Economics Chapter Overview

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Questions and Answers

What are the three types of economic systems discussed in the provided text?

Traditional, Command, and Mixed
Traditional, Command, and Market (correct)
Market, Mixed, and Social
Command, Mixed, and Social

What does the term "externalities" refer to in economics?

The impact of economic activities on the environment.
The factors that determine the price of goods and services in a market.
The costs and benefits associated with the production or consumption of a particular good or service. (correct)
The role of government in regulating the economy.

Which of the following is NOT a characteristic of a mixed economy?

A combination of market and command elements.
Private ownership of businesses.
Centralized planning and control of the economy. (correct)
Government regulation of certain industries.

What are the key factors that influence the shifting of demand in a market?

Changes in income, consumer preference, consumer expectations, prices of related goods, government policies, and number of consumers in the market. Signup and view all the answers

The "peak" of a business cycle represents the highest point of economic growth in a period.

True (A) Signup and view all the answers

What is the main objective of Capitalism?

To create profit. Signup and view all the answers

Define "Aggregate Supply" and explain its connection to the economy's production potential.

Aggregate Supply represents the total quantity of goods and services that producers are willing and able to supply at different price levels. It reflects the economy's overall production capacity and potential. Signup and view all the answers

What is the primary function of a Federal Transfer Program? Provide examples.

They aim to transfer resources from the government to individuals or entities without requiring any goods or services in return. Their purpose is to address poverty, support economic hardship, or redistributing income to reduce inequality. Examples include Social Security, Medicare, Nutrition Assistance Program, and Unemployment Insurance. Signup and view all the answers

The ______ is the total value of all final goods and services produced within a country's borders during a specific time period.

Gross Domestic Product (GDP) Signup and view all the answers

A "quota" used as a trade barrier involves a specific limit on the quantity of goods that can be imported or exported during a defined period.

True (A) Signup and view all the answers

What are the basic components of M1 money supply?

Physical currency, checking accounts, and demand deposits (C) Signup and view all the answers

Explain the concept of "scarcity" in economics and its impact on decision-making.

Scarcity is a fundamental economic concept that refers to the limited availability of resources in comparison to unlimited human wants and needs. This scarcity forces individuals, businesses, and societies to make choices about how to allocate resources and prioritize their needs. It drives the concept of opportunity cost, which is the value of the alternative forgone when making a choice. Signup and view all the answers

Define the terms "marginal benefit" and "marginal cost" in economic terms.

Marginal benefit refers to the additional benefit gained from consuming one more unit of a particular good or service. Marginal cost, on the other hand, represents the additional cost incurred in producing or consuming that extra unit. Signup and view all the answers

Flashcards

Production Possibilities Frontier

A curve that shows the maximum combinations of two goods or services an economy can produce with its available resources and technology.

Externalities

Side effects of economic activities that affect third parties, either positively or negatively. They can occur in production or consumption.

Perfect Competition

A market structure with many buyers and sellers trading identical products. Firms can enter or exit the market freely, and no single firm has price control.

Federal Transfer Programs

Government payments to individuals or entities without requiring any goods or services in return. Aim to reduce poverty, provide assistance during hardships, or redistribute income.