principals of economy

Question 1

economics

Answer 1

-the study of how humans make decisions in the face of scarcity
-study of how society distributes scarce resources

Question 2

scarcity

Answer 2

human wants for goods, services, and resources exceed what is available (limited)

Question 3

guns vs butter

Answer 3

military spending vs domestic spending

Question 4

efficiency

Answer 4

produces the most with the least effort

Question 5

equity

Answer 5

fairness

Question 6

opportunity cost

Answer 6

analyze the choices
-the cost of what you give up when you pick the alternative choice
ex: class for 3hrs when you could get paid $20 an hour
-$60 opportunity cost
-education gives you future income

Question 7

incentive

Answer 7

reason to work harder; work goes up = money goes up

Question 8

marginal analysis

Answer 8

examination of decisions on the margin, meaning a little more or a little less from the status quo
“thinking in small baby steps”
-you stop when benefit = cost
-do not move forward when cost is greater than benefit

Question 9

marginal analysis: benefit

Answer 9

additional benefit from adding a unit of something

Question 10

marginal analysis: cost

Answer 10

additional cost form adding a unit of something

Question 11

fixed cost

Answer 11

paying no matter what, doesn’t change

Question 12

inflation

Answer 12

-prices are rising
-gov prints money; inflation occurs

Question 13

bond

Answer 13

-I gave you money
-I owe you money

Question 14

market

Answer 14

a place where buyers and sellers meet to exchange goods and services

Question 15

factors of production (POP) (inputs)

Answer 15

any good or services that aids in the production of final goods & services
-land, labor, capital

Question 16

land

Answer 16

any gifts from nature (minerals, land, trees, etc)

Question 17

labor

Answer 17

any person involved in production (directly/indirectly) of final goods and services

Question 18

capital

Answer 18

any machinery or equipment that aids in production of final goods and services

Question 19

taxes; transfer payment

Answer 19

provide payments made to firms/households by government

Question 20

limitations

Answer 20

money, labor, material, lack of technology

Question 21

the law of increasing opportunity cost

Answer 21

it goes up even more when resources are not perfectly shiftable

Question 22

positive statement

Answer 22

express fact

Question 23

normative statement

Answer 23

express opinion

Question 24

3 goals of macroeconomics

Answer 24

-economic growth
-lowering unemployment
-regulating inflation