38

FDIC

Answer 38

created in response to the problems during the Great Depression; insures customer deposits in the event of a bank failure