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What are the two main branches of economics?
What are the two main branches of economics?
Microeconomics and Macroeconomics
Scarcity is a long term issue, while a shortage is a temporary lack of something.
Scarcity is a long term issue, while a shortage is a temporary lack of something.
True
What is the definition of economics?
What is the definition of economics?
The study of how people choose to use their limited resources to satisfy their ultimate wants.
What is utility in economics?
What is utility in economics?
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Which of the following is NOT a characteristic of the U.S. economy?
Which of the following is NOT a characteristic of the U.S. economy?
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What is the main reason for the increase in the labor force?
What is the main reason for the increase in the labor force?
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What are the three types of taxes?
What are the three types of taxes?
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What are the three functions of money?
What are the three functions of money?
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What is the main reason why countries trade?
What is the main reason why countries trade?
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What is the natural rate of unemployment?
What is the natural rate of unemployment?
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A trade deficit occurs when a country imports more than it exports.
A trade deficit occurs when a country imports more than it exports.
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What is the main reason for a trade deficit?
What is the main reason for a trade deficit?
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What are three examples of services the United States exports?
What are three examples of services the United States exports?
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Study Notes
Micro and Macroeconomics
- Microeconomics focuses on individual economic decisions.
- Macroeconomics focuses on the economy as a whole.
- Economics studies how people use limited resources to satisfy wants.
Shortages and Scarcity
- Shortages are temporary.
- Scarcity is long-term.
Economic Systems
- Command: Decisions by a powerful authority.
- Market: Decisions by individuals.
- Traditional: Decisions based on customs.
Types of Economies
- The U.S. has a pure free enterprise economy.
Resources and Wants
- Resources are limited.
- Wants are unlimited.
Utility
- Utility is the satisfaction gained from consuming a good or service.
Resources
- Perpetual: Always available (e.g., sunlight).
- Renewable: Can be replenished (e.g., trees).
- Non-renewable: Cannot be replenished (e.g., oil).
Capitalism and the Standard of Living
- Capitalism contributes to a higher standard of living through new technology and competition.
Government Intervention
- Government intervention is needed in binding contracts to ensure all parties uphold their obligations.
Trade and Economic Growth
- Trade increases economic choices.
Variables and Human Capital
- Variables in graphs change.
- Human capital consists of knowledge and skills gained through education and experience.
Resource Allocation
- Societies prioritize needs over wants to determine how resources are used.
U.S. Economy Characteristics
- Economic freedom.
- Competition.
- Equal opportunity.
- Binding contracts.
- Property rights.
- Profit motive.
- Limited government.
Opportunity Cost
- Opportunity cost is the value of the next best alternative.
Diminishing Marginal Utility
- The more a good is consumed, the less satisfaction a person derives from each additional unit.
Demand
- Demand is the quantity of a good that consumers are willing and able to buy at various prices at a given point in time.
Supply
- As prices increase, supply increases; as prices decrease, supply decreases.
Supply and Demand Shifters
- Many factors cause changes in supply and demand, including income, consumer preferences, and prices of substitute goods.
Elasticity
- Elasticity measures the responsiveness of quantity demanded or supplied to price changes.
Economic Interdependence
- People depend on others for most goods and services due to specialization and trade.
Economic Interdependence
- Economic interdependence describes how people depend on others for the goods and services they require.
Demand Schedule
- A demand schedule displays the quantity of a good or service that different consumers are willing and able to buy at various prices.
Market Equilibrium
- Market equilibrium occurs where quantity demanded equals quantity supplied, thus determining price.
Money Characteristics
- Money is acceptable, scarce, portable, durable, divisible, and uniform.
Investment Options
- Diversification is a strategy to reduce risk in investing. Risk and reward are associated with different investment options.
Perfect Competition
- Many producers and consumers; identical products; easy entry; no control over prices.
Monopoly
- One producer; unique product; high barriers to entry; substantial control over prices.
Oligopoly
- Few producers; similar products; high barriers to entry; some control over prices.
Bank Loans and Uses
- Different types of bank loans exist for various purposes (personal, business, mortgage).
Externalities: Positive and Negative
- Positive externalities: benefits others.
- Negative externalities: costs imposed on others.
Competition
- Non-price competition: Using factors other than price to attract customers (e.g., service, physical characteristics, location, status).
Price Leadership
- A dominant firm sets prices, and other firms follow.
Collusion
- Producers agree on production levels and pricing.
Bank Charter
- A bank charter is an agreement with a state for a bank's operation.
Diversification in Investing
- Reduces risk.
Role of Prices
- Guide consumers and producers on what to buy and sell.
Price Determination
- Market equilibrium (supply and demand) determines prices.
Government Involvement
- Government intervenes to correct externalities, regulate industries, and promote economic stability.
Taxes
- Taxes are a significant source of government revenue (e.g., income tax).
Constitutional Provisions on Economics
- The Constitution gives Congress specific powers related to economics.
Factors Influencing Economic Decisions
- Consumer freedom to choose goods and services.
Trade
- Countries trade to gain a variety of goods and services at potentially lower prices.
Tariffs
- Tariffs are taxes on imported goods for protection.
Unemployment
- Cyclical unemployment is linked to economic downturns.
Economic Growth
- Factors include investment, innovation and technology.
Trade and Employment
- Global trade can impact domestic employment.
Trade Agreements and Trade Barriers
- Agreements reduce barriers; trade barriers can limit choices and increase prices.
Inflation Measurement
- Inflation measurement has limitations.
Natural Rate of Unemployment
- Natural rate of unemployment is a range between 4%-6%.
Trading Partners
- The U.S. has significant trade relationships with other countries.
Trade Deficit
- Trade deficit means importing more than exporting.
Depreciation
- Gradual reduction of an asset's value due to wear, tear, or obsolescence.
Business Cycle
- Consists of phases: expansion, peak, contraction, and trough.
Education and Exports
- Countries benefit from exporting education opportunities.
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Description
This quiz covers the foundational concepts of micro and macroeconomics, including resource allocation, economic systems, and types of economies. Test your understanding of key terms like scarcity, utility, and the impact of capitalism on living standards.
