Economics Terminology Quiz

Economics Terms

• Economy: a system of production, distribution, and consumption of goods and services
• Consumer: an individual who buys and uses goods and services
• Producer: an individual or business that creates goods and services
• Market Economy: an economy where resources are allocated based on market forces of supply and demand
• Profit: the difference between revenue and costs
• Incentive: a motivation to take action
• Competition: the rivalry between producers to sell goods and services
• Supply: the amount of goods and services producers are willing to sell
• Demand: the amount of goods and services consumers are willing to buy
• Opportunity Cost: the value of the next best alternative given up when choosing one option over another
• Scarcity: the fundamental economic problem of limited resources and unlimited wants

Banking and Finance

• Bond: a type of investment where an investor lends money to a borrower
• Interest Rate: the percentage of the loan amount charged as interest
• Credit: the ability to borrow money
• Credit Reporting Bureaus: organizations that collect and provide credit information
• Credit Counseling: services that help individuals manage debt
• Money: a medium of exchange, unit of account, and store of value
• Currency: the physical form of money
• Deposits: money placed into a bank account
• Withdrawals: money taken out of a bank account
• Checking Account: a type of bank account for everyday transactions
• Savings Account: a type of bank account for saving money
• Checks: written orders to pay a specified amount of money
• Debit Card: a card that deducts money directly from a bank account
• Loan: a type of credit where money is borrowed and repaid with interest
• Budget: a plan for managing income and expenses
• Federal Budget: the budget of the federal government
• Mandatory Spending: government spending required by law
• Discretionary Spending: government spending that can be changed by Congress
• Securities: financial instruments representing ownership or debt
• Interest: a fee charged on borrowed money
• Deficit: a shortfall in a budget or financial situation
• Surplus: an excess in a budget or financial situation

Government and Economy

• Federal Reserve: the central bank of the United States
• Inflation: a sustained increase in the general price level of goods and services
• Investment: the act of putting money into something with the expectation of earning a profit
• Credit Score: a numerical representation of creditworthiness
• Consumer Sovereignty: the idea that consumers have the power to make choices in a market economy
• Private Property Rights: the rights of individuals to own and control property
• Laissez-Faire: an economic philosophy that advocates for minimal government intervention
• Tax: a compulsory payment to the government
• Excise Tax: a tax on specific goods and services
• Income Tax: a tax on an individual's income
• Corporate Income Tax: a tax on a corporation's income
• Progressive Tax: a tax where higher incomes are taxed at a higher rate
• Social Security Tax: a tax to fund Social Security programs
• Property Tax: a tax on real estate and personal property
• Estate Tax: a tax on inherited property
• Tariffs: taxes on imported goods

Economics Questions

• How do banks earn a profit?: Banks earn a profit by lending money at a higher interest rate than they borrow at.
• What is a credit score?: A credit score is a numerical representation of creditworthiness.
• What are the advantages of credit/loans?: Credit and loans allow individuals and businesses to finance purchases and investments.
• What are the disadvantages of credit/loans?: Debt can lead to financial difficulties if not managed properly.
• What happens if you cannot pay back a loan?: Failure to repay a loan can result in late fees, penalties, and damage to credit scores.

Federal Reserve and Economy

• Functions of the Federal Reserve: regulating and supervising banks, maintaining the stability of the financial system, and setting monetary policy.
• How does the Federal Reserve moderate the economy?: The Federal Reserve sets interest rates and regulates the money supply to promote economic growth and stability.
• Why would the Federal Reserve want interest rates raised or lowered?: To control inflation, stimulate economic growth, or combat recession.

Taxes and Government

• How do federal, state, and local taxes support the economy and provide services to citizens?: Taxes fund public goods and services, such as infrastructure, education, and national defense.
• Federal Budget: a plan for managing the federal government's income and expenses.
• Government borrowing: the government borrows money by issuing bonds and securities.
• Government's 5 roles in a market economy: provider of public goods, regulator, stabilizer, allocator of resources, and protector of individual rights.

Constitution and Federalism

• What are the 3 basic economic questions?: What to produce, how to produce, and for whom to produce.
• What are the 6 characteristics of money?: medium of exchange, unit of account, store of value, standard of deferred payment, divisibility, and portability.
• What is the Constitution?: The supreme law of the United States, outlining the structure and powers of the federal government.
• What are the three parts of the Constitution?: the Preamble, the Articles, and the Amendments.
• What are the 7 Articles of the Constitution?: Article I: Legislative Branch, Article II: Executive Branch, Article III: Judicial Branch, Article IV: States, Article V: Amendments, Article VI: Debts, Article VII: Ratification.

Philosophy and History of the Constitution

• Who are the three philosophers associated with the Constitution?: John Locke, Thomas Hobbes, and Baron de Montesquieu.
• How did John Calvin influence the Constitution?: Calvin's ideas on governance and the social contract influenced the Constitution.
• How did Thomas Hobbes influence the Constitution?: Hobbes' ideas on the social contract and the role of government influenced the Constitution.
• How did Baron de Montesquieu influence the Constitution?: Montesquieu's ideas on separation of powers and checks and balances influenced the Constitution.

Bill of Rights

• What is the Bill of Rights?: The first 10 amendments to the Constitution, protecting individual rights and liberties.
• What is the primary purpose of the Bill of Rights?: To protect individual rights and liberties from government abuse.
• Who authored the Bill of Rights?: James Madison.
• How many rights were originally proposed?: 19 rights were originally proposed, but 10 were ratified.

Amendments

• What are the 13th, 14th, 15th, 19th, 24th, and 26th amendments for?: Abolishing slavery, granting citizenship, voting rights, women's suffrage, poll taxes, and voting age, respectively.

Note: This is not an exhaustive list of study notes, but rather a condensed version of the key terms and concepts.