51 Questions
What does a Production Possibilities Graph show?
The maximum possible combinations of two goods that can be produced in a given time period with available resources
What are the 4 factors of production?
Land, labor, capital, and entrepreneurship
What are the 3 key economic questions?
What to produce, how to produce, and for whom to produce
Define market failure.
A situation in which the market does not allocate resources efficiently
Define Law of Demand.
As the price of a good decreases, the quantity demanded increases, and vice versa
Define complements and give one example.
Goods that are consumed together, like peanut butter and jelly
What is the term for the situation where limited resources cannot satisfy all the needs and wants of people?
Scarcity
What do we call the risk-taking individual who combines the other factors of production to create and market new goods or services?
Entrepreneur
What is the term for the value of the next best alternative that is given up when making a choice?
Opportunity cost
What does the term 'guns or butter' refer to in economics?
Trade-offs between military and civilian spending
What is the term for the condition in which all resources are used to produce the goods and services that people most want?
Efficiency
What is the term for goods that are both non-excludable and non-rival in consumption?
Public goods
What is the term for the situation where limited resources cannot satisfy all the needs and wants of people?
Scarcity
What does a Production Possibilities Graph show?
Alternative combinations of goods that an economy can produce given its available resources
What is the term for the risk-taking individual who combines the other factors of production to create and market new goods or services?
Entrepreneur
What are the 3 key economic questions?
What to produce, how to produce, for whom to produce
Define free enterprise.
An economic system where individuals are free to own businesses and make economic choices
Define market failure.
When the market is unable to allocate resources efficiently
Define elastic demand and give one example.
When a change in price leads to a proportionally smaller change in quantity demanded; luxury goods
What are the 4 economic systems?
Market economy, planned economy, mixed economy, traditional economy
Define free enterprise.
An economic system where private individuals or groups have the right to own property and businesses and make a profit with limited government intervention
Define substitutes and give one example.
Goods that are consumed instead of each other, e.g., tea and coffee
What are the 6 factors that can cause the demand curve to shift to the right?
Change in consumer income, change in consumer tastes, change in expectations, change in the number of consumers, change in the price of related goods, change in technology
What are the 4 economic systems?
Capitalism, socialism, communism, mixed economy
Define complements and give one example.
Goods that are consumed together and complement each other, e.g., computers and software
Define inelastic demand and give one example.
Demand that is unaffected by price changes, e.g., salt
What are the 6 factors that can cause the demand curve to shift to the right?
Changes in income, price of substitutes, price of complements, population, expectations, advertising
What is the main factor that can affect elasticity of supply?
Availability of substitutes for production inputs
What are the factors that can cause the supply curve to shift to the left?
Natural disasters affecting production
Define equilibrium.
A state of balance where quantity demanded equals quantity supplied
What are the 3 uses of money?
Medium of exchange, unit of account, store of value
What category makes up the largest percentage of mandatory spending?
Social Security and Medicare
What is the definition of inflation?
A general increase in prices and fall in the purchasing value of money
What are the 3 uses of money?
Medium of exchange, unit of account, store of value
What category makes up the largest percentage of mandatory spending?
Social Security and Medicare
What is the definition of inflation?
A general increase in prices and fall in the purchasing value of money
What is the purpose of NAFTA?
To promote trade and economic integration between the United States, Canada, and Mexico
What is the most important job of the Federal Reserve?
Controlling the money supply and interest rates to maintain economic stability
Define comparative advantage.
The ability of a country to produce a good at a lower opportunity cost than another country
What is the most important job of the Federal Reserve?
Controlling inflation and maintaining price stability
Define specialization. Why does specialization cause nations to trade with each other?
Specialization is when a country focuses on producing a limited set of goods and services.
Define tariff.
A tax on imported goods
What is the purpose of NAFTA?
To eliminate trade barriers between Canada, Mexico, and the United States
What is the most important job of the Federal Reserve?
Controlling the nation's money supply and interest rates
What does specialization cause nations to do?
Trade with each other to obtain goods and services they do not produce efficiently
What is the purpose of NAFTA?
To promote trade and economic integration between the United States, Canada, and Mexico
Define trade surplus.
A situation where a country exports more goods and services than it imports
Define protectionism.
The policy of restraining trade between countries through methods such as tariffs and quotas
Expansionary fiscal policies are designed to stimulate economic growth and increase aggregate demand.
True
Contractionary fiscal policies are intended to slow down economic growth and decrease aggregate demand.
True
Classical Economics is a school of economic thought that emphasizes the importance of free markets and minimal government intervention.
True
Test your knowledge of basic economic concepts with this quiz. From defining scarcity and the factors of production to understanding opportunity cost and production possibilities, this quiz covers essential economic principles. Perfect for students or anyone interested in economics.
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