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Questions and Answers
A city government is considering implementing rent control to make housing more affordable. Based on microeconomic principles, what is a likely consequence of this policy?
A city government is considering implementing rent control to make housing more affordable. Based on microeconomic principles, what is a likely consequence of this policy?
- A surplus of rental units, as demand decreases due to lower prices.
- A shortage of rental units, as quantity demanded exceeds quantity supplied at the controlled price. (correct)
- No change in the housing market, as rent control only affects price and not quantity.
- Increased supply of rental units due to higher guaranteed income for landlords.
A major technological innovation dramatically reduces the cost of producing solar panels. According to supply and demand principles, what is the most likely short-term effect on the solar panel market?
A major technological innovation dramatically reduces the cost of producing solar panels. According to supply and demand principles, what is the most likely short-term effect on the solar panel market?
- A decrease in both the equilibrium price and quantity.
- An increase in the equilibrium price and a decrease in the equilibrium quantity.
- A decrease in the equilibrium price and an increase in the equilibrium quantity. (correct)
- An increase in both the equilibrium price and quantity.
A country's central bank decides to lower interest rates to stimulate economic growth. How might this monetary policy action impact inflation and unemployment?
A country's central bank decides to lower interest rates to stimulate economic growth. How might this monetary policy action impact inflation and unemployment?
- Inflation increases, and unemployment increases.
- Inflation decreases, and unemployment decreases.
- Inflation increases, and unemployment decreases. (correct)
- Inflation decreases, and unemployment increases.
A government implements a new tax on sugary drinks to combat obesity. This is an example of what type of economic policy?
A government implements a new tax on sugary drinks to combat obesity. This is an example of what type of economic policy?
Which of the following scenarios represents a situation where game theory would be most applicable?
Which of the following scenarios represents a situation where game theory would be most applicable?
A country experiences a significant increase in its GDP. While this indicates economic growth, what is a limitation of using GDP as the sole measure of economic development?
A country experiences a significant increase in its GDP. While this indicates economic growth, what is a limitation of using GDP as the sole measure of economic development?
In a mixed economy, which of the following activities would the government most likely undertake to address a market failure?
In a mixed economy, which of the following activities would the government most likely undertake to address a market failure?
Which of the following is an example of a lagging economic indicator?
Which of the following is an example of a lagging economic indicator?
A firm operating in a perfectly competitive market is experiencing economic losses. What is the most likely course of action for this firm in the short run?
A firm operating in a perfectly competitive market is experiencing economic losses. What is the most likely course of action for this firm in the short run?
A country decides to implement tariffs on imported steel to protect its domestic steel industry. What is a likely consequence of this trade policy?
A country decides to implement tariffs on imported steel to protect its domestic steel industry. What is a likely consequence of this trade policy?
Flashcards
Economics
Economics
How societies allocate scarce resources to satisfy unlimited wants and needs.
Microeconomics
Microeconomics
Focuses on individual economic agents, like households and firms.
Elasticity
Elasticity
The responsiveness of quantity demanded or supplied to changes in price.
Fiscal Policy
Fiscal Policy
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Monetary Policy
Monetary Policy
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Gross Domestic Product (GDP)
Gross Domestic Product (GDP)
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Capitalism
Capitalism
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Socialism
Socialism
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Leading Indicators
Leading Indicators
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Economic Policies
Economic Policies
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Study Notes
- Economics is a social science that studies how societies allocate scarce resources to satisfy unlimited wants and needs
- It examines the production, distribution, and consumption of goods and services
Microeconomics
- Microeconomics focuses on the behavior of individual economic agents, such as households, firms, and markets
- Supply and demand are fundamental concepts that determine prices and quantities in markets
- Elasticity measures the responsiveness of quantity demanded or supplied to changes in price or other factors
- Market structures include perfect competition, monopoly, oligopoly, and monopolistic competition, each with distinct characteristics
- Production costs, including fixed, variable, and marginal costs, influence firms' decisions on output levels
- Market failures, such as externalities and public goods, may require government intervention to improve efficiency
- Consumer behavior analyzes how individuals make choices to maximize their satisfaction (utility)
- Game theory studies strategic interactions between individuals or firms, considering their interdependence
Macroeconomics
- Macroeconomics examines the behavior of the economy as a whole, focusing on aggregate variables
- Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders
- Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling
- Unemployment refers to the situation where individuals are actively seeking work but unable to find employment
- Fiscal policy involves government spending and taxation to influence the economy
- Monetary policy involves central banks managing the money supply and interest rates to stabilize the economy
- Economic growth refers to the increase in the production of goods and services over time
- Business cycles are fluctuations in economic activity, characterized by periods of expansion and contraction
- International trade examines the exchange of goods and services between countries
- Exchange rates determine the value of one currency in terms of another
Economic Systems
- Capitalism is an economic system characterized by private ownership of the means of production and market-based allocation of resources
- Socialism is an economic system characterized by social ownership or control of the means of production
- Mixed economies combine elements of both capitalism and socialism, with varying degrees of government intervention
Economic Indicators
- Leading indicators provide insights into future economic activity
- Lagging indicators reflect past economic performance
- Coincident indicators move in sync with current economic activity
Economic Development
- Economic development focuses on improving the well-being of individuals and societies, not just increasing wealth
- Factors influencing economic development include education, healthcare, infrastructure, and institutions
- Sustainable development aims to meet the needs of the present without compromising the ability of future generations to meet their own needs
Economic Policy
- Economic policies are actions taken by governments to influence economic outcomes
- Trade policies include tariffs, quotas, and free trade agreements
- Regulatory policies aim to correct market failures and protect consumers and the environment
- Income redistribution policies aim to reduce inequality and provide social safety nets
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Description
Overview of economics as a social science, focusing on resource allocation and the study of microeconomics. Key concepts include supply and demand, elasticity, and diverse market structures. Analysis of production costs and understanding market failures are essential components.
