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ECONOMICS > MASTERY TEST > Flashcards

MASTERY TEST Flashcards

1
Q

“Economics is a social science, not a physical science.”

A

Jim Stanford

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2
Q

It is the study of human efforts to satisfy what appears to be unlimited and competing wants through the careful use of relatively scarce resources.

A

Economics

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3
Q

It deals with the behavior of people as they cope with the fundamental problem of scarcity.

A

Economics as a Social Science

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4
Q

Using real-life scenarios to build models that are used to make assumptions.

A

Economics as a Social Science

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5
Q

The country’s unemployment rate is 5.1 percent.

A

POSITIVE ECONOMIC STATEMENT

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6
Q

POSITIVE ECONOMIC
STATEMENT

A
  • realities that can be proved or disproved, supported, or rejected by reference to facts.
  • must be subject to verification or reputation by reference to the facts.
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7
Q

Realities that can be proved or disproved, supported, or rejected by reference to facts.

A

POSITIVE ECONOMIC
STATEMENT

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8
Q

Must be subject to verification or reputation by reference to the facts.

A

POSITIVE ECONOMIC
STATEMENT

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9
Q

The present unemployment rate should be lower.

A

NORMATIVE ECONOMIC STATEMENT

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10
Q

NORMATIVE ECONOMIC
STATEMENT

A
  • represents an opinion
  • cannot be approved or disproved, nor shown to be true or false by reference to facts.
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11
Q

MAJOR DIVISIONS OF ECONOMICS

A
  • MICROECONOMICS
  • MACROECONOMICS
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12
Q

It represents an opinion

A

NORMATIVE ECONOMIC
STATEMENT

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13
Q

It cannot be approved or disproved, nor shown to be true or false by reference to facts.

A

NORMATIVE ECONOMIC
STATEMENT

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14
Q

Greek prefix “_____” which means small.

A

mikro

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15
Q

Studies the economic behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

A

MICROECONOMICS

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16
Q

Individual market and individual consumer behavior

A

MICROECONOMICS

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17
Q

Greek prefix “_____” which means large.

A

makro

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18
Q

Studies the performance of the economy as a whole.

A

MACROECONOMICS

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19
Q

Deals with economy-wide sum such as total production.

A

MACROECONOMICS

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20
Q

Monetary policy, economic growth, inflation, unemployment, and government borrowing.

A

MACROECONOMICS

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21
Q

It is a basic requirement for survival.

A

Need

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22
Q

These are physiological needs, safety needs, love and belonging, esteem needs, and self-actualization needs.

A

Needs

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23
Q

It is something that is desired.

A

Want

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24
Q

It is a means of expressing a need. Food, for example, is a basic need related to survival. To satisfy this need, a person may “want” a pizza, hamburger, or other food.

A

Want

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25
Q

It is a tangible commodity.

A

Good

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26
Q

intended for final use by individuals. Ex: food, appliances, clothing, and automobiles.

A

Consumer Good

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27
Q

a manufactured good used to produce other goods and services.

A

Capital Good

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28
Q

any good that lasts three years or more when it is used on a regular basis.

A

Durable Good

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29
Q

provided for public use.

A

Public Good

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30
Q

Examples of Public Good

A

-public museums

-libraries.

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31
Q

Examples of Durable Good

A
  • furnitures
  • cars
  • consumer electronics.
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32
Q

Examples of Capital Good

A
  • machinery
  • tools.
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33
Q

Examples of Consumer Good

A
  • food
  • appliances
  • clothing
  • automobiles
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34
Q

Economic Products

A
  • Goods
  • Services
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35
Q

It is a work that is performed for someone.

A

Service

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36
Q

It is something that cannot be touched or felt.

A

Service

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37
Q

It include haircuts, home repairs, and forms of entertainments.

A

Service

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38
Q

Resources —-X—-> Needs and Wants

A

SCARCITY OF PRODUCTIVE RESOURCES

39
Q

FACTORS OF PRODUCTION

A
  • Land
  • Capital
  • Labor
  • Entrepreneurs
40
Q

Refers to the “gift of nature”, or natural resources not created by human effort.

A

Land

41
Q

Include the tools, equipment, and factories used in the production of goods and services.

A

Capital

42
Q

Refers to all people with all their efforts, abilities, and skills except for a unique group of individuals, called entrepreneurs.

A

Labor

43
Q

Refers to innovators responsible for much of the change in the economy. They are risk-taker in search of profits.

A

ENTREPRENEURS

44
Q

HE STATES THAT THE FOUR FACTORS OF PRODUCTION PROVIDE THE MEANS FOR SOCIETY TO PRODUCE AND DISTRIBUTE ITS GOOD AND SERVICES.

A

CLAYTON (1995)

45
Q

Remember, goods and services are scarce because the factors of production used to produce them are scarce. In case you have forgotten, scarcity is described as limited quantities of resources to meet unlimited wants. Consider a pair of denim blue jeans. The denim is made of cotton, grown on the land. The land and water used to grow the cotton is limited and could have been used to grow a variety of different crops. The workers who cut and sewed the denim in the factory are limited labor resources who could have been producing other goods or services in the economy. The machines and the factory used to produce the jeans are limited capital resources that could have been used to produce other goods. This scarcity of resources means that producing some goods and services leaves other goods and services unproduced.

A

The four factors of production are interconnected in many ways.

46
Q

THREE BASIC ECONOMIC QUESTIONS

A
  • WHAT TO PRODUCE?
  • HOW TO PRODUCE?
  • FOR WHOM TO PRODUCE?
47
Q

IS THE THIRD QUESTION. AFTER SOCIETY DECIDES WHAT TO PRODUCE AND HOW TO PRODUCE THEM, THE ITEMS PRODUCED MUST BE ALLOCATED TO SOMEONE.

A

FOR WHOM TO PRODUCE?

48
Q

IS THE SECOND QUESTION SHOULD A FACTORY OWNER USE ASSEMBLY-LINE METHODS THAT REQUIRE LITTLE LABOR, OR SHOULD THEY USE LESS EQUIPMENT AND MORE WORKERS? IF AN AREA HAS MANY UNEMPLOYED PEOPLE, THE SECOND METHOD MIGHT BE BETTER. ON THE OTHER HAND, ASSEMBLY LINE METHOD IN COUNTRIES WHERE CAPITAL IS WIDELY AVAILABLE USUALLY HAVE LOWER PRODUCTION COSTS. LOWER COSTS MAKE MANY LESS EXPENSIVE MANUFACTURED ITEMS AND THEREFORE, AVAILABLE TO MORE PEOPLE.

A

HOW TO PRODUCE?

49
Q

IS THE FIRST QUESTION SHOULD A SOCIETY DEVOTE MOST OF ITS RESOURCES TO PRODUCING MILITARY EQUIPMENT OR THE OTHER ITEMS SUCH AS FOOD, CLOTHING, OR HOUSING.

A

WHAT TO PRODUCE?

50
Q

is the study of economics in relation to real life situations.

A

Applied Economics

51
Q

is the study of observing how theories work in practice.

A

Applied Economics

52
Q

It is the application of economic principles and theories to actual situations, and trying to predict what the outcomes might be.

A

Applied Economics

53
Q

Applied economics may be practiced at these two levels below:

A
  • Macroeconomic
  • Microeconomic
54
Q

analyzing individual consumers and companies

A

Microeconomic

55
Q

the whole, aggregate economy

A

Macroeconomic

56
Q

who is famous for his Say’s Law or the law of market,

A

Jean-Baptiste Say (1767-1832)

57
Q

the British political economist, philosopher, and civil servant,

A

John Stuart Mill (1806-1873).

58
Q

work, on the other hand, is on the Principles of Political Economy with Some of Their Applications to Social Philosophy.

A

John Stuart Mill (1848)

59
Q

wrote about applying the
“general principles of political economy” to “ascertain the rule of action of any
combination of circumstances presented to us”

A

Jean-Baptiste Say

60
Q

It is all about thinking things up,

A

Economic Theory

61
Q

It is about trying things out.

A

Applied Economics

62
Q

is the application of economic theory and econometrics in specific settings (Market
Business News 2016)

A

Applied economics

63
Q

Points to learn…

A

• Robust background in applied economics allows people to make informed forecasts about future trends.
• Knowledge in applied economics provides the student with a broader perspective on the application of economic theory to real world issues but less knowledge of core economic theory.
• Applied economics is the application of economic theory and econometrics in specific settings (Market
Business News 2016)

64
Q

is defined as a well substantiated explanation of some aspects of the natural world.

A

Theory

65
Q

is defined as a theory on commercial activities such as the production and consumption of goods.

A

Economic Theory

66
Q

MALTHUSIAN THEORY OF
POPULATION GROWTH

A

Thomas Robert Malthus,

67
Q

an English cleric and scholar, examined the relationship between population growth and resources.

A

Thomas Robert Malthus,

68
Q

If every member of a family tree reproduces, the tree will continue to grow with each generation.

A

MALTHUSIAN THEORY OF
POPULATION GROWTH

69
Q

ADAM SMITH AND THE WEALTH OF NATIONS

A

Adam Smith

70
Q

a Scottish economist and philosopher, was a pioneer in political economy and modern economics.

A

Adam Smith

71
Q

His best-known work “An Inquiry into the Nature and Cause of the Wealth of Nations” commonly called “ The Wealth of Nations” was published in 1776.

A

Adam Smith

72
Q

Wealth of nations was published in.

A

1776

73
Q

The book offers a detailed description of life and trade in English society. It also scientifically describes the basic principles of economics.

A

ADAM SMITH AND THE WEALTH OF NATIONS

74
Q

Economic ideas of Adam Smith

A

• Productivity and Wealth

• Invisible Hand

• Laissez-Faire

75
Q

The Wealth of Nations was ridiculed by aristocracy in parliament at that time. Business people, however, were delighted to have a moral justification for their growing wealth power. Eventually, the doctrine of laissez-faire, meaning no government intervention in economic affairs, became the watchword of the day in Great Britain.

A

• Laissez-Faire

76
Q

One of Smith’s most important contributions deals with the competition in the marketplace. He argued that competition, together with the free market system, would act as an invisible hand that would guide resources to their most productive use.
He also believed that under competitive conditions, individuals acting naturally in their own self-interest would bring the greatest good for society as a whole.

A

Invisible Hand

77
Q

Smith observed that labor becomes more productive as each worker becomes more skilled at a single job. He also said that new machinery and the division and specialization of labor would lead to an increase in production and greater wealth for the nation.

A

Productivity and Wealth

78
Q

is a doctrine that claims that an economic system should be free from government intervention or moderation, and be driven only by the market forces. It is centered on the belief that when humans are self-interested and, when they are not interfered, a balanced system of production and exchange, arises.

A

laissez-faire

79
Q

laissez-faire

A

laissez-faire

80
Q

MODERN
ECONOMIC THEORIES

A
  1. Consumerism-
  2. Keynesianism-
  3. Liberalism-
  4. Monetarism-
  5. Utilitarianism-
81
Q

is the application of statistical and mathematical theories in economics for the purpose of testing hypotheses and forecasting future trends.

A

Econometrics

82
Q

Points to learn…
• An example of real-life application of econometrics would be to study to income effect. An economist may hypothesize that as a person increases his income, his spending will also increase. The hypothesis can be tested and proven using econometric tools like frequency distributions or multiple regression analysis.

A
83
Q

Without evidence, economic theories are abstract and might have no bearing on reality.
According to Judge (2017), the following are the goals of studying econometrics:

A

The first goal is to test a hypothesis. It allows you to conduct applied econometric studies of your own, which can be very useful if you are also doing a dissertation.

The second goal is to critically assess the empirical work of others. This can be helpful when discussing the relevant academic literature in any other module and to be able to comment on why a particular technique may or may not be appropriate can often be impressive.

84
Q

bases the moral worth of an action upon the number of people who derive happiness or pleasure from it.

A

Utilitarianism

85
Q

states that an increasing consumption of goods is economically beneficial.

A

Consumerism

86
Q

popularized by John Maynard Keynes, advocates government monetary and fiscal programs intended to stimulate business activity and increase employment.

A

Keynesianism

87
Q

advocates free competition and self- regulating market.

A

Liberalism

88
Q

states that variation in unemployment and the rates of inflation are usually caused by changes in the supply of money.

A

Monetarism

89
Q

uses a combination of economic theory, math, and statistical inferences to quantify and analyze economic theories by leveraging tools such as frequency distributions, probability and probability distributions, statistical inference, simple and multiple regression analysis, simultaneous equations models, and time series methods.

A

Theoretical econometrics

90
Q

It takes economic models to be tested through statistical trials.

A

Econometrics

91
Q

The results are then compared and contrasted against real-life examples.

A

Econometrics

92
Q

can be therefore be divided into two major categories: theorical and applied.

A

Econometrics

93
Q

It is used when making social, economic, or political decision for the “betterment of society.’

A

Utilitarianism

ECONOMICS (1 decks)

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