Macro Economics 1

Question 1

Absolute Advantage

Answer 1

The producer can produce the most output or requires the least amount of input(resources)

Question 2

Comparative Advantage

Answer 2

The producer with the lowest opportunity cost should produce a certain good and then trade the surpluses with foreign nations - David Ricardo

Question 3

Private Sector

Answer 3

Part of the economy run by individuals and businesses

Question 4

Public Sector

Answer 4

Part of the economy that is controlled by the government

Question 5

Factor Payment

Answer 5

Factors of production like rent, wages, interest and profit

Question 6

Transfer Payments

Answer 6

Government redistributing income through welfare payments or social security

Question 7

Subsidies

Answer 7

Government payments to businesses

Question 8

Law of Demand

Answer 8

There is a inverse relationship between price and quantity demanded

Question 9

Law of Supply

Answer 9

There is a direct relationship between price and quantity supplied

Question 10

Scaricy

Answer 10

We have unlimited wants but limited resources

Question 11

Opportunity Cost

Answer 11

Most desirable alternative given up when you make a decision

Question 12

Factors of Production

Answer 12

Land, Capital, Labor

Question 13

PPC (on the curve)

Answer 13

efficient

Question 14

PPC (outside the curve)

Answer 14

impossible given the current resources

Question 15

PPC (inside the curve)

Answer 15

inefficient/unemployment

Question 16

Constant Opportunity Cost

Answer 16

similar resources, straight line PPC

Question 17

Increasing Opportunity Cost

Answer 17

not very similar resources, bold out curve

Question 18

Shifting the PPC?

Answer 18

1.more resources 2.trade

Question 19

Surplus

Answer 19

Price is above the market eqilibrium

Question 20

Shortage

Answer 20

Price is underneath the market eqilibrium