16 Questions
What is the primary reason countries trade with each other?
To specialize in the production of goods and services
What is the term for the decrease in the satisfaction a consumer derives from each additional unit of a good or service?
Diminishing Marginal Utility
What is the term for a situation in which the quantity of a good or service that consumers are willing to buy is greater than the quantity that producers are willing to supply?
Shortage
What is the primary goal of the Federal Reserve during periods of inflation?
To decrease the money supply
What is the term for a business structure in which the owners have limited liability and the business is taxed as a separate entity?
Corporation
What is the term for the money that a corporation distributes to its shareholders?
Dividend
What is the term for a policy that restricts trade between countries?
Tariff
What are the three functions of money?
Medium of exchange, unit of account, and store of value
What is the main aim of Fiscal Policy?
To stabilize the economy
What is the term for the decrease in the satisfaction a consumer derives from each additional unit of a good or service?
Diminishing Marginal Utility
What is the term for a situation in which the quantity of a good or service that consumers are willing to buy is less than the quantity that producers are willing to supply?
Surplus
What is the term for a business structure in which the owners have unlimited liability and the business is not taxed as a separate entity?
Sole Proprietorship
What is the term for the money that a government borrows to finance its activities?
National Debt
What is the primary goal of the Federal Reserve during periods of recession?
To decrease interest rates
What is the term for a policy that restricts trade between countries?
Trade Barrier
What is the term for a strong money supply?
All of the above
Study Notes
Economics Branches
- Macroeconomics studies the economy as a whole, focusing on issues like inflation, unemployment, and economic growth.
- Microeconomics examines the behavior and decision-making of individual economic units, such as households and firms.
Key Concepts
- Scarcity: the fundamental economic problem of unlimited wants and needs, but limited resources.
- Opportunity Cost: the value of the next best alternative that is given up when a choice is made.
- Diminishing Marginal Utility: the decrease in satisfaction or utility gained from consuming additional units of a good or service.
Elasticity
- Measures the responsiveness of the quantity demanded or supplied of a good to changes in its price or other influential factors.
Market Structures
- Surplus: a situation where the quantity supplied exceeds the quantity demanded.
- Shortage: a situation where the quantity demanded exceeds the quantity supplied.
Financial Instruments
- Bond: a debt security issued by a borrower to raise capital.
- Stock: a type of security that represents ownership in a company.
- Dividend: a payment made by a company to its shareholders.
Business Organizations
- Limited Liability: a feature of corporations that protects shareholders from personal liability.
- Merger: the consolidation of two or more companies into one.
- Equity: ownership interest in a business.
- Lease: a contract in which one party grants the use of an asset to another party for a specified period.
Macroeconomic Concepts
- Inflation: a sustained increase in the general price level of goods and services in an economy.
- T-Bill: a short-term government debt security.
- Bank: a financial institution that accepts deposits and provides loans.
- Credit Union: a cooperative financial institution that provides loans and other financial services to its members.
- FDIC: a US government agency that provides deposit insurance to protect depositors.
Taxation
- Proportional Tax: a tax system where the tax rate is the same for all levels of income.
- Progressive Tax: a tax system where higher income earners are taxed at a higher rate.
- Regressive Tax: a tax system where lower income earners are taxed at a higher rate.
International Trade
- LDC: a Less Developed Country, characterized by a low standard of living and underdeveloped industrial base.
- IMF: the International Monetary Fund, an organization that promotes global economic stability and growth.
- WTO: the World Trade Organization, an organization that promotes free trade and cooperation among nations.
- Tariff: a tax imposed on imported goods.
- Quota: a government-imposed limit on the quantity of a good that can be imported or exported.
- Subsidy: a payment made by the government to support a specific industry or business.
Economic Systems
- Capitalism: an economic system characterized by private ownership and free market exchange.
- Command Economy: an economic system characterized by government control and planning.
- Traditional Economy: an economic system characterized by custom and tradition.
- Mixed Economy: an economic system that combines elements of capitalism and socialism.
Entrepreneurship
- Entrepreneur's Creed: a set of principles that guides entrepreneurial decision-making and behavior.
Business Structure
- Sole Proprietorship: a business owned and operated by one individual.
- Partnership: a business owned and operated by two or more individuals.
- Corporation: a business owned by shareholders and operated by a board of directors.
Mergers and Acquisitions
- Three types of mergers: horizontal, vertical, and conglomerate.
Franchising
- Advantages: access to a proven business model, training, and support.
- Disadvantages: loss of autonomy, franchise fees, and restrictions.
Business Cycle
- The sequence of expansion, peak, recession, and trough that characterizes the economy's fluctuations.
Money and Banking
- Three functions of money: medium of exchange, unit of account, and store of value.
- Characteristics of a strong money supply: stability, flexibility, and trustworthiness.
- Three goals of the economy: economic growth, full employment, and price stability.
- Three tools of monetary policy: open market operations, reserve requirements, and interest rates.
- Fiscal Policy: the use of government spending and taxation to influence the economy.
- Expansionary bias: the tendency for governments to run budget deficits and stimulate the economy during times of low economic growth.
- Deficit: a situation where government expenditures exceed revenues.
- National Debt: the total amount of money owed by the government to its creditors.
Economics Branches
- Macroeconomics studies the economy as a whole, focusing on issues like inflation, unemployment, and economic growth.
- Microeconomics examines the behavior and decision-making of individual economic units, such as households and firms.
Key Concepts
- Scarcity: the fundamental economic problem of unlimited wants and needs, but limited resources.
- Opportunity Cost: the value of the next best alternative that is given up when a choice is made.
- Diminishing Marginal Utility: the decrease in satisfaction or utility gained from consuming additional units of a good or service.
Elasticity
- Measures the responsiveness of the quantity demanded or supplied of a good to changes in its price or other influential factors.
Market Structures
- Surplus: a situation where the quantity supplied exceeds the quantity demanded.
- Shortage: a situation where the quantity demanded exceeds the quantity supplied.
Financial Instruments
- Bond: a debt security issued by a borrower to raise capital.
- Stock: a type of security that represents ownership in a company.
- Dividend: a payment made by a company to its shareholders.
Business Organizations
- Limited Liability: a feature of corporations that protects shareholders from personal liability.
- Merger: the consolidation of two or more companies into one.
- Equity: ownership interest in a business.
- Lease: a contract in which one party grants the use of an asset to another party for a specified period.
Macroeconomic Concepts
- Inflation: a sustained increase in the general price level of goods and services in an economy.
- T-Bill: a short-term government debt security.
- Bank: a financial institution that accepts deposits and provides loans.
- Credit Union: a cooperative financial institution that provides loans and other financial services to its members.
- FDIC: a US government agency that provides deposit insurance to protect depositors.
Taxation
- Proportional Tax: a tax system where the tax rate is the same for all levels of income.
- Progressive Tax: a tax system where higher income earners are taxed at a higher rate.
- Regressive Tax: a tax system where lower income earners are taxed at a higher rate.
International Trade
- LDC: a Less Developed Country, characterized by a low standard of living and underdeveloped industrial base.
- IMF: the International Monetary Fund, an organization that promotes global economic stability and growth.
- WTO: the World Trade Organization, an organization that promotes free trade and cooperation among nations.
- Tariff: a tax imposed on imported goods.
- Quota: a government-imposed limit on the quantity of a good that can be imported or exported.
- Subsidy: a payment made by the government to support a specific industry or business.
Economic Systems
- Capitalism: an economic system characterized by private ownership and free market exchange.
- Command Economy: an economic system characterized by government control and planning.
- Traditional Economy: an economic system characterized by custom and tradition.
- Mixed Economy: an economic system that combines elements of capitalism and socialism.
Entrepreneurship
- Entrepreneur's Creed: a set of principles that guides entrepreneurial decision-making and behavior.
Business Structure
- Sole Proprietorship: a business owned and operated by one individual.
- Partnership: a business owned and operated by two or more individuals.
- Corporation: a business owned by shareholders and operated by a board of directors.
Mergers and Acquisitions
- Three types of mergers: horizontal, vertical, and conglomerate.
Franchising
- Advantages: access to a proven business model, training, and support.
- Disadvantages: loss of autonomy, franchise fees, and restrictions.
Business Cycle
- The sequence of expansion, peak, recession, and trough that characterizes the economy's fluctuations.
Money and Banking
- Three functions of money: medium of exchange, unit of account, and store of value.
- Characteristics of a strong money supply: stability, flexibility, and trustworthiness.
- Three goals of the economy: economic growth, full employment, and price stability.
- Three tools of monetary policy: open market operations, reserve requirements, and interest rates.
- Fiscal Policy: the use of government spending and taxation to influence the economy.
- Expansionary bias: the tendency for governments to run budget deficits and stimulate the economy during times of low economic growth.
- Deficit: a situation where government expenditures exceed revenues.
- National Debt: the total amount of money owed by the government to its creditors.
Test your knowledge of economics fundamentals, including macro and microeconomics, scarcity, opportunity cost, and more!
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