14 Questions
What is the term for a general increase in prices and fall in the purchasing value of money?
Inflation
What is the term for wealth in the form of money or other assets owned by a person or organization?
Capital
What is the term for the loss of potential gain from other alternatives when one alternative is chosen?
Opportunity Costs
What is the term for the total value of goods produced and services provided in a country during one year?
Gross Domestic Product
What is the term for a tax imposed on the purchase of imports?
Tariff
What is the term for money paid regularly at a particular rate for the use of money lent?
Interest
What is the term for when a government, business, or household spends more in a given period of time than they generate in income?
Deficit
What is the main factor that determines the price of a commodity?
Supply and Demand
What is the result of inflation on the purchasing value of money?
It decreases
What is the primary purpose of imposing a tariff?
To stimulate more domestic production
What is the relationship between profit and interest?
Profit is the financial gain, while interest is the cost of borrowing
What happens when a government, business, or household spends more than it generates in income?
It incurs a deficit
What is the main function of capital in a business?
To start or invest in a company
What is the consequence of opportunity costs?
A loss of potential gain
Study Notes
Supply and Demand
- The availability of a commodity, product, or service and the desire of buyers for it regulate its price.
- The relationship between supply and demand affects the market price of a product or service.
Inflation
- Inflation occurs when there is a general increase in prices and a fall in the purchasing value of money.
- It results in a decrease in the value of money.
Opportunity Costs
- Opportunity costs refer to the loss of potential gain from other alternatives when one alternative is chosen.
- It is the value of the next best alternative that is given up when a choice is made.
Capital
- Capital refers to wealth in the form of money or other assets owned by a person or organization.
- The purpose of capital is to start a company or invest.
Debt
- Debt refers to something, typically money, that is owed or due.
- It can be a financial obligation that needs to be repaid.
Gross Domestic Product (GDP)
- GDP is the total value of goods produced and services provided in a country during one year.
- It is a measure of a country's economic activity.
Interest
- Interest is money paid regularly at a particular rate for the use of money lent.
- It can also be the cost of delaying the repayment of a debt.
Profit
- Profit is a financial gain, the difference between the amount earned and the amount spent.
- It is the result of buying, operating, or producing something.
Interest Rate
- Interest rate is the cost of borrowing money expressed as a percentage.
- It is a measure of the rate at which interest is paid on a loan or investment.
Tariff
- Tariff is a tax imposed on the purchase of imports.
- It is usually imposed to stimulate more domestic production of the product in question.
Deficit
- Deficit occurs when a government, business, or household spends more in a given period of time than they generate in income.
- It results in a financial shortfall that needs to be addressed.
Supply and Demand
- The availability of a commodity, product, or service and the desire of buyers for it regulate its price.
- The relationship between supply and demand affects the market price of a product or service.
Inflation
- Inflation occurs when there is a general increase in prices and a fall in the purchasing value of money.
- It results in a decrease in the value of money.
Opportunity Costs
- Opportunity costs refer to the loss of potential gain from other alternatives when one alternative is chosen.
- It is the value of the next best alternative that is given up when a choice is made.
Capital
- Capital refers to wealth in the form of money or other assets owned by a person or organization.
- The purpose of capital is to start a company or invest.
Debt
- Debt refers to something, typically money, that is owed or due.
- It can be a financial obligation that needs to be repaid.
Gross Domestic Product (GDP)
- GDP is the total value of goods produced and services provided in a country during one year.
- It is a measure of a country's economic activity.
Interest
- Interest is money paid regularly at a particular rate for the use of money lent.
- It can also be the cost of delaying the repayment of a debt.
Profit
- Profit is a financial gain, the difference between the amount earned and the amount spent.
- It is the result of buying, operating, or producing something.
Interest Rate
- Interest rate is the cost of borrowing money expressed as a percentage.
- It is a measure of the rate at which interest is paid on a loan or investment.
Tariff
- Tariff is a tax imposed on the purchase of imports.
- It is usually imposed to stimulate more domestic production of the product in question.
Deficit
- Deficit occurs when a government, business, or household spends more in a given period of time than they generate in income.
- It results in a financial shortfall that needs to be addressed.
Test your understanding of basic economics concepts such as supply and demand, inflation, opportunity costs, capital, and debt. See how well you can define and apply these fundamental principles.
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