Module 1

Question 1

Laissez-Faire means?

Answer 1

Let events take their course.

Question 2

Concert Ticket Price Attendance
$100 0
$80 1000
$60 2000
$40 3000
$20 4000
what is the relationship between concert ticket price and attendance?

Answer 2

Negative

Question 3

Johnny pays his friend Chris to fix his car, what happens to GDP?

Answer 3

It understates GDP if Chris does not report the income

Question 4

The economic system in which the market operates but government regulates markets significantly is what?

Answer 4

Welfare capitalism

Question 5

Factual tools are important tools for helping economists understand how they function together. They include statistics and ?

Answer 5

History

Question 6

Consumers purchase what from the firms?

Answer 6

Goods

Question 7

Which of the following best describes a monetary policy tool?
Taxes
Interest rates
Government spending
Household savings?

Answer 7

Interest rates

Question 8

regardless of whether you are looking through the microeconomics or the macroeconomics telescope, the fundamental subject material of the interconnected … does not change

Answer 8

economy

Question 9

Economics is the study of?

Answer 9

How to allocate scarce resources among alternative uses

Question 10

Output Total Costs
0 100
1 125
2 160
3 205
4 260
5 300
6 330

the total cost of production shows that firm has what kind of relationship with output?

Answer 10

direct

Question 11

what kind of economy is an economic system in which the basic questions of what, how, and for whom to produce are resolved primarily by customs of the society?

Answer 11

traditional

Question 12

What is scarcity? Can you think of two causes of scarcity?

Answer 12

Scarcity means human wants for goods and services exceed the available supply. Supply is
limited because resources are limited. Demand, however, is virtually unlimited. Whatever the
supply, it seems human nature to want more

Question 13

Residents of the town of Smithfield like to consume hams, but each ham requires 10 people to
produce it and takes a month. If the town has a total of 100 people, what is the maximum
amount of ham the residents can consume in a month?

Answer 13

100 people / 10 people per ham = a maximum of 10 hams per month if all residents produce
ham. Since consumption is limited by production, the maximum number of hams residents
could consume per month is 10.

Question 14

Circular flow design

Answer 14

a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market.

Question 15

Command economy

Answer 15

An economy where economic decisions are passed down from government authority and where the government owns the resources

Question 16

Division of labour

Answer 16

the way in which different workers divide required tasks to produce a good or service

Question 17

economies of scale

Answer 17

when the average cost of producing each individual unit declines as total output increases

Question 18

exports

Answer 18

products (goods and services) made domestically and sold abroad

Question 19

fiscal policy

Answer 19

economic policies that involve government spending and taxes

Question 20

globalization

Answer 20

the trend in which buying and selling in markets have increasingly crossed national borders

Question 21

goods and services market

Answer 21

a market in which firms are sellers of what they produce and households are
buyers

Question 22

gross domestic product (GDP)

Answer 22

measure of the size of total production in an economy

Question 23

imports

Answer 23

products (goods and services) made abroad and then sold domestically

Question 24

labor market

Answer 24

the market in which households sell their labor as workers to business firms or other employers

Question 25

macroeconomics

Answer 25

the branch of economics that focuses on broad issues such as growth, unemployment,
inflation, and trade balance

Question 26

market

Answer 26

interaction between potential buyers and sellers; a combination of demand and supply

Question 27

market economy

Answer 27

an economy where economic decisions are decentralized, private individuals own
resources, and businesses supply goods and services based on demand

Question 28

microeconomics

Answer 28

the branch of economics that focuses on actions of particular agents within the economy,
like households, workers, and business firms

Question 29

monetary policy

Answer 29

policy that involves altering the level of interest rates, the availability of credit in the
economy, and the extent of borrowing

Question 30

private enterprise

Answer 30

system where private individuals or groups of private individuals own and operate the
means of production (resources and businesses

Question 31

specialization

Answer 31

when workers or firms focus on particular tasks for which they are well-suited within the
overall production process

Question 32

traditional economy

Answer 32

typically an agricultural economy where things are done the same as they have always
been done

Question 33

underground economy

Answer 33

a market where the buyers and sellers make transactions in violation of one or more
government regulations

Question 34

theory

Answer 34

a representation of an object or situation that is simplified while including enough of the key features
to help us understand the object or situation

Question 35

Why might Belgium, France, Italy, and Sweden have a higher export to GDP ratio than the United States?

Answer 35

The US is a large country economically speaking, so it has less need to trade internationally than the other countries mentioned. One additional reason is that each of the other countries are a member of the European Union, where trade between member occurs without barriers to trade, like tariffs and quotas.

Question 36

Give the three (3) reasons that explain why the division of labor increases an economy’s level of production.

Answer 36

1) Division of labor allows for specialization,
2) Workers learn to be more efficient
3) businesses can take advantage of economies of scale.

Question 37

What are three reasons to study economics?

Answer 37

1) Economics factors into every major policy decision.
2) Encourages good citizenship
3) Makes for a well-rounded education

Question 38

What are examples of individual economic agents?

Answer 38

*Individuals
*Households
*Businesses

Question 39

What are the three main goals of macroeconomics?

Answer 39

1) Growth in the standard of living
2) Low Unemployment
3) Low inflation

Question 40

How did John maynard keyes define economics?

Answer 40

As a method of thinking that help people draw correct conclusions.

Question 41

What are three ways that societies can organize themselves ecnomically?

Answer 41

1) as a command economy
2) a market economy
3) mixture of the two