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Questions and Answers
What does economics fundamentally address?
What does economics fundamentally address?
Which statement best describes the economic way of thinking?
Which statement best describes the economic way of thinking?
How do economists typically work as social scientists?
How do economists typically work as social scientists?
What is a key benefit of economics as a life skill?
What is a key benefit of economics as a life skill?
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What complication underlies all economic problems?
What complication underlies all economic problems?
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What type of market involves the buying and selling of goods and services?
What type of market involves the buying and selling of goods and services?
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What do households supply in factor markets?
What do households supply in factor markets?
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Which direction does money flow compared to real flows in the economy?
Which direction does money flow compared to real flows in the economy?
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What is one primary source of federal government financing?
What is one primary source of federal government financing?
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How do state and local governments primarily fund their expenditures?
How do state and local governments primarily fund their expenditures?
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What type of flows represent incomes and expenditures in the economy?
What type of flows represent incomes and expenditures in the economy?
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What does the federal government primarily provide with its major expenditures?
What does the federal government primarily provide with its major expenditures?
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Which tax is NOT typically a source of revenue for state and local governments?
Which tax is NOT typically a source of revenue for state and local governments?
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What role do entrepreneurs play in the economic process?
What role do entrepreneurs play in the economic process?
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Which of the following describes functional distribution of income?
Which of the following describes functional distribution of income?
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What percentage of total income did the poorest 20% earn in 2017?
What percentage of total income did the poorest 20% earn in 2017?
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As of April 10, 2019, what was the estimated U.S. population?
As of April 10, 2019, what was the estimated U.S. population?
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Which group constitutes the term 'emerging market economies'?
Which group constitutes the term 'emerging market economies'?
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How is the global production worth approximately $135 trillion reflected?
How is the global production worth approximately $135 trillion reflected?
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What does personal distribution of income indicate?
What does personal distribution of income indicate?
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What would be your estimated share if global production were divided equally among the population?
What would be your estimated share if global production were divided equally among the population?
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What are consumption goods and services primarily used for?
What are consumption goods and services primarily used for?
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Which of the following is NOT considered a factor of production?
Which of the following is NOT considered a factor of production?
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Which category includes tools, instruments, and buildings?
Which category includes tools, instruments, and buildings?
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What is human capital primarily associated with?
What is human capital primarily associated with?
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What type of goods are cranes and trucks classified as?
What type of goods are cranes and trucks classified as?
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Which of the following natural resources is NOT included in the definition of land?
Which of the following natural resources is NOT included in the definition of land?
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What aspect of labor determines its quality?
What aspect of labor determines its quality?
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For which of the following purposes are goods and services primarily produced?
For which of the following purposes are goods and services primarily produced?
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Which of the following best describes the nature of production in developing economies compared to advanced economies?
Which of the following best describes the nature of production in developing economies compared to advanced economies?
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What role does human capital play in differentiating economies?
What role does human capital play in differentiating economies?
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Which statement accurately reflects the agricultural production in advanced economies?
Which statement accurately reflects the agricultural production in advanced economies?
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What are the two main activities through which households and firms interact with other economies?
What are the two main activities through which households and firms interact with other economies?
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How does the physical capital influence production capabilities between different economies?
How does the physical capital influence production capabilities between different economies?
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What term is used for goods and services that the United States buys from other countries?
What term is used for goods and services that the United States buys from other countries?
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Which of the following indicates a major difference in income levels globally?
Which of the following indicates a major difference in income levels globally?
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What happens when the value of U.S. imports exceeds U.S. exports?
What happens when the value of U.S. imports exceeds U.S. exports?
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What does the circular flow model primarily illustrate?
What does the circular flow model primarily illustrate?
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In what way are advanced economies similar in terms of production?
In what way are advanced economies similar in terms of production?
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How does Boeing reduce the manufacturing cost of the Dreamliner?
How does Boeing reduce the manufacturing cost of the Dreamliner?
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Which factor is least likely to be a consideration in evaluating human capital?
Which factor is least likely to be a consideration in evaluating human capital?
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What does international finance mainly involve?
What does international finance mainly involve?
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What does the red flow in the circular flows represent?
What does the red flow in the circular flows represent?
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How are global economic booms and slumps transmitted?
How are global economic booms and slumps transmitted?
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What motivates the decisions made by Boeing and its 400-plus firms in production?
What motivates the decisions made by Boeing and its 400-plus firms in production?
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Study Notes
Introduction to Economics
- The book title is Essential Foundations of Economics.
- The ninth edition is by Bade and Parkin.
- The image on the cover of the book is a butterfly on a flower.
- A question is posed on page 2, "Did you make the right decision?"
Getting Started
- The chapter checklist includes defining economics and the questions economists ask.
- Understanding economic thought processes is covered.
- Economists' roles as social scientists and policy advisors are explained.
- How economics is a useful life skill and job skill is also discussed.
Definitions and Questions (1.1)
- Economic problems arise because people's desires exceed available resources (scarcity).
- Scarcity forces choices among available alternatives.
- Choices depend on the incentives involved.
- Economics is the social science that studies choices made by individuals, businesses, and governments when dealing with scarcity.
- Choices involve incentives and arrangements for coordination.
- Microeconomics focuses on individual and business choices and their interaction with governments.
- Macroeconomics investigates the overall effects of these choices on national and global economies.
- Two important economic questions are: How are goods and services produced, for whom are they produced, and what goods and services get produced?
- Self-interest often contributes to the overall well-being of society.
- Globalization accelerates international trade and production, impacting economies.
- The Information Revolution and climate change are also discussed as factors reflecting self-interest, but affecting social welfare.
- US government budget deficits and debt, along with future retirement and health care costs impact society and future generations.
The Economic Way of Thinking (1.2)
- Six main ideas:
- Choices involve tradeoffs.
- Cost represents what's given up to get something.
- Benefit signifies what's gained.
- Rational choice involves comparing costs and benefits.
- Most decisions are "how much" choices, focusing on marginal adjustments.
- Choices respond to incentives.
- A tradeoff is an exchange, giving something up for another.
- Opportunity cost is the most desirable alternative given up.
- Marginal cost represents the extra cost from making a unit increase in activity.
- Marginal benefit represents the additional gain from a unit increase.
- A rational choice implies using available resources to best achieve objectives, by comparing costs and benefits.
Economics as a Social Science and Policy Tool (1.3)
- Economists use the scientific method to understand and predict economic forces.
- Economists use various methods like natural experiments, statistical investigations, and economic experiments to verify predictions.
- Natural experiments involve situations where a single factor is different while other factors are similar.
- Statistical investigations look for correlations between variables.
- Economic experiments place individuals in decision-making situations to observe their responses.
- Disagreements in economics can be categorized as normative (opinions) or positive (facts).
- Policy advice often combines positive and normative viewpoints.
Economics as a Life Skill and Job Skill (1.4)
- A degree in economics can lead to jobs as economists, or related fields like law, business, or health care.
- Typical jobs for economics majors include market research analyst, financial analyst, or budget analyst.
- Economics jobs are expected to grow from 2014 to 2024, according to the data.
- Economists' salaries vary, but the average is around $72,279.
- Skills emphasized in economics jobs include critical thinking, analytical skills, math skills, writing skills, and oral communication.
- Economics helps with decision-making across various contexts, from personal to community.
Eye on the Benefit and Cost of School (1.5)
- School's benefits include education and higher future income.
- School's costs include tuition, books, and forgone income.
- Some successful people chose to leave school before graduation.
- Benefits versus opportunity cost of education are considered.
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Description
This quiz covers the foundational concepts of economics as discussed in Chapter 1 of Essential Foundations of Economics. It explores the idea of scarcity, the role of economists, and the questions they ask to better understand economic decisions. Prepare to evaluate your understanding of these essential economic principles.
