Microeconomics and Macroeconomics Quiz

Definition: Study of individual economic units (consumers and firms) and their interactions.
Key Concepts:
- Demand and Supply: Determines market prices and quantities.
- Elasticity: Measure of responsiveness of quantity demanded or supplied to changes in price.
- Consumer Behavior: Analyzes choices and preferences; utility maximization.
- Production and Costs: Examines production processes and cost structures.
- Market Structures:
  - Perfect Competition
  - Monopoly
  - Oligopoly
  - Monopolistic Competition

Definition: Study of the economy as a whole, focusing on aggregate indicators.
Key Concepts:
- Gross Domestic Product (GDP): Total value of all goods and services produced in an economy.
- Inflation: Rate at which the general level of prices for goods and services rises.
- Unemployment: Measurement of the labor force that is jobless and actively seeking employment.
- Fiscal Policy: Government spending and taxation policies to influence the economy.
- Monetary Policy: Central bank actions that manage the money supply and interest rates.

Definition: Framework that describes and interprets economic processes and phenomena.
Key Theories:
- Classical Economics: Focuses on free markets, competition, and the belief in self-regulating markets.
- Keynesian Economics: Emphasizes total spending in the economy and its effects on output and inflation; advocates for government intervention.
- Monetarism: Highlights the role of governments in controlling the amount of money in circulation.
- Behavioral Economics: Integrates psychological insights into economic theory; examines how cognitive biases affect decision-making.

Definition: Exchange of goods and services between countries.
Key Concepts:
- Comparative Advantage: Countries should specialize in producing goods where they have a lower opportunity cost.
- Trade Barriers: Tariffs, quotas, and embargoes that restrict international trade.
- Trade Agreements: Treaties between countries to promote trade and reduce tariffs (e.g., NAFTA, EU).
- Balance of Payments: Record of all economic transactions between residents of a country and the rest of the world.

Definition: Government actions aimed at addressing public issues and promoting social welfare.
Key Concepts:
- Regulatory Policies: Rules and guidelines surrounding economic activities (e.g., environmental regulations).
- Welfare Policies: Programs designed to support low-income individuals and families (e.g., Social Security, TANF).
- Tax Policy: Government tax structures and their impact on economic behavior, revenue generation, and redistribution.
- Public Goods and Services: Goods that are non-excludable and non-rivalrous, provided by the government (e.g., national defense, public parks).

Focuses on individual economic units like consumers and firms, and how they interact.
Key concepts include:
- Demand and Supply: Market forces that dictate prices and quantities
- Elasticity: Measuring how much demand or supply reacts to price changes.
- Consumer Behavior: Analyzing consumer choices, preferences, and utility maximization.
- Production and Costs: Exploring production processes and how costs are structured.
- Market Structures: Analyzing types of markets, including perfect competition, monopoly, oligopoly, and monopolistic competition.

Examines the economy as a whole, focusing on aggregate indicators and overall performance.
Key concepts include:
- Gross Domestic Product (GDP): The total value of goods and services produced within a country's borders.
- Inflation: The rate at which prices for goods and services rise over time.
- Unemployment: The percentage of people in the labor force actively seeking work but unable to find it.
- Fiscal Policy: Government actions involving spending and taxation aimed at influencing the economy.
- Monetary Policy: Central bank actions that manage the money supply and interest rates to stabilize the economy.

Provides frameworks for interpreting economic processes and phenomena.
Major theories include:
- Classical Economics: Emphasizes free markets, competition, and the belief in self-regulating markets.
- Keynesian Economics: Focuses on total spending in the economy and its impact on output and inflation, advocating for government intervention.
- Monetarism: Highlights the importance of government control over the money supply.
- Behavioral Economics: Combines psychology with economics, exploring how cognitive biases influence economic decisions.

The exchange of goods and services between countries.
Key concepts include:
- Comparative Advantage: The principle that countries specialize in producing goods where they have a lower opportunity cost, increasing overall output.
- Trade Barriers: Restrictions on international trade like tariffs, quotas, and embargoes.
- Trade Agreements: Treaties between countries designed to promote trade and reduce tariffs (e.g., NAFTA, EU).
- Balance of Payments: Records all economic transactions between a country and the rest of the world.

Government actions designed to address public issues and promote social welfare.
Key concepts include:
- Regulatory Policies: Rules and guidelines governing economic activities (e.g., environmental regulations).
- Welfare Policies: Programs that support low-income individuals and families (e.g., Social Security, TANF).
- Tax Policy: Government tax structures and their impact on economic behavior, revenue, and redistribution.
- Public Goods and Services: Non-excludable and non-rivalrous goods provided by the government (e.g., national defense, public parks).