Introduction to Economics Flashcards
Economics is the study of how people make ____________ to satisfy their ____________ with limited ____________.
decisions, wants, resources.
What is the problem called when resources are limited?
scarcity
What is given up when a choice is made called?
opportunity cost
The three basic economic questions all societies must answer are: What to produce? How to produce it? _____ ________ to produce it?
For whom
Inflation is the rate at which the general price of goods and services __________ over time.
rises
As inflation increases, the purchasing power of money __________.
decreases
Supply is the amount of a good or service that producers are __________ and able to sell at different __________.
willing, prices
Demand is the amount of a good or service that __________ are willing and able to buy at different __________.
consumers, prices
The point where supply and demand meet is called the __________ price.
equilibrium
The economy operates like a system where money, goods, and services move between __________ and __________.
individuals, businesses
The system where money moves from individuals to businesses is called the __________ ________ model.
circular flow
In the product market, households buy goods and services from businesses using their __________.
income
In the resource market, people provide their __________ to businesses in exchange for __________.
labor, wages
The __________ is also part of the circular flow, collecting __________ to pay for public services.
government, taxes
A free market economy is driven by __________ and __________ __________.
competition, consumer demand
A command economy is controlled by the __________, which makes all economic decisions.
government
A mixed economy is a combination of a _________ __________ __________ and a __________ __________.
free market economy, command economy
In a traditional economy, people often perform the same type of __________ as their parents or grandparents.
jobs
There are three main types of businesses: __________, __________, and __________.
sole proprietorships, partnerships, corporations
A sole proprietorship is a business owned by __________ person.
one
The owner of a sole proprietorship is responsible for all profits and __________.
losses
A partnership is a business owned by _____ ___ ______ people.
two or more
In a corporation, the business is legally separate from its __________.
owners
An __________ takes the risk of starting a new business.
entrepreneur
Banks move money from __________ to __________.
savers, borrowers
What do savers earn when they deposit money in a bank?
interest
What do borrowers pay when they take out a loan?
interest
How do banks help businesses and individuals?
They provide loans to help with investments and purchases.
The U.S. economy is a mixed economy, meaning it has elements of both a __________ economy and a __________ economy.
free market, command economy
Some key characteristics of the U.S. economy include private ownership, competition, __________ enterprise, and limited government.
free
Free enterprise + democracy = __________ & __________ FREEDOM!
political, economic
Virginia and the United States want to pursue __________ __________ to make $$$!
international trade
Governments collect __________ to pay for public services such as schools, roads, and defense.
taxes
A monopoly occurs when one company controls an entire industry, reducing __________ and limiting choices for consumers.
competition
