Overview Of Economics

Question 1

is the study if the proper allocation and efficient use of scarce resources to produce commodities for the satisfaction of unlimited needs and wants of man

Answer 1

Economics

Question 2

Four Sectors of Economy

Answer 2

Household
Business Firms
Government
The Rest of the World

Question 3

Consuming unit

Answer 3

Household

Question 4

Producing Unit

Answer 4

Business Firms

Question 5

Controls the economic activities of man

Answer 5

Government

Question 6

Imports and exports - open economy globalization

Answer 6

The rest of the world

Question 7

Father of economics

Answer 7

Adam Smith

Question 8

each works using one’s self-interest, nevertheless benefits the whole market

Answer 8

Invisible Hand

Question 9

absence of governmental control over business

Answer 9

Laissez-faire

Question 10

each individual person will specialized in part of the
production system

Answer 10

Division of Labor

Question 11

non-governmental intervention of trading among nations (no tariff/no quota)
-accordance to the principles of natural liberality

Answer 11

free trade

Question 12

non-governmental intervention in the operation of commercial enterprise

Answer 12

free enterprise

Question 13

18th century England
introduction of machine in factories

Answer 13

Industrial Revolution

Question 14

natural resources - Rent

Answer 14

Land

Question 15

human effort exerted by man (intellectual, emotional,
psychological, physical)-Salaries & wages

Answer 15

Labor

Question 16

man-made resources- Interest

Answer 16

capital

Question 17

it entails special
ability of man in combining all other economic resources
(management, innovative, creative, etc.)-profits

Answer 17

Entrepreneurship/entrepreneurial ability

Question 18

creation of human satisfying goods. Transformation of inputs/raw materials into output

Answer 18

production

Question 19

transfer of position of the goods/services
from one sector to another sector

Answer 19

distribution

Question 20

financial transactions involves money

Answer 20

exchange

Question 21

using the goods and services

Answer 21

consumption

Question 22

limited resources

Answer 22

scarcity

Question 23

5 Economic Questions

Answer 23

1. What goods and services to produces?- Set a system of prioritization
2. How to produce goods and services?-Methods of production- Traditional
   method vs. modern method
3. For whom the goods and services to produce?
4. How much to produce?
5. When (normal & seasonal commodities) and where to produce?

Question 24

value of foregone alternative

Answer 24

opportunity cost

Question 25

Accessibility of production

Answer 25

1. accessible to the market 2. accessible to labor 3. accessible to the source of raw materials 4. accessible to the means of transportation

Question 26

goals of economics

Answer 26

1. to strengthen economic freedom 2. to promote economic efficiency 3. promote economic stability 4. improve economic security 5. attaining a high level of growth in the economy

Question 27

pertains to the study of the behavior of individual units in the economy - known as classical economics -household and business firms

Answer 27

microeconomics

Question 28

Economy of the whole ( employment and unemployment, inflation

Answer 28

Macroeconomics

Question 29

Prosperous years for the US economy

Answer 29

1920s

Question 30

Wall Street Collapse - Great Depression of 1930s

Answer 30

1929

Question 31

Author General Theory of Employment Interest and Money 1935

Answer 31

John Maynard Keynes

Question 32

Process of directing economic relationships by examining behavior and events and determining the casual relationships among the data and activities observed

Answer 32

Economic Analysis

Question 33

Used to analyze relationships among economic variables from particular to general (inductive) or thru deductive (general to particular)

Answer 33

Logic

Question 34

Quantitatively describe economic behavior and serve as basis for hypothesis testing.

Answer 34

Statistics

Question 35

A hypothesis becomes theory or principle when

Answer 35

Empirically Validated

Question 36

Enables analysts to conceptualize and quantify a hypothesis for empirical validation

Answer 36

Mathematics

Question 37

an aid in understanding how economy operates because it explains how economic variables are related to one another.

Answer 37

economic analysis

Question 38

Purposes of Economic Analysis

Answer 38

1. Economic analysis is an aid in understanding how economy operates because it explains how economic variables are related to one another. 2. It permits prediction of the results of changes in the economic variables. 3. It serves as basis of policy formulation.

Question 39

economic policy

Answer 39

- Consists of intervention or courses of action taken by the government or other private institutions to manipulate the results of economic activity. -The policy adopted by the government may be monetary, fiscal, or trade for the purpose of achieving economic welfare.

Question 40

Economists have developed techniques referred to as

Answer 40

Scientific Approach

Question 41

Measures that can change from time to time from observation to observation

Answer 41

Variables

Question 42

Statement of the proposed relationship between two or more variables

Answer 42

Theory/Hypothesis

Question 43

A formal statement of a theory, usually mathematical statement of a presumed relationship between two or more variables

Answer 43

Model

Question 44

Absolute truth

Answer 44

Law

Question 45

Hypothesis that had withstand the rigors of testing (foolish to regard set or principles and theories as absolute truth)

Answer 45

Principles

Question 46

Definition of the problem

Answer 46

Specifications and definition of its postulates

Question 47

Data Gathering

Answer 47

Observation of the facts concerning the activities about which we want to theorize

Question 48

Application of the rules of logic to the observed facts in an attempt to establish casual relationship among them and to eliminate as many irrelevant and insignificant facts as possible

Answer 48

Economic Analyses

Question 49

Once hypothesis have been formulated, they must be thoroughly tested to determine the extent of which they are valid. -Applying statistics

Answer 49

Hypothesis testing

Question 50

Hypothesis that will hold up most of the time in most of the circumstances to which they are relevant

Answer 50

Principles

Question 51

Functions of economic theory

Answer 51

1. Explain the nature of economic activity 2. Predict what will happen to the economy as fact change

Question 52

Describes the facts and data in the economy, description of economic outcomes, with what exists, how it works, without making judgment

Answer 52

Positive Economics

Question 53

Judges economic outcomes; what out to be, policy economics-courses of action (law/legislations)

Answer 53

Normative Economics

Question 54

Ways of Expressing Theories and Models

Answer 54

-Verbal Statment -Graphical -Tabular -Mathematical Notation

Question 56

is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.

Answer 56

Gross domestic product (GDP)

Question 57

refers to what you have to give up to buy what you want in terms of other goods or services.

Answer 57

Opportunity Cost