What is economics Flashcards
What is economics?
Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
True or False: Economics only deals with money.
False
What are the two main branches of economics?
Microeconomics and Macroeconomics.
Fill in the blank: Microeconomics focuses on ________ behavior.
individual
What does macroeconomics study?
Macroeconomics studies the economy as a whole, focusing on aggregate outcomes like inflation, unemployment, and economic growth.
What is the basic economic problem?
Scarcity
True or False: Opportunity cost is the value of the next best alternative foregone.
True
What is a market economy?
A market economy is an economic system where decisions regarding investment, production, and distribution are based on supply and demand.
What role does government play in a mixed economy?
In a mixed economy, the government regulates and intervenes in economic activities to promote social welfare and correct market failures.
Multiple Choice: Which of the following is NOT a factor of production? A) Land B) Labor C) Money D) Capital
C) Money
What is the law of demand?
The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.
Fill in the blank: The intersection of the supply and demand curves determines the ________ price.
equilibrium
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
True or False: GDP stands for Gross Domestic Product.
True
What does GDP measure?
GDP measures the total value of all goods and services produced within a country over a specific time period.
Multiple Choice: Which of the following is a component of GDP? A) Net Exports B) Taxes C) Stock Prices D) None of the above
A) Net Exports
What is a recession?
A recession is a significant decline in economic activity across the economy lasting longer than a few months.
Fill in the blank: The ________ curve illustrates the relationship between inflation and unemployment.
Phillips
What is fiscal policy?
Fiscal policy refers to government spending and taxation decisions used to influence economic activity.
True or False: Monetary policy is controlled by the government.
False
What institution typically conducts monetary policy?
The central bank.
What is the purpose of trade?
Trade allows countries to specialize in the production of goods and services they can produce most efficiently.
Fill in the blank: Comparative advantage explains how countries can benefit from ________.
trade
Multiple Choice: What type of economic system is characterized by communal ownership? A) Capitalism B) Socialism C) Feudalism D) Mercantilism
B) Socialism
