Handout 1

Question 1

Economics

Answer 1

The study of how societies allocate their scarce resources

Question 2

Microeconomics

Answer 2

Focuses on understanding individuals’ motivations and their resulting actions that impact a society’s allocation of resources

Question 3

Aggregation

Answer 3

Sum total

Question 4

Macroeconomics

Answer 4

Viewing an entire economy as an indivisible unit in much the same way that a forest is often though of as a single entity instead of as a complex aggregation of trees, rabbit, birds, mosses, etc

Question 5

Capital

Answer 5

Something productive

Question 6

Fiscal Policy

Answer 6

Government policy designed to influence the sizes of the four shares (Consumption by households, Creating new capital, Used by gov’t, Exported to some other society)

Question 7

Inflation

Answer 7

Rising prices across the economy

Question 8

Monetary Policy

Answer 8

A government’s actions affecting the amount of money circulating around its economy is called monetary policy

Question 9

Recession

Answer 9

A poorly functioning economy

Question 10

Fallacy of composition

Answer 10

It is wrong to automatically conclude that what is true for a member of a group is true for the group as a whole

Question 11

Social Welfare

Answer 11

Society’s well-being