Economics Quiz: Money and Trade Concepts

A type of currency that is declared legal tender by a government. It has no fixed value and is not backed by silver or gold.

Money that represents a commodity held elsewhere. It's like a receipt for something valuable.

Money that has intrinsic value, meaning it has value even if not used as money. It's valuable for its own sake.

Currency produced without government legal sanction. It's designed to resemble genuine money.

When a country's currency becomes weaker compared to other currencies. This makes goods and services in that country cheaper for foreign buyers.

A maximum price that sellers are legally allowed to charge for a product or service.

The lowest price that buyers are legally allowed to pay for a commodity.

A model illustrating the flow of goods, services, resources, and money between businesses and households.

Using government spending and taxes to influence the economy.

A period of economic decline marked by a decrease in GDP, employment, and overall economic activity.

Unemployment that occurs due to temporary job transitions.

Unemployment that occurs due to long-term changes in the economy, such as technological advancements or shifts in industry.

Unemployment that occurs due to seasonal changes in the economy, such as the holiday season or agricultural cycles.

The ability of one country to produce a good or service at a lower opportunity cost than another country.

An economic system where the government controls key aspects like investments, prices, and income.

An economic system relying on customs, traditions, and historical practices.

An economic system with minimal government intervention, driven by competition among private businesses.

An economic system blending both private businesses and government-run businesses.

A minimum price set by law for a good or service.

The stage in the business cycle after the peak, characterized by declining economic activity.

A diagram showing the combinations of two goods that a country can produce using all available resources and technology.

Points on the PPC represent efficient use of resources, meaning there's no waste.

Points outside the PPC represent combinations that are impossible to produce with current resources.

Points inside the PPC represent combinations that could be produced but indicate an underutilization of resources.

Natural disasters can shrink the PPC due to limited resources and damaged infrastructure.

A tax imposed on imported goods, making them more expensive and incentivizing people to buy domestic products instead. This is a protectionist policy aimed at shielding domestic industries from foreign competition.

When the price of a product goes up, the quantity demanded goes down; the reverse is also true. As the price increases, consumers buy less, and conversely, when prices decrease, demand usually increases.

A weaker local currency makes exporting goods cheaper, as it takes fewer units of foreign currency to buy the same amount of local currency. A stronger foreign currency increases profits from exports, as more local currency can be purchased with the same amount of foreign currency.

Countries focus on producing goods they can make most efficiently, minimizing the opportunity cost. They trade with other countries for goods they produce less efficiently, leading to overall gains for both.

A trade agreement between the United States, Canada, and Mexico that aimed to eliminate tariffs and trade barriers to encourage free trade among the three countries.