LESSON 1

Question 1

_______ achieved by avoiding or limiting fluctuations in production, employment, and prices. It seeks to avoid the recessionary declines and inflationary expansions

Answer 1

Stability

Question 2

Defined as any situation where making one choice means losing something else, usually forgoing a benefit or opportunity.

Answer 2

Tradeoff

Question 3

The pursuit of the five economic goals is inherently an act of..

Answer 3

Normative Economics

Question 4

In a mixed economy, the pursuit of these goals is largely directed by..

Answer 4

Government

Question 5

In an economy, production, consumption and exchange are carried out by three basic economic units:

Answer 5

Firms
Households
Government

Question 6

Economic unit that makes the production decisions

Answer 6

Firms

Question 7

Economic unit that makes consumption decisions and own factors of production.

Answer 7

Households

Question 8

Collects taxes from households, buys goods from firms, and distributes those goods to households individually or collectively.

Answer 8

Government

Question 9

______achieved by increasing the economy’s ability to produce goods and services. This goal is best indicated by measuring the growth rate of production.

Answer 9

Economic Growth

Question 10

(Imports and Exports) Instead of money, this sector typically injects goods into the circular flow model in the form of imports and leaks goods in the form of exports.

Answer 10

Foreign Countries/Foreign Sectors

Question 11

Latin phrase meaning ‘all other things remaining equal’

Answer 11

Ceteris Paribus

Question 12

A social science that deals with the production, distribution, and consumption of goods and services.

Answer 12

Economics

Question 13

The two Nature of Economics

Answer 13

Economics as a Science
Economics as an Art

Question 14

Scope of economics thatexamines individual activity, industries, and their interaction.

Answer 14

Microeconomics

Question 15

The study of the economy as a whole.

Answer 15

Macroeconomics

Question 16

The theory which refers to the price of an individual commodity is determined by the market forces of demand and supply.

Answer 16

Theory of Product Pricing

Question 17

The twomost important goals for microeconomics

Answer 17

Efficiency
Equity

Question 18

Deals with efficiency in allocation of resources.

Answer 18

Theory of Economic Welfare

Question 19

The focus of microeconomics is mainly confined to..

Answer 19

Price Theory
Resource Allocation

Question 20

Refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.

Answer 20

Economic Policy

Question 21

Factor that suggest Microeconomics, land, labor, capital and entrepreneur are the factors that contribute to the production process. Microeconomics helps in determining the factor rewards for land, labor, capital, and entrepreneur in the form of rent, wages, interest, and profit respectively.

Answer 21

Theory of Factor Pricing

Question 22

It generally directed to achieve four major goals: stabilizing markets, promoting economicprosperity, ensuring business development, and promoting employment.

Answer 22

Policy

Question 23

The type of economy that has five conditions including full employment, stability, economic growth, efficiency, and equity, that are generally desired by society and pursued by governments through economic policies.

Answer 23

Mixed Economy

Question 24

_______is achieved when all available resources (labor, capital, land, and entrepreneurship) are used to produce goods and services

Answer 24

Full Employment

Question 25

The three most important goals for macroeconomics

Answer 25

Full employment
Stability
Economic growth

Question 26

_____ is achieved when society is able to get the greatest amount of satisfaction from available resources

Answer 26

Efficiency

Question 27

_____ is achieved when income and wealth are fairly distributed within a society

Answer 27

Equity