section 1

Question 1

Gross Domestic Product (GDP)

Answer 1

the market value of all new final goods and services produced inside a country during a given time period

Question 2

what does economic activity revolve around?

Answer 2

production

Question 3

short-run analysis

Answer 3

assuming that at least 1 thing remains fixed

Question 4

long-run analysis

Answer 4

nothing remains fixed

Question 5

what drives economic activity?

Answer 5

spending

Question 6

GDP 2023

Answer 6

1. US
2. China
3. Germany
4. Japan

Question 7

per capita GDP =

Answer 7

GDP/population

Question 8

per capita GDP is rough estimate of 2 things:

Answer 8

productivity and income (standard of living

Question 9

economics

Answer 9

the study of how society chooses to allocate its scare productive resources

Question 10

productive resources

Answer 10

inputs to production

Question 11

4 factors of production

Answer 11

labor, capital, land, entrepreneurial talents

Question 12

who owns the factors of production?

Answer 12

people/households

Question 13

what is the fundamental economic problem facing society?

Answer 13

scarcity of resources

Question 14

economy

Answer 14

a particular system of organization for production, distribution, and consumption of goods and services

Question 15

economic systems

Answer 15

centrally planned economies, market economy, mixed economies

Question 16

centrally planned economies

Answer 16

resources are allocated by way of a centrally planning agency of the government

Question 17

market economy

Answer 17

resources are allocated by of way of individual buyers and sellers

Question 18

mixed economies

Answer 18

employ elements of both central planning and market allocation of resources

Question 19

opportunity cost

Answer 19

what is given up whenever a choice is made

Question 20

production possibilities curve (PPC)

Answer 20

a curve made up of points that represent the maximum combination of goods and services an economy can produce with existing resources and technology

Question 21

assumptions in the construction of the PPC:

Answer 21

1. production is limited to two types of goods and services
2. all resources are efficiently employed
3. all resources are fixed
4. all technology is fixed

Question 22

the PPC illustrates:

Answer 22

1. points of efficient, inefficient, and unattainable level of production
2. product mix
3. opportunity cost
4. economic growth
5. law of increasing opportunity cost

Question 23

economic decision makers

Answer 23

1. households (consumers)
2. firms (businesses)
3. governent
4. foreign sector

Question 24

household are referred to as

Answer 24

utility maximizers

Question 25

utility

Answer 25

satisfaction from consumption

Question 26

rational

Answer 26

intentionally making decisions that make you better off

Question 27

households buy 2 categories of things

Answer 27

goods and services

Question 28

business structures

Answer 28

1. sole proprietorship
2. partnership
3. corporation

Question 29

3 levels of government

Answer 29

federal, state, local

Question 30

tax systems

Answer 30

progressive tax system, regressive tax system, proportional tax system (flat tax)

Question 31

progressive tax system

Answer 31

the percentage of your income paid in taxes goes up as your income goes up

Question 32

regressive tax system

Answer 32

the percentage of your income paid in taxes goes down as your income goes up

Question 33

proportion tax system (flat tax)

Answer 33

all tax payers pay the same percentage of their income in taxes

Question 34

marginal tax rate

Answer 34

the tax rate of the next dollar of taxable income

Question 35

average tax rate =

Answer 35

tax/taxable income x 100