Fundamental Concepts of Economics Quiz
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Questions and Answers

What are values?

  • Goals that can be accomplished in less than a year
  • Basic requirements for human survival
  • Consumer willingness to buy products
  • Beliefs of a person or social group with emotional investment (correct)

    • What are goals?

    A purpose/objective.

    What are needs?

    Basic requirements for human survival.

    What are wants?

    <p>Goods that are purchased to add comfort or pleasure to life.</p> Signup and view all the answers

    What is a surplus?

    <p>A situation in which quantity supplied is greater than quantity demanded.</p> Signup and view all the answers

    What are long-term goals?

    <p>Accomplishments that may take several months to several years.</p> Signup and view all the answers

    What are short-term goals?

    <p>Accomplishments in a small amount of time.</p> Signup and view all the answers

    What is opportunity cost?

    <p>Cost of the next best alternative use of money, time, or resources.</p> Signup and view all the answers

    What is equilibrium price?

    <p>The price that balances quantity supplied and quantity demanded.</p> Signup and view all the answers

    What are resources?

    <p>A source or supply or support.</p> Signup and view all the answers

    What is economics?

    <p>The study of how societies decide what to produce, how to produce it, and how to distribute what they produce.</p> Signup and view all the answers

    What is a traditional economy?

    <p>An economy based on customs and traditions.</p> Signup and view all the answers

    What is a command economy?

    <p>An economic system controlled by a strong, centralized government.</p> Signup and view all the answers

    What is a market economy?

    <p>An economy that allocates resources through decentralized decisions.</p> Signup and view all the answers

    What is a mixed economy?

    <p>An economy in which private enterprise exists alongside government regulation.</p> Signup and view all the answers

    What is scarcity?

    <p>A situation in which unlimited wants exceed limited resources.</p> Signup and view all the answers

    What is demand?

    <p>Consumer willingness and ability to buy products.</p> Signup and view all the answers

    What is supply?

    <p>A stock of a resource from which a person or place can be provided.</p> Signup and view all the answers

    What is a budget?

    <p>A plan for making and spending money.</p> Signup and view all the answers

    What are fixed expenses?

    <p>Costs that do not change in total but can decrease on a per unit basis.</p> Signup and view all the answers

    What are flexible expenses?

    <p>Costs that do not stay the same, such as utilities, clothes, and food.</p> Signup and view all the answers

    What are luxury goods?

    <p>Goods that are not necessary for life; they make life more enjoyable.</p> Signup and view all the answers

    What is a dividend?

    <p>A payment from profits by a company's Board of Directors to shareholders.</p> Signup and view all the answers

    What is credit?

    <p>An arrangement to receive cash, goods, or services now and pay for them later.</p> Signup and view all the answers

    What is a secured loan?

    <p>A loan that is backed up by collateral.</p> Signup and view all the answers

    What is an unsecured loan?

    <p>A loan guaranteed only by a promise to repay it.</p> Signup and view all the answers

    What is collateral?

    <p>A security pledged for the repayment of a loan.</p> Signup and view all the answers

    Study Notes

    Fundamental Concepts of Economics

    • Values: Emotional beliefs regarding preferences that affect decision-making.
    • Goals: Specific objectives a person aims to achieve.
    • Needs vs. Wants: Needs are essentials for survival; wants enhance comfort and pleasure.
    • Scarcity: The gap between limited resources and unlimited desires, leading to the necessity for choices.

    Market Dynamics

    • Surplus: Occurs when supply exceeds demand.
    • Equilibrium Price: The price where the quantity supplied equals the quantity demanded.
    • Demand and Supply: Demand is influenced by consumer willingness to buy, while supply refers to the availability of goods.

    Economic Structures

    • Traditional Economy: Based on customs; roles and production methods are passed down generations.
    • Command Economy: Centralized government controls production, focusing heavily on industrial goods.
    • Market Economy: Resource allocation through decentralized decisions by households and businesses.
    • Mixed Economy: Combines private enterprise with government regulation and support.

    Financial Planning and Budgeting

    • Budget: A financial plan outlining expected income and expenditures.
    • Fixed Expenses: Costs that remain constant regardless of the volume of activity.
    • Flexible Expenses: Variable costs like utilities and food that can change over time.

    Money Management

    • Gross Pay vs. Net Pay: Gross is total income before deductions; net is income after deductions.
    • Deductions: Amounts taken from gross pay, reducing take-home income.
    • Saving: Disposable income directed towards future needs rather than immediate consumption.

    Currency and Banking

    • Federal Reserve: Central banking system responsible for monetary policy and interest rates.
    • Reserve Requirement: A percentage of deposits that banks must keep in reserve.
    • Credit Union: Member-owned financial institution offering savings, loans, and services at lower costs.

    Investment Basics

    • Investing: Allocating resources hoping to yield returns over time.
    • Risk: The uncertainty associated with investment returns.
    • Return: The income earned on invested capital.

    Types of Financial Instruments

    • Bonds: Securities representing a promise to repay borrowed funds with interest.
    • Stocks: Shares representing ownership in a corporation; can be common or preferred.
    • Mutual Funds: Investments pooled from many investors to buy a mixed portfolio of stocks and bonds.

    Understanding Credit

    • Credit: Agreement to receive goods/services upfront with promises of future payment.
    • Credit History: Record of repayments which influences credit ratings and borrowability.
    • Secured vs. Unsecured Loans: Secured loans require collateral; unsecured loans are based solely on promise of repayment.

    Retirement Planning

    • Retirement Plans: Strategies to set funds aside for post-retirement living.
    • 401(k) vs. 403(b): Employer-sponsored retirement plans, with tax advantages for contributors.
    • Roth IRA vs. Traditional IRA: Retirement accounts with different tax implications and withdrawal rules.

    Final Exam Preparation

    • Exam Structure: Familiarize with key terms and concepts across chapters for comprehensive understanding.
    • Practice Concepts: Apply definitions and their implications to real-life scenarios.
    • Revise Key Terms: Regular review of financial terminology to reinforce knowledge retention.

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    Description

    Test your understanding of key economic principles, including values, goals, and the differences between needs and wants. Explore market dynamics such as surplus, equilibrium price, and various economic structures. This quiz will help solidify your grasp of essential economic concepts.

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